On Thursday we saw bullish action. Friday showed weakness on abnormal volume due to re-balancing of the Russell 3000, Global and Microcap indexes.

This is disappointing after seeing strength on Thursday but on a 15 minute time frame, the volume flooded in in the final minutes and didn’t push prices much lower which suggests that it was both buying and selling (characteristic of index re-balancing).

Moreover, the support level around 1,265 is still intact which is good news for bulls. Here’s a weekly chart of the S&P 500:

The S&P has closed out the last three weeks roughly in the same spot.

So after strong evidence of both buying and selling, we are at a point where we are somewhat neutral.

Because we are sitting on the support line and 200MA I do see us getting a bounce Monday as we continue trading within the channel marked below:

Prices have jumped around inside the blue lines but increasing volume near the support lines suggests possible buying.

If you’re a gambler, it wouldn’t be bad time to consider a long position in an index-tracking ETF. We’ve bounced off this level several times and with all the uncertainty in the economy, the stock market still offers the best returns and is liquid enough to attract cautious investors.