As I stated last fall, I expect a breakout in volatility in 2006 after the historically narrow range in the indices in 2005. Odds favor that January's price action underscores that premise.

Since last Friday, it has been a wild ride. Wednesday fulfilled the promise of a break to test the 1259/1260 square. As suggested yesterday, the three drives to 1259 traced out by the S&P 500 on Wednesday's 10-minute chart telegraphed Thursday's rally. Once the S&P remained in the green after the first hour, it was a good bet that we would get a trend day up.

With Thursday's rally, the S&P has whipped back above the wedge on the short-term chart that we've been showing, and in the process, the index has attacked its overhead resistance at its 20-day moving average with a close of 1273.85 -- right on that moving average. Now the test will be to see if the S&P will slice back through our key pivot of 1275 and hold after the first hour on Friday.

So far, the test of Friday's low looks good, especially with many names showing piggyback large-range days -- such as CheckFree (CKFR - commentary - Cramer's Take) and Nucor (NUE - commentary - Cramer's Take). Moreover, the bulls would love to put the pedal to the momentum metal going into the end of the month, to buff the January Barometer and to squeeze out a close back above 1275 on the important Friday close.

The bulls would love to accomplish a mirror image of last Friday's free fall. However, I would be patient as the market has still not confirmed that it's out of the woods. And, if momentum falters on Friday, traders may bail after the nice bounce back in stocks rather than carry them home into the weekend. So the late action on Friday will be important.

That said, the names we highlighted yesterday such as SanDisk (SNDK - commentary - Cramer's Take), which was down solidly and made a nice reversal after selling off, and Cephalon (CEPH - commentary - Cramer's Take) came back like gangbusters. Ditto some of the oils such as Schlumberger (SLB - commentary - Cramer's Take).

Moreover, Apple (AAPL - commentary - Cramer's Take) was up a point from its close when I wrote this and may bounce back nicely after tagging its 50-day moving average

Conclusion: These ingredients portend well for a continuation of rally mode on Friday. But, as you know, when what is expected by the tale of the tape doesn't play out: Duck.

S&P 500 Daily

(In the chart below, the S&P (A) broke a wedge (B) but has now flipped back above it (C). However, resistance from a downtrend shows-up at 1279.)

S&P 500 60-Minute

SanDisk (SNDK:Nasdaq)