Thoughts on ABX Index, market sentiment...

The ABX Index is in the news again, with the current series falling to August levels as Moody's announced further downgrading of subprime ratings. From Wall St's point of view, liquidity in the credit market has stabilized, but are market players just delaying the inevitable write downs? Corporate earnings have been disappointing investors so far, and it will be interesting to see how the market interprets the continued onslaught of negative housing data (like tomorrow's NAHB housing market index). Expectations of another fed rate cut have decreased since the last FOMC meeting, but with two weeks left until the next meeting, market sentiment may quickly lose its current optimism.