While there is a chance it was an observation fleet, the prototype itself was aborted during takeoff, so it's unlikely it was light from the prototype itself:
“The weapon exploded during takeoff and fell back down in the range complex.”
It was very bright and over the horizon so he cannot see where it is exactly, the flash could easily be much further away than the lights he then passed over.
“The weapon exploded during takeoff and fell back down in the range complex.”