The stock market’s been getting absolutely hammered lately, and honestly, it’s starting to look like a clearance sale nobody asked for. The S&P 500 is down 6% year-to-date, which sounds dramatic until you remember that most of this damage came from one thing: investors collectively freaking out about the Iran war and what it means for oil prices and the economy.
But here’s the thing—and this is where it gets interesting—a bunch of Wall Street’s smartest technical analysts are now saying the market has gotten so beaten down that it’s actually primed for a relief rally. Think of it like a rubber band that’s been stretched too far. Eventually, it snaps back.
The evidence is pretty compelling. Adam Kobeissi, who runs The Kobeissi Letter, pointed out that the S&P 500 is trading at its lowest level in 232 days. More importantly, its Relative Strength Index—basically a measure of whether something’s been oversold or overbought—is sitting around 29. When that number drops below 30, it’s basically the market’s way of saying “okay, we’ve gone too far.” Kobeissi’s calling for a 2% bounce to around 6,500.
Then there’s the 200-day moving average, which is one of those technical signals that actually matters. The S&P 500 just broke below it, and here’s the kicker: in 20 out of the last 28 times this happened, the index climbed back above that level within 10 trading days. Jay Woods from Freedom Capital Markets noted that except for the 2022 bear market, these dips have historically been great entry points for traders.
What’s really interesting is that sentiment is shifting. Mark Newton at Fundstrat Research thinks we’re just one or two weeks away from hitting bottom, with support around 6,200. Even David Rosenberg’s research firm—and Rosenberg’s usually the guy warning about apocalypse—is floating the idea of a spring and summer rally. They found that ten sectors in the S&P 500 are showing bullish momentum signals.
The wildcard, of course, is the Iran situation. JPMorgan’s strategists basically said stocks will keep bouncing around sideways until we get some clarity on whether the US and Iran are actually going to talk. But they also noted that stocks have gotten “materially cheaper,” and from a technical standpoint, we’re close to support levels. If there’s any de-escalation or ceasefire news, expect a sharp rally.
So what does this mean for you? Well, if you’ve been sitting on cash waiting for a better entry point, the market might be giving you one soon. The technicals are screaming oversold, the sentiment is turning, and even the Trump administration seems to be feeling the pain. Sometimes the best time to buy is when everyone’s convinced the sky is falling.
