Why I need a tight stop for the current trade

I am revising my stop loss sharply to my EP for the S&P, due to the following reasons:

1. 'The S&P index could fall by half from these levels over the long term but near term, the risk of a knee-jerk rebound in stock prices has risen. Currently, Prechter recommends closing out the short position recommended on the S&P 500 back in 2007, because too many investors are now betting that prices will drop. The bear side has gotten a bit crowded in the stock market.' (The Edge, Mar 9 2009).

2. Barclays plc said US stocks may begin rallying in May, while the chief investment strategist at Citigroup Inc argued that selling equities now is like "closing the barn door after the animals have fled". In two months, shares may get a boost from the US Federal Reserve's TALF, the central bank's rate cuts and the government's US$787 billion economic stimulus. The market may reb0und in 2Q as the economic outlook improves. "In the past, awful 10-year returns for stocks have not been indicative of worse to come, but rather lead to better than random forward performance. (The Edgem Mar 9 2009).

These 2 views reinforce my belief that the stock market may bottom very soon (albeit temporarily), and hence, my cautious stance. It also explains why I am closing my short position prematurely earlier. Now, I will ride whatever the market is going to give me on my 4 remaining lots, and keep my powder dry to take on long positions on H-shares once the market reverses direction.