Hope Springs Eternal

In spite of some major losses overseas, the market managed to gain back lost ground from Friday's selloff. Volume was light, but breadth was positive.

The bulls had some positive things to work with including some good earnings reports (though guidance remains disappointing) in addition to strength in financials (see UYG) and homebuilders (see XHB) along with lots of chatter concerning heavy insider buying within the retailers (see XRT).

You can sense investor confidence is returning and the bulls are looking for reasons to get long. Hope springs eternal now that stocks have stopped going down every single day.

Of course, we've seen this show before each and every Fed meeting since last summer. In fact, following today's dismal report on home sales, expectations are now very high for at least another 50 basis point cut. I don't have to tell you what to expect IF Bernanke doesn't give in to the market's demands once again.

* Vmware (VMW) is being blown apart in after-hours trading and I continue to be concerned with the forward guidance many firms are providing that I follow. In addition, another day of this and the oversold condition we've been in will be wiped away just in time for the Fed decision.