Despite a volatile start to the month and geopolitical tensions weighing on global markets, technical analysts at Fundstrat believe the worst of the equity sell-off may finally be in the rearview mirror.
While the Dow Jones Industrial Average faced a sharp 700-point stumble on Thursday amid surging energy prices, the resilience shown earlier in the week has caught the attention of market veterans.
Technical strategist Mark Newton suggests that the recent surge in major averages indicates a structural shift in market momentum, hinting that the “bottoming process” for the current correction is officially underway.
Technical resilience and the ‘short covering’ myth
The recent bounce in US equity indices was more than just a fleeting relief rally or a product of automated short-covering.
According to Mark Newton, the intensity of the two-day surge earlier this week – which saw the S&P 500 post its strongest performance since May – offered substantial evidence of a shift in investor sentiment.
While Newton noted that the “bounce failed to give any green lights to buy at the lows,” he argued that the price action was too significant to be ignored.
Instead of a desperate dash to cover losing bets, it signaled a foundational stabilization.
Newton remains “not convinced anymore that US indices require a further move back to new lows,” signaling that the market’s floor may have already been established.
Global market coordination and correction recovery
The narrative of a market bottom is not limited to Wall Street; a synchronized recovery appears to be taking shape across international borders.
Fundstrat’s analysis highlights that indices in Europe and Asia are flashing convincing signals that have “brightened the overall technical setup.”
European markets kicked off the month with a vigorous rebound, and Japan’s Nikkei has shown remarkable strength, mirroring the recovery seen in the US.
This global alignment provides a cushion against domestic volatility, suggesting that the broad-based sell-off seen in March – the worst for the S&P 500 since 2022 – is transitioning into a phase of healthy consolidation.
Newton views this progress in global indices as a vital indicator that the macro-environment is slowly healing from its recent lows.
Navigating near-term volatility and April targets
While the outlook has turned cautiously optimistic, the path toward new highs is unlikely to be a straight line.
Newton anticipates that the weeks ahead “could still prove volatile,” especially as the market digests fluctuating oil prices and the de-escalation of the US-Iran conflict.
However, he believes that a period of consolidation between April 5th and April 9th would actually be beneficial, as it would “help to create a better risk/reward opportunity in the short run vs. trying to chase this two-day bounce.”
By allowing the market to breathe and stabilize at these levels, investors can avoid the traps of emotional trading.
Ultimately, the orderly nature of the recent correction suggests that the “bottoming out” process is more about building a base than surviving a crash.
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