Dow climbs back above June low, but it’s still a ‘buyer beware’ market backdrop

The Dow Jones Industrial Average DJIA, +2.19% surged 722 points, or 2.5%, to extend the previous session’s 765-point bounce off the 17-month closing low on Sept. 30. The two-day, 1,487-point rally takes the Dow back above the June 17 closing low of 29,888.78, the break below of which on Sept. 23 helped kick off a new phase for the current bear market. Falling below the June low had also trigger a sell signal based on the century-old Dow Theory of market analysis. Meanwhile, the S&P 500 SPX, +2.44% closed back above its June low on Monday, a week after closing below it, and the Nasdaq Composite COMP, +2.68% closed back above its June low on Monday, one session after closing below it. The rallies back of the June lows doesn’t necessarily mean the bear market has bottomed. “While conditions appear ripe for a relief rally, we continue to believe it is a buyer-beware backdrop until there is more evidence of a bottom being made (along with signs of interest rate and dollar stabilization),” Craig Johnson, chief market technician at Piper Sandler, wrote in a note to clients.