Stocks rally but could be heading into period of weakness

Stock markets started the week strongly.

The gains came early. In China, the Shanghai Composite Index jumped 4.9 percent on Monday on speculation that the government will start a new round of consolidation among state-owned companies.

Europe followed with the STOXX Europe 600 Index rising 0.7 percent.

In the US, the S&P 500 rose 1.3 percent while the Dow Jones Industrial Average climbed 1.4 perent to end its longest losing streak since 2011.

However, JPMorgan Chase's technical analysts think that investors should not get too excited about the latest rally. From Bloomberg:

The bank's Jason Hunter and Silvia Seceleanu have a note out saying that the tight trading range in which the U.S. equity market has been trapped this year could give way to a period of weakness heading into the fall.

They point to recent declines in consumer-discretionary and health-care stocks as a bearish signal, since the market-leading groups were the last two major industries to hang onto bullish price trends.