Mark Newton: Monday's U.S. Stock Rally Was a Dead-Cat Bounce, Downside Risk Extended to October

According to Mark Newton, Fundstrat's chief technical strategist, Monday's (June 8) U.S. stock market rally—following Friday's sharp decline—was not a trend reversal but a "dead-cat bounce." The Nasdaq Composite rose 0.9% and the S&P 500 gained 0.3%, far below Friday's declines of 4.2% and 2.6% respectively. Both indexes briefly climbed around 1% intraday but closed below their opening levels, signaling further weakness ahead.

Newton warned that Fundstrat's "S&P 500 Cyclical Composite Index" has topped and turned negative, with weakness likely persisting through late July. Citibank's technical analysis team confirmed the outlook, noting that the S&P 500, Nasdaq 100, and Philadelphia Semiconductor Index all formed bearish outside weeks on Friday, a pattern historically associated with further declines in the following two weeks.