To keep rising, stocks need to see this: Technician

A short-term bounce may not be enough to save stocks.

According to Ari Wald of Oppenheimer, the S&P 500 is set for a relief rally to the 1,965 to 2,000 range. However, unless more individual stocks are able to break above their 200-day moving averages, investors should still be very cautious, he said.

Currently about 20 percent of stocks that trade on the New York Stock Exchange are above the 200-day moving average, according to Wald, who is waiting to see that number increase to 70 percent of stocks.

"That's marked prior resumptions of long-term strength," Wald said Monday on CNBC's "Power Lunch." "Without that, we'd be looking to sell the relative weaker names on the bounce, [including] small caps and commodities-exposed stocks."

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Longer term, Wald expects the S&P 500 to fall to 1,740 in a "healthy correction," which would be another 10 percent drop from where the index closed Monday.

Erin Gibbs of S&P Investment Advisory isn't as bearish.

From a valuation perspective, Gibbs said the S&P 500 has held support at 15.5 times forward earnings, or around 1,820. Increased worries over the Chinese and U.S. economies might drive down stock prices, Gibbs said, but the last few economic data releases have been largely positive.

She said jobless claims, new home sales, the mortgage purchase application index and consumer confidence have all been positive signals for the U.S. economy.

"I just don't see the economic numbers for the U.S. consumer to really make [stocks] capitulate that much," she said Monday in a "Trading Nation" segment. "We'd really need to see a deterioration in confidence for it to break below that."

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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

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