The current run up in stock prices represents more than just a relief rally, Piper Jaffray senior technical strategist Craig Johnson said Monday.
The Dow and extended gains on Monday after ending last week at two-month highs and turning in their third consecutive weekly gain.
The surge has been underpinned by better-than-expected economic data and improving market measures, he said.
Stocks have recorded the highest number of new 26-week highs since the end of 2015, and a growing number of equities are entering an uptrend, according to Piper Jaffray research.
"Over the last week, the pain trade, which had been down, has really started to flip and turn higher, as a lot of investors are really questioning whether this advance is more than just a relief rally," Johnson told CNBC's "Squawk on the Street."
"We think it is because the internals of the market are beginning to improve," he said.
Through Monday, U.S. stocks had paused after moving toward key moving averages, indicating that investors are waiting for clues about monetary policy from the world's central banks, Johnson said.
"When I come through and I look at the individual stocks and industry groups in the marketplace, I think what we're starting to see happen is rate hikes are getting priced back in," he said.
The Federal Reserve's policymaking committee meets next week to discuss the path of interest rates. Investors are also watching a European Central Bank meeting on Thursday to see if the continent's central bankers will increase stimulus spending and push rates further into negative territory.
While a March rate hike is probably off the table, the Fed could potentially move in June, Johnson said. He noted that interest-rate sensitive assets like REITs and consumer staples are beginning to sell off.
On oil markets, Johnson told CNBC on Friday that he thought the recent rise in crude did represent a relief rally.
