The main focus on Friday will remain on the financial sector and the government's bailout plan, but traders will also have to digest the latest economic data.

The one key report scheduled for release on Friday is August's trade balance report. Economists expect the U.S. trade deficit to narrow to $59 billion in August from $62.2 billion in July.

On the technical side, the intermediate-term indicators are still pointing to a sell side bias, while the short-term indicators are still pointing to a sell side bias but are in extremely oversold territory following three straight days of strong selling pressure. In addition, the Dow Jones Industrial Average, S&P 500 Index and Nasdaq Composite Index all closed below their four-, 10-, 50- and 200-day moving averages again on Thursday. For the Dow and S&P 500, it was the 195th consecutive session in which they closed below their 200-day moving averages.

Due to the technical indicators, look for stocks to experience choppy trade on Friday morning with early direction coming from the performance in the overseas markets overnight. If the overseas markets move lower overnight, look for stocks to show a sell side bias at the open. Conversely, look for stocks to show a slight buy side bias if the overseas markets perform well during overnight trading. Even if the market opens lower, look for some short covering to come into the market as the session progresses following the recent sell-off. Right now any rebound should be considered a dead-cat bounce, but in the unlikely chance the S&P 500 does break back above its four-day moving average during morning trade, look for stocks to move even higher during the afternoon.

The bond market should experience another volatile session on Friday now that the benchmark 10-year note yield is trading above the key 3.75 percent level. If the 10-year yield can hold above 3.82 percent during morning trade, look for Treasuries to move lower again on Friday with the 10-year yield re-challenging the 3.88 percent level. A break above 3.88 percent should lead to a re-test of 3.92 percent soon thereafter. However, look for Treasuries to move higher on Friday if the 10-year yield moves back below 3.82 percent. That should lead to a re-test of 3.75 percent soon thereafter.