Market Extra: Watch out for ‘dead cat bounce’ in stocks because there’s more pain ahead: Morgan Stanley’s Wilson

Terrance Horan/MarketWatch
Is it a rebound or a dead cat bounce?

October is living up to its infamous reputation as a volatile month for stocks with major indexes down sharply and there is likely more pain ahead for investors, according to one prominent Wall Street analyst.

The recent rebound “was a dead cat bounce,” said Michael Wilson, an equity strategist at Morgan Stanley, in a report. “We look for confirmation with a definitive break of the S&P 500 through its 200-day moving average.”

After eking out gains last week, the S&P 500 SPX, -0.23% is trading below the 200 DMA of 2,768 Monday as stocks struggle for direction with third-quarter earnings cycle picking up pace.

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