As shown above in the internals box, Friday’s choppy action is clearly displayed with a positive Breadth Ratio and negative A/D Line, something that is very uncommon, but indicative of sideways action.
Looking at the Banking Sector (BKX) we saw a huge push lower on Tuesday with an extremely bearish candle with virtually no shadow. While it seems to be forming a bear flag, the government is pumping in fiscal stimulus in the billions of dollars to help these banks from collapsing.
On an even more interesting note looking at the XLF FEB 10 Calls, 272k contracts were traded on Friday. To put that in perspective of how large that is, the next highest are the FEB 11 Calls at 46k. A very big hitter is buying an enormous amount of call options in anticipation of a move higher. While we cannot know for sure which way the market is going to move, we can analyze the facts and historical trends to make highly probable speculations.