Here’s how we’ll know if this comeback rally is more than just an oversold bounce, according to technicians. Stocks surged Monday to kick off the trading week, with the major averages all up more than 1%, following reports that President Donald Trump could take a softer stance on tariffs . This comes after the S & P 500 on Friday snapped a four-week losing streak , posting a 0.5% weekly advance. But technicians are watching key levels to see if the rally is sustainable, or if it represents just a temporary bit of relief after the pullback over the last month, during which the S & P 500 dipped into correction territory . .SPX 1M mountain S & P 500 “If this bounce is more than a simple oversold move, we should expect the S & P 500 to retain 5,825,” JC O’Hara, chief market technician at Roth Capital Partners, wrote Sunday. “The first move which should be celebrated by the bulls is a successful close above 5,700 as that is the level where sellers have become very aggressive. The ability to break above that line will be a partial indication of seller’s exhaustion.” A move to 5,825 would be a 2.8% advance above where the S & P 500 closed Friday, at 5,667.56. A close above 5,700 would be a less than 1% gain. On Monday, the S & P 500 was at 5,762 at noon. Similarly, Oppenheimer’s Ari Wald said he’s waiting for the S & P 500 to reclaim resistance at 5,750, which also represents the 200-day moving average for the benchmark. He noted 5,500 is a critical support level for the broader index, while resistance is more “formidable” at 5,900, which also represents the 50-day moving average. In fact, he noted that risk leadership, in particular, is oversold, meaning this is an area where investors can add exposure. “In regards to attractive tactical conditions for risk, the High-Beta vs. Low-Volatility ratio is trading 10% below its 200-day average,” Wald said. “While we believe longer-term leadership trends are reversing toward low-volatility defensives, this oversold deviation indicates current conditions are unfavorable for risk-off, and conversely, favorable for risk-on.” Other technicians expressed more skepticism stocks could meaningfully break out from here. BTIG’s Jonathan Krinsky said he anticipates a “tactical bounce, but medium-term trouble” for stocks. Elsewhere, Wolfe Research’s Rob Ginsberg said it’s critical for the current stock rally to show it has some legs. “This past week was disappointing, as the S & P was unable to punch above 5700, try as it might,” Ginsberg wrote over the weekend. “If upside momentum fails to gain traction in the coming week, this powerful rally so many are banking on, may be a lost cause.” Get Your Ticket to Pro LIVE Join us at the New York Stock Exchange! Uncertain markets? Gain an edge with CNBC Pro LIVE , an exclusive, inaugural event at the historic New York Stock Exchange. In today’s dynamic financial landscape, access to expert insights is paramount. As a CNBC Pro subscriber, we invite you to join us for our first exclusive, in-person CNBC Pro LIVE event at the iconic NYSE on Thursday, June 12. Join interactive Pro clinics led by our Pros Carter Worth , Dan Niles , and Dan Ives , with a special edition of Pro Talks with Tom Lee . You’ll also get the opportunity to network with CNBC experts, talent and other Pro subscribers during an exciting cocktail hour on the legendary trading floor. Tickets are limited!
