Yesterday, stocks recovered a little from last week’s sharp sell-off. A little time over the weekend to reflect on the true potential of the "Volcker Rule"

(the name given to the new banking regulations proposed by the President on Thursday) to become law probably helped. 

Stocks gained slightly even though December home sales dropped a worse than expected 16%. That’s a pretty bad surprise, but stocks shook it off. That suggests to me that last week’s sell off may have been a bit exaggerated. 

As an aside, I’m not sure why there was concern that Fed Chief Bernanke wouldn’t be re-confirmed to his post. Sure, Geithner might be on the way out, but that’s no big deal. I see zero percent chance that Congress would let Bernanke go at this point. 

*****Fourth Quarter earnings have been good so far. I read that 70% of companies reporting have beaten expectations. But many of the surprises have been met with selling, like IBM (NYSE:IBM) and Google (Nasdaq:GOOG).  

It seems we’re getting just enough decent earnings reports to keep things interesting. And of all the unlikely suspects, US Steel (NYSE:X) is near the top of the list. 

It goes almost without saying that steel should not do well in a global recession. But US Steel beat Q4 revenue expectations handily. (Earnings per share is not comparable due to a bunch of one-time items.)

 

Once again, the buyers have stepped in at obvious support levels and sent stocks higher. We’ve identified support for the Dow Industrials at around 8,000. And while the index traded below 8,000 this week, the fact that buyers continue to step in remains one of the few positives for stock prices.