Friday was a strong day for Wall Street. Stocks gapped up and surged higher throughout the session. However trade was light. All five major indices ended near intraday highs. High beta issues led the charge higher. The small-cap Russell 2000 tacked on an impressive 2.6%, while both the S&P MidCap 400 and the Nasdaq tacked on 2.0%. The S&P 500 improved by a solid 1.9% and the Dow Jones Industrial Average added 1.7%. It is noteworthy that both the QQQ and SPY set new swing highs on Friday. If this price action holds, a retest of the May swing high on both indices could soon occur.

Despite the strong price action in the market on Friday, internals ended the session mixed. Volume dropped on the Nasdaq by 5.5% and on the NYSE by almost 10.0%. Still, advancing volume topped declining volume on both exchanges. On the NYSE, the ratio of advancing volume to declining volume ended the session at 9.3 to 1 and on the Nasdaq, it finished at 4.7 to 1. The light volume suggests that institutions were not particularly active on Friday. This is somewhat surprising given the magnitude of the move.

The SPDR S&P Homebuilders ETF (XHB) has been one of the strongest ETFs in the market over the past several months. Last Thursday XHB formed a bullish reversal candle which was followed by Friday's gap up. Although this price action is bullish, it does not provide an entry suitable to taking on the trade. In order for XHB to provide a quality buying opportunity we would like to see it set a "higher-low" and another "buy-pivot" similar to the reversal candle formed last Thursday. Under these circumstances we would consider XHB a potential buy entry over the new pivot.



For the most part, Friday's market action was quite bullish and should continue to place pressure on market bears on Monday. However, it is of some concern that the market couldn't generate enough buying interest to post an accumulation day.

Deron Wagner is the Founder and Head Trader of both Morpheus Capital LP, a U.S. hedge fund, and MorpheusTrading.com, a trader education firm.