A 'tug-o-war' dominated Friday's action; which indeed had the two 'fades' we suspected likely; with traders nevertheless managing to hold S&P together into the Close; resulting in approximately a one-third (at the best) recovery of a prior more notable decline; with internals topping days ago; which is why the Volatility Index (VIX) was not declining, even as the S&P was still advancing.

Technically... re-calibrating how deep the market goes with pullback behavior is also quite variable, and not solely because of 'raw' economic measures, even as of course consumer 'reticence' to engage in social and commercial activities will continue exerting pressure on earnings; to the extent that even matters for now.

Executive summary:

• The world of worry isn't calmed by Friday's alternating rebound; it's just the normal bounce off the first high-level support; and they may try extending it, because failure to hold it would reinforce ideas of stair-step declines;

• Debt-laden issues can indeed suggest more trouble brewing; and the softer Dollar alludes to this indirectly; as did the 'let's go Japanese' monetary policy affirmation by Fed Chairman Powell (refers to perpetual low interest rates);

• Notably (when viewing globally) EEM (Emerging Markets) rebounded to soft underbellies of the old rising-trend pattern; which is of concern to what had been (and ideally can be in the future) a global snap-back or basing time;
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• Meanwhile the market's 'reset' could be healthy and set-the-stage for more upside; as the angle-of-attack we were seeing exhausted a few weeks back and that's why the so-called illiquid plunge of Thursday is attributed to that;
• I point out (as I did early this year) that whether up or down; it's not liquidity as much as it is monkey-see/monkey-do; as aglo-traders (especially) tend to move in lockstep in either direction;

• And remember, they are heavily leveraged; so they can often make a market move and then when they get scared, they take money off in-sync quickly;

• Same crowd became the FOMO buyers in the past month; after missing the first key weeks of the advance off our March bottom;

• Meanwhile AT&T is said to want to sell Warner's Gaming division; which I'd rather see them merge with others since it's a hot area during a pandemic; but I understand the desire to reduce Debt if they can get 3-4 Billion from it;
• Speculative Sorrento Pharma retired all their 120 million debt; that seems curious as they are talking of floating another dilutive offering, or some way to raise more funds; maybe just partnerships coming; no idea; suspicious;
• And sure; the rise of Covid hospitalizations (not just cases) is a concern that is growing, despite some contending it's still the 1st wave (let's hope not; as whatever one labels it, it's at new highs in some states like Florida; and not easily dismissed as merely more positives because of more testing (which of course is part of it; but not the whole story);

In-sum: rebounds off first support around or just below 3000, after Thursday's dramatic Thursday S&P decline, was the expectation for Friday's start, followed by margin call liquidations (both around 10:30 am and then after midsession as I outlined as likely in last night's report including an intervening bounce) and then a mixed pre-weekend defensive play, including intraday-intraweek 'squaring'.

So it's not just 'dip-buying', but that may be part of it. I thought this week's bit of a shakeout was not any sort of drama (even though the actual Dow drop was a big number); because first of all it's not the beginning of a shake; and there are a ton of speculators and even big money managers wanting to 'get in' the action although most know better than to expect the first break to generate more than a snap-back, before the market at least 'attempts' to extend a pullback.  

Bottom line: there are too many 'known-and-unknown' variables to have great conviction here; unlike our confident pessimism in late January / early February; and then absolutely convinced optimism that the March 23rd purge was clearly a significant capitulation and market bottom. Whether it's the health of society; the reopening tentative participation by citizens; or the anxiety and uncertainty caused by proper and improper protests and agitation; people are nervous.

Customers are disinclined to venture into many outgoing scenarios. So that is very sobering to businesses as well, as they need customers; and (for instance restaurants) can't even fill reduced seating. If they open and nobody comes ... 

For at least the last two weeks we have been looking for a setback or correction given S&P was at and above our target near-term. Later in the year we allow for higher yet (under certain circumstances); and that's where the variables no-one is certain about just now matter. (Can't be; not just insurrection efforts; but Covid cases, are all variable for the moment and not terribly encouraging as they both relate to a reticence among consumers to emerge much into the public space.)

Suspicion that if we get a trading dip Monday; there will be an effort to rebound, regardless of the outcome, which should not be higher highs, by the way; but rather more bouncing off S&P high level (cushion) support.