Dead cat bounces are a familiar feature of stock-market corrections, offering fleeting relief after sharp declines. Yet history shows these rebounds often prove temporary traps, luring investors back in just before the next leg resumes lower.

Today's rebound is being driven by Microsoft, which was up 14% in early trading. If the gain holds, it would mark the stock's largest one-day percentage advance since October 2008. The surge has lifted the Invesco QQQ Trust Series I more than 3%, putting the ETF on track to snap a six-session losing streak. While the move is impressive, outsized rallies often occur during topping phases, and August and September have historically been two of the weakest months for equities.

Now let's turn to the charts of the QQQ, the S&P 500, and the Dow Jones Industrial Average to see where these benchmarks may be headed next.

The QQQ has broken below a bearish head-and-shoulders pattern at the very round 700 level. Embedded within that formation was a bearish island reversal, completed by a 3.3% gap lower on June 23 after a 3% gap higher on June 15. Together, these signals point to weakening price action.

Momentum also flashed a warning before the breakdown. A bearish RSI divergence developed as the ETF recorded a higher price high in June while the RSI posted a lower high than it did in May, often an early indication that upside momentum is fading.

Tuesday's doji candle offered some encouragement to bulls, but this morning's 3% rebound has recovered only half of the losses from the prior six-session decline. While the bounce could extend in the near term, it is likely to prove temporary, with the QQQ eventually retesting the $650 area in the coming weeks, a downside scenario I first outlined 10 days ago.

The S&P 500, the benchmark U.S. equity index, is down 3% from its all-time high, a much smaller pullback than the Nasdaq, which now sits 8% below its peak. Even so, the ratio chart shows the index has lagged small-cap stocks.

The technical picture has also weakened. The index has broken below a bull flag pattern, while its 50-day simple moving average has begun to slope lower. It is now on track for a sixth consecutive below that key trend line, and the longer it remains there, the more challenging the technical backdrop becomes.

The next significant test is likely to come at the 200-day simple moving average, currently near 7,100, before the end of August. That level also aligns closely with the April 15 double-bottom breakout and would represent a healthy retest of prior resistance turned support, implying 4% downside from current levels.

Finally, a look at the Dow Jones Industrial Average suggests the rally may be losing momentum. July has produced a cluster of spinning tops and doji candles near the all-time highs. This combination often signals buyer fatigue and increasing indecision.

The index is now clinging to its 50-day simple moving average, and I believe round-number theory could come into play with a drift toward the 50,000 level in the near term. A pullback of that magnitude would also allow the 200-day SMA to catch up and provide a healthy retest of the May cup-with-handle breakout.

The current advance began with a bullish morning star that completed on March 31, marking the low of the base. From there, the Dow rallied roughly 8,000 points into early July, peaking just above 53,000. After such an extended move, a period of digestion would be a normal and constructive development.

Doug Busch is the senior technical analyst at Barron's Investor Circle . His technical view is added to stock picks, including those published exclusively for Investor Circle readers. A glossary of technical terms is updated regularly with new entries.