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Friday Look Ahead: Will Stocks See a Sixth Week of Losses?

Bulls trotted gingerly back into the stock market, and if they stay around on Friday, there's a chance the market could avoid a sixth week of losses.

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Stocks broke a six-day losing streak Thursday, with the Dow finishing up 0.6 percent at 12,124, and the S&P 500 up 0.7 percent at 1289. The Dow is now down just 0.2 percent on the week, and the S&P 500 is down 0.9 percent. If the Dow is negative for the week, it would be the longest losing streak since 2002.

Market leaders Thursday were the commodities-related materials sector, up 1.6 percent, followed by energy up 1.24 and financials, up 1.19 percent.

"I think we overdid it on the downside a little bit too quickly," said Marc Pado, Cantor Fitzgerald market strategist.

"You don't get (selling) strings like this without compelling news or data. I didn't quite grasp the concept of fear so this is by all means a relief bounce. It is not the beginning of a new bull market rally. This is a bounce off of the low. You can tell with the rotation of groups. The best performing groups are the ones that have been hurt the most in the last weeks. Financials, retailers, basic materials. Those are the groups that took a big hit. The pendulum is swinging the other way. That's good news. This should be the beginning of a basing process," he said.

Pado said the market still has some choppy weeks ahead, but it could start feeling better in July, when earnings season starts up again. "If you pull back, you'll see buyers stepping in because they're getting themselves positioned for earnings season," he said.

The market was supported Thursday by an unexpected contraction in the U.S. trade deficit for April. But Thursday's jobless claims were disappointing, rising to 427,000. News out of Europe was mixed, as European Central Bank President Jean Claude Trichet said Greece must avoid any form of restructuring. Later Greece's cabinet approved a new round of austerity measures, a requirement for continued bailout funding.

"I've been telling people we're very news dependant right now," said Steve Massocca, managing director with Wedbush Securities. "..There's a debate going on between the people who say the economy is getting weak and those who say it's not that bad. I think the winner of that debate is going to determine where the market's going."

The market finished off its highs Thursday, but the rally gave hope to traders who believe the market is close to or at the bottom of its latest sell off. The bearish crowd, however, saw the move higher as being a head fake, supported by short-covering.

Treasurys prices moved lower, and yields rose. The 10-year was at 2.997 percent. "I think people need more evidence that Q2 growth is truly going to disappointed and maybe second half growth is going to be throttled back," said William O'Donnell, chief Treasury strategist at RBS.

The dollar was higher against a basket of currencies, as the euro slipped in a "sell the news" reaction to the European Central Bank's suggestion it could raise rates in July.

Oil continued to climb on supply concerns, after OPEC's failure Wednesday to come to an agreement to increase production. NYMEX crude was up 1.2 percent at $101.93 per barrel. Unlike some who believe oil has seen highs for the year, Massocca said oil demand will stay high, supporting prices. He is buying depressed tanker stocks. "I think the Saudis will be supplying as much oil as they can sell. The tanker stocks have gotten killed because people think there's not going to be as much oil on the water," he said.

Pado also pointed out that the number of bears is rising, in the American Association of Individual Investors survey, a contrarian or bullish signal. Bullishness, meanwhile, fell to the lowest level since Aug. 26, just before Fed Chairman Ben Bernanke first discussed the current round of quantitative easing. The number of bulls is 24.4 percent, down from 30.2 percent, and bears rose to 47.7 percent from 33.4 percent.

There is little for the market to add to its economic debate Friday. Import prices for may are released at 8:30 a.m.

What Else to Watch

The deadline for nominations for the position of IMF managing director is Friday. French Finance Minister Christine Lagarde is seen as the front runner.

New York Fed President William Dudley tours Brooklyn and speaks on the economy at 10:30 a.m. ET.

Lululemon reports earnings and Toyota , overnight, provides a forecast.

Questions? Comments? Email us at marketinsider@cnbc.com