“When the Facts Change…….”

I do so to sir. What do you do.” Winston Churchill was not opining on the stock market, but the statement could be relevant to Friday’s PRICE action. Now do not call me a raging bull, but could this be the start of a nice countertrend rally? Of course, it can. It could be a strong move into earnings season about a month away, where the downtrend could resume or could be the start of a bountiful move higher. Firstly one has to give credit to the bulls (and bears running for cover), stepping up with the reversal on a Friday, especially into a holiday weekend. Was it yield-related? For sure, but we were very oversold with at one point recently less than 10% off S&P 500 names trading above their 50-day SMAs. If the Nasdaq is going to sprint away it is going to need a contribution from the chart below of the SMH. The chart’s complexion became a little brighter after Friday’s session as it is now breaking ABOVE a bearish head and shoulders formation and could be forming a double bottom pattern. The bulls received the big follow-through session they were looking for. How long will it last?

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