Fundstrat says a bottoming process in stocks has begun

Stocks have started their bottoming process, according to Fundstrat. The major averages surged earlier this week, with the S & P 500 posting its best day since May on Tuesday, and then gaining again on Wednesday , amid rising hopes the U.S.-Iran war will soon wind down. That rally paused on Thursday, with Dow Jones Industrial Average futures tumbling more than 700 points as oil prices surged. However, that two-day streak earlier in the week gave technical strategist Mark Newton enough evidence that the stock sell-off will soon come to an end, even if there is more volatility over the near term. “While the two-day US Equity index bounce failed to give any ‘green lights to buy’ at the lows, this price action cannot be simply brushed off as short-covering,” wrote Newton. “Some consolidation into April 5-9th would help to create a better risk/reward opportunity in the short run vs. trying to chase this two-day bounce.” “Yet, I am not convinced anymore that US indices require a further move back to new lows, and very well could be bottoming out,” Newton wrote. .SPX YTD mountain S & P 500, YTD Despite the sell-off being broad in nature, it has been orderly. The S & P 500 fell 5.1% in March, its worst monthly performance going back to 2022. Both the Nasdaq Composite and Dow have tumbled into correction territory. Yet, in all cases, the sell-off has yet to prove as bad as feared with oil above $100 a barrel. A look abroad shows further signs of a bottoming out in stocks, with indexes in Europe and Asia showing convincing enough rallies that have brightened the overall technical setup, the strategist said. European stocks kicked off the month with a major rebound . Japan’s Nikkei has also bounced back strongly this week. “I still find it difficult to call for a move back to highs right away and feel like the weeks ahead could still prove volatile,” Newton wrote. “However, it’s important to take note of the progress happening in indices around the globe.”