Piper Sandler is cautioning investors against rushing into the latest S&P 500 rebound, warning that market conditions remain fragile despite recent gains. Analyst Craig Johnson advised staying cautious, noting that conviction in the recent move higher has been weak.

Johnson pointed out that both the S&P 500 and NASDAQ continue to languish below their 50-day moving averages, leaving the risk of another leg down in place. The firm observed that the bounce lacked follow-through, with major indexes giving back nearly half their gains by Tuesday afternoon.

Piper Sandler described the current environment as a "rotational bull market" that still rewards dip-buying, but warned that momentum indicators are cooling. The firm recommended using the relief rally to trim laggards in Tech and Consumer Discretionary rather than aggressively chasing the bounce. While Energy remained a bright spot with crude oil poised for a breakout above $66, several large-cap stocks have seen RSI levels move into oversold territory, potentially setting the stage for a relief rally.