It was a troubling week or bulls as the long standing sequence of gains banked since late October gave way to a couple of days of sharp profit taking.  Friday's action attempted to draw a line under this selling but it remains to be seen how effective this will prove to be in the weeks ahead.  On a positive front, buying volume ranked as accumulation across lead indices. 

The Nasdaq closed the small gap between Tuesday and Wednesday's sell off, but it might have a harder time getting above last week's highs, which were initially marked by the neutral doji at peak high of 16,053. Technicals are nicely positive and while the index hasn't yet regained its relative leadership role vs the Russell 2000 it has made up some ground on it. 

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 The S&P offered more room to maneuver with a large area of support down to the 4,545 breakout level, so Friday's gain came from a position of strength.  Friday also came with bullish accumulation volume, which continues the run of good form for the index. An optimist might look for a measured move that would target psychological resistance of 5,000, but pullbacks like this are more likely to zig-zag and we have seen the 'zig'.

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The Russell 2000 hasn't bounced like the Nasdaq or S&P, but there is a coiling behavior which traders can jump on - trading in the direction of the break.  A break down would not necessarily kill the rally as this index has emerged from a year long trading range and it will be hard to push it below $232 (IWM). 

The Dow Industrials experienced a little more of a pullback than the S&P, enough to find it close to testing its 20-day MA. Because the selling was a little more pronounced than the S&P it has generated a 'sell' in the MACD, but this shouldn't be too damaging and may be a temporary blip.

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Next week will be about firming up Friday's buying as something more than a one day event, which in itself would probably be enough to confirm the trading range breakouts from October.