"I think that the market is saying awful news is OK because it gives us our juice for longer. We kind of hoped we'd start to trade on earnings trends," Adams said. "But earnings don't matter. In earnings season, stocks fell and it was the best earnings season we've seen in years."
Adams said the market is also sensitive to what's happening in Ukraine, pointing to last Friday when stocks rose after Russian officials said military exercises ended. "There's obviously a geopolitical kick, and the Fed driving the trading pattern … I do think geopolitics are part of the story and create an even greater volatility on a day-to-day basis, but underlying it all at its core—it's really all about the Fed."
Read MoreExpect to feel the pain from Fed's 'taper' dismount
Trader focus has already been shifting to next week, when minutes from the Fed's last meeting are released Wednesday. But the highlight comes when Fed officials head to Jackson Hole, Wyoming, for their annual symposium at the end of the week.
Ward McCarthy, chief financial economist at Jefferies, said it's unlikely there will be much to surprise markets from Jackson Hole. "Basically Jackson Hole is going to be a showdown between those who think the labor market still has wounds and those who think it's coming along," he said.
Read More8 battered stocks with big upside potential
As the bond market pulled in buyers, stock market buyers went on a spree among the riskiest names Thursday. The iShares Nasdaq Biotech ETF is up 3.9 percent so far this week. Stocks like Amazon, Tesla and LinkedIn are all several percent higher since Monday.
Special situations should get some attention Friday, after big investors and hedge funds revealed their holdings in SEC filings. Gannett rose in late trading after Carl Icahn revealed a stake and said he wants to split it apart. Also in the after hours, Coca-Cola announced it bought a stake in Monster Beverage, and both stocks rose.
PPI data is reported at 8:30 a.m. Friday, as is the EmpireState survey. Treasury TIC data is released at 9 a.m., while industrial production and capacity utilization are both released at 9:15 am. Consumer sentiment is at 9:55 a.m. Estee Lauder releases earnings ahead of the bell.