After PHP upgrade Drush Fails After ugrading PHP 5.3 to 5.4.10, drush fails with the following error for most of commands:
Command watchdog-show needs a higher bootstrap level to run - you will need to invoke drush from a more         [error]
functional Drupal environment to run this command
...

I reinstalled Drush(Drush 5.8 does not work on  Mac OSx 10.7.5, so downgraded to 5.0.0), but it did not solve the problem. 

Is Drush compatible with php 5.4.10.? Why would i get these errors and how to troubleshoot?

Thank You
As mentioned here drush is not yet completely compatible with PHP 5.4

And regarding the error message you will need to invoke drush from a more [error] functional Drupal environment to run this command , in general cases it means that you are running drush from a location which is not associate to a drupal instance. To be on a safer side go location-of-your-drupal-instance/sites/all/modules and run the command.