The S&P 500 on Thursday opened higher but sold off to 1,878 before recovering and then zipping sharply higher. It surged 1.7 percent to 1,921.
On Wednesday, the S&P 500 closed below 1,900 for the first time since September and broke below 1,888 Thursday — a trend line connecting October 2014 lows and lows from August and September 2015. It was also above the 1,867 closing low of 2015, which many analysts had targeted as support.
Read MoreOil prices could spike 50% higher in 2016: Analyst
Wald said Thursday’s “countertrend relief pop” would not last, and he expects a breakdown in energy stocks will continue to pressure the market.
“You really see how quickly investors are to run to the exits as soon as volatility hits,” he said.
Redler said the bounce could be the first step toward finding a bottom if it holds. “I would not say this is the low of the year, but I would hope this is the low of January,” he said.
Read MoreRed alert: A $1 trillion stock bubble ready to pop
Markets are watching a number of events Friday, aside from the global turmoil that pounded commodities currencies and equities markets worldwide. Dudley speaks at the New Jersey Economic Leadership Forum.
“I would be surprised if President Dudley didn’t make some reference to recent events, given the fact the New York Fed open market desk operates at the heart of the financial markets,” said Deutsche Bank’s chief U.S. economist, Joseph LaVorgna. “My guess is he’ll say something on the outlook, something reassuring on jobs and the economy but say recent developments are something the Fed is monitoring.”
Read MoreMarch could be off the table for Fed rate hike
Traders expect Dudley to sound dovish, and there was much anticipation that he would discuss whether he sees recent market developments as factors that could give the Fed pause. Central bank officials have forecast four rate hikes this year, but economists expect about two. The first is expected in March.
There are also two other Fed speakers Friday, but neither carries the same weight for markets as Dudley, who is seen as being close to Fed Chair Janet Yellen. San Francisco Fed President John Williams speaks on the economy at 11 a.m. ET in San Francisco, and Dallas Fed President Rob Kaplan speaks at 1 p.m. ET in Dallas.
Besides the central bank speakers, there are a number of important economic reports, including retail sales at 8:30 a.m. ET and business inventories at 10 a.m. Consumer sentiment is at 10 a.m. and industrial production is at 9:15 a.m. PPI is reported at 8:30 a.m. and the Empire State manufacturing survey is released at 8:30 a.m. ET.
There are also earnings from several important banks, such asCitigroup and Wells Fargo. U.S. Bancrop, BlackRock and PNC also report.
Wells Fargo stock fell 2 percent after its report. JPMorgan was the first blue chip bank to report Thursday, and its stock closed 1.5 percent higher on the day but that gain was reversed Friday morning. Intelreported after the bell, and even though its earnings beat expectations, its stock sank about 5 percent in the premarket.
Read MoreJPMorgan takes hit due to oil rout
Redler said Thursday’s rally was a one-day win for the bulls but the market has a lot of hurdles. “It’s a step in the right direction. We need to see more constructive action. Before they put more money to work at these levels, we need to see a lot of things transpire to build confidence for higher prices. Oil needs to get away from the $30s, and the Shanghai needs to hold above 2,800. The yen needs to see continued stability and we need to see earnings reports that don’t miss and guide lower. There’s so many headwinds ahead.”