On Friday, the bulls were able to register a win, with major indexes breaking slightly out of declining channels. Looking at Thursday and Friday together, traders demonstrated indecision more than anything else, sending averages up in down in a narrowing range. It felt as though short covering was driving much of the action, with a lack of follow through on Friday's gap up, and frenzied rallies off of the lows when selling had dried up.



Price is still below the 10 and 50 day moving averages.



Although we closed higher on Friday, an options expiration day before a three day weekend before an inauguration, there is good reason to be skeptical. Reason number one is the action in financials. XLF is looking oversold, but so far it is still falling.



During the past week, Bank of America's stock sank from 12.86 to 7.18, a loss of approximately 45% of it value, or roughly $28 billion in market cap.



There was carnage throughout the financial sector, as Citigroup also declined from 6.54 to 3.50, another enormous loss of shareholder equity. Douglas A. McIntyre updates us on the government's reaction:

The Fed has passed tens of billions of dollars of loans to banks and brokerages through its emergency lending window. It has lowered interest rates to zero. Treasury has put $25 billion into each of the money center banks. It is now backing over $300 billion in bad assets held by CItigroup (C) through a loss-sharing agreement.