Piper Sandler warns: Don't rush to buy the dip in the S&P 500

LootboxPhobia · 2026-02-20T11:54:38+00:00

Piper Sandler warns investors to remain cautious after the market rebound, emphasizing that the current rebound lacks follow-through momentum. Analysts believe investors should use the rebound to adjust their positions rather than aggressively chase gains, and they caution that there is still a risk of decline in the market. The energy sector performed relatively well, but overall, there is a need to be wary of a low-quality rebound.

LootboxPhobia

2026-02-20 11:54:38

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Investing.com - Piper Sandler warns investors not to act too quickly after the recent market rebound, believing that despite a constructive bounce, the market landscape remains fragile.

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Analyst Craig Johnson stated that investors should remain cautious, “not to rush into bottom-fishing,” and pointed out that recent upward momentum is weak.

Johnson noted that the S&P 500 and Nasdaq are still “hovering below their 50-day moving averages,” which keeps the risk of “another decline” present.

Piper Sandler indicated that this rebound lacks follow-through momentum, with major indices giving back nearly half of their gains on Tuesday afternoon.

The firm said this context suggests investors should “use this relief rally to trim lagging stocks in the technology and discretionary consumer sectors, rather than aggressively chasing the rebound.”

Piper Sandler describes the market as a “rotation bull market,” still rewarding buying on dips, but warns that momentum indicators are cooling off. Its breadth and trend indicators have begun to slow, further reinforcing the case for patience.

The energy sector remains a bright spot, leading gains as crude oil prices rise. Johnson emphasized that the energy sector continues to improve, with crude oil potentially breaking above $66 providing support.

Piper Sandler added that several large-cap stocks’ RSI levels have entered oversold territory, which could lay the groundwork for a relief rally, but the firm insists investors should stay vigilant and avoid overcommitting to low-quality rebounds.

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