The stock market is off its session high, but is still boasting impressive gains halfway through Friday's trading session.

The S&P 500 ended higher by 1.09% at 2,970, the Nasdaq rallied 1.34% and the Dow climbed 320 points or 1.21%. The Russell 2000 led the way, finishing higher by 1.9%.

Investors are seeing Thursday's rally spill into Friday, as optimism about a trade deal has investors looking for more upside. Given that the market has been bubbling just a few percent under its highs, any sustainable rally could vault equities to new highs.

Can we get there on a trade deal?

The trade situation cuts both ways. When tensions are escalating, stocks come under pressure. When it looks like there will be a deal and/or talks are going well, equities tend to rally. But because much of this news breaks on Twitter (TWTR - Get Report) or overnight, it can create frustration among traders and additional, unforeseen volatility.

Let's look at the charts to see what's next.

Trading the S&P 500 Near All-Time Highs

Daily chart of the S&P 500 ETF (SPY).
Daily chart of the S&P 500 ETF (SPY).

Given that the SPDR S&P 500 ETF (SPY - Get Report) is the most popular trading vehicle for the S&P 500, let's look at the chart for the SPY.

When the SPY tumbled lower to start the month of October, uptrend support (blue line) and the 78.6% retracement held as support. After a few choppy sessions, the SPY was able to reclaim August resistance and the 50-day moving average on Thursday's rally. On Friday, the SPY is clearing the 20-day moving average and short-term downtrend resistance (purple line).

So what now?

The SPY is finding resistance, even though it's not up to $300+ yet. Instead, the Fed-day range (blue box) is slowing the stock market rally. Of course, after two robust days of gains, it could simply be a lack of buyers in the short-term that is weighing on Friday's pullback from the day's high.

From here, two options for the SPY include a breakout over the Fed-day range and $300, or a pullback into support.

If it's the former, look for a close over $300 and a push to the current high made last month at $301.24. The SPY has both the momentum-measuring MACD (bottom of the chart, blue circle) turning bullish, while the RSI (top of the chart, blue circle) has plenty of room to run before indicating an overbought condition.

On the flip side, bulls would still be OK if the SPY were to pullback -- so long as it finds support between $292 and $294. There it has the 50-day and 20-day moving averages, respectively, as well as former August resistance.

There are other possibilities beyond a $300 breakout and a $292 breakdown, but until one of those two things happen, mapping out the possibilities may prove futile. Let's wait for one of these moves, first.

This article is commentary by an independent contributor. At the time of publication, the author had no positions in the stocks mentioned.