Oil Is Collapsing. Fundstrat’s Technical Read on What's Next.
Audio Brief
Show transcript
This episode covers a market update from Fundstrat head of technical strategy Mark Newton, who reviews the recent extraordinary market rally and provides a near term roadmap for equities. There are three key takeaways to consider today. First, expect a minor equity pullback followed by consolidation. Second, exercise caution in the energy sector as crude oil declines. Third, avoid assuming cryptocurrencies will follow the recent equity rally.
The recent equity market recovery was historically rapid, moving from a one hundred day low to a two hundred day high in just eleven days. However, this was likely a garden variety correction rather than a major bottom, as it lacked true volume capitulation and extreme oversold conditions. As a result, technical analysis points to a period of consolidation. Investors should anticipate a minor market pullback of three to five percent between mid April and mid May, which could present a more favorable entry point.
The performance of crude oil remains a critical indicator. Crude prices are expected to continue declining over the next month, alleviating inflationary pressures but warranting caution for new energy sector positions. Meanwhile, digital assets are currently exhibiting a different technical pattern than equity markets. Cryptocurrencies have not broken their downtrends and may need to hit new lows before finding a sustainable bottom.
That concludes this market update, reminding investors to wait for strategic entry points as markets digest recent violent rallies.
Episode Overview
- In this market update from April 16, 2026, Mark Newton, Head of Technical Strategy at Fundstrat, reviews the recent extraordinary market rally where indices moved from a 100-day low to a 200-day high in just 11 days.
- He analyzes the technical factors surrounding the recent low, including the lack of extreme oversold conditions or true capitulation, suggesting it was a "garden variety correction."
- The episode provides a near-term roadmap for equity markets, predicting a short-term pullback followed by further consolidation, offering strategic advice on timing entries.
- He also touches upon the cryptocurrency market, noting its divergence from equities and suggesting new lows might still be needed before a true bottom is reached.
Key Concepts
- The recent market correction was relatively mild and lacked the typical signs of a major market bottom. Newton emphasizes that despite the rapid recovery, the market never reached truly oversold levels on a weekly or monthly basis, nor was there evidence of volume capitulation, making this a "garden variety correction" rather than a panic-driven bottom.
- Market consolidations are expected after rapid, violent rallies. The "V-shaped" recovery witnessed over the past couple of weeks is unusually fast, and technical analysis suggests that a period of backing and filling, or consolidation, is the normal and expected next phase before new highs can be sustained.
- Cryptocurrency markets are currently exhibiting a different technical pattern than equity markets. While some believe the two are highly correlated, Newton points out that crypto did not bottom in February and still hasn't broken its downtrend, suggesting that crypto may need to make new lows before finding a sustainable bottom.
- The performance of crude oil is a critical indicator for equity market bottoms. A peak and subsequent decline in crude oil prices can alleviate inflationary pressures and often precedes or coincides with a bottoming process in equity markets, as seen in recent weeks.
Quotes
- At 1:00 - "It's actually one of the first times in about almost in history where the markets have been able to go from a 100-day low to a 200-day high in 11 days." - Highlighting the historical rarity and extreme velocity of the recent market recovery.
- At 1:42 - "We also didn't really truly get oversold... when you look at a weekly or monthly basis, we were never really all that oversold. We also didn't really see proper evidence of capitulation." - Explaining why the recent low might not represent a major, long-term market bottom.
- At 3:08 - "In general normally we see consolidation after big moves like this. We can't just continue to go straight up to 7300." - Teaching that rapid market advances usually require a period of rest and consolidation to be sustainable.
Takeaways
- Anticipate a minor market pullback of 3-5% between mid-April and mid-May, which could present a more favorable, lower-risk entry point for investors who missed the initial bottom.
- Exercise caution when considering new positions in the energy sector, as crude oil prices are expected to continue declining over the next month.
- Avoid assuming that cryptocurrency will follow the recent equity rally; technical patterns suggest holding off on aggressive crypto purchases until downtrends are broken.
