Stocks could close out the month of May with a tailwind, particularly if the commodities sell off continues.
Friday's market should also be helped by Dell's strong earnings report, which drove its stock nearly 10 percent higher after hours and could be a catalyst for tech at the open.
The market's performance this month tells an interesting tale. The Dow 30 industrials are down 1.4 percent, but look at small caps and tech. The tech-driven Nasdaq and Russell 2000 were both up 4 percent. The broad S&P 500 rose 0.9 percent this month.
Remember, too, that the market value of tech in the S&P 500 surpassed the financials this month for the first time since early 2002. So, it's not surprising to see that tech is up 4.8 percent for the month, and the financial sector is down 5.7 percent.
The big market story this week though is the selling spree in commodities, particularly in oil. Have they topped out for now? That's yet to be seen, but the debate is raging and there seems to be a major shift going on.
At the same time, we see Treasury yields rise to the year's highs, stocks are holding their own and the dollar is strengthening. The 10-year was yielding 4.09 percent at the end of the day, and the dollar was up 0.9 percent against the euro.
"Do I think it's in the early phases of a correction and maybe something bigger? ... Yes," said Kevin Ferry of Cronus Futures Management.
Linked to the sell off in commodities are stories that big hedge funds are bailing out and that investors are selling on concern a slowing global economy could snuff the rally.
At the same time, rising Treasury yields are flashing inflation warnings for some. "In my mind, we are not going to have retrenchment of major proportion that would cause people to think there's deflation," Ferry said. "You're going to have stinky inflation rates ... and that might be enough to cool it. This thing's going to end in ice, not fire ... It's going to chill out. We're not going back."
Ferry said the general market behavior is beginning to make more sense. "When I look at all the pieces of the puzzle now, they seem to fit," he said.
Art Cashin, director of floor operations for UBS, said there was a theory among traders Thursday that there was a big asset reallocation from bonds to equities taking place during the trading day, but he did not believe that because stocks would have moved higher than the 52 point gain on the Dow.
He said the rising rates in Treasury markets helped to cool off commodities. "Nineteen of the key commodities were almost in free fall as the higher interest rates were making it far too expensive to finance the stuff," said Cashin, adding it looked like some hedge funds were liquidating positions.
Oil fell $4.41 per barrel Thursday, or 3.4 percent to $126.62. Interesting too on a day that oil was tumbling, the CFTC announced both that it was tightening oversight of oil markets and said that it launched a probe into crude oil markets. (Walter Lukken, who heads the CFTC, will appear on "Power Lunch" Friday)
The CFTC news added pressure to an already falling oil price.
Cashin said the S&P, at 1398 Thursday, needs to close somewhere above 1405 Friday to break through the 18-month moving average. "For now, the temptation would be to try to push it higher and break it out to the upside ... the end of the day will be very interesting to see how it played because it's the end of the month," he said.
Data for Friday includes personal income, personal consumption and the core PCE deflator for May at 8:30. Chicago PMI is at 9:45 a.m., and consumer sentiment is released at 10 a.m.
Tiffany reports earnings before the bell.
June 1 : The European Central Bank turns ten Sunday. That day is also the official start of the hurricane season.