Several technical signals suggest that the stock market is nearing oversold territory, but that doesn't mean Wall Street is poised for a true rebound, according to Canaccord Genuity strategist Tony Dwyer. The Nasdaq Composite , S & P 500 and Dow Jones Industrial Average all closed below their 50-day moving average on Tuesday. And within the S & P 500, more than 85% of stocks are below their own 50-day moving average, Dwyer said in a note to clients Wednesday.
"The fact the market is oversold doesn't mean the correction is over, it simply means the environment is ripe for a temporary bounce like mid-August, especially given the average NYSE stock is already down 30% from its 52-week high," Dwyer said. The recent rise in bond yields will put a cap on any short-term rebound, according to the strategist. "Ultimately, there needs to be a significant and sustainable drop in U.S.