Can the rally find new footing? Here's what you need to know
Summary
- Market rally attempt is logical after a 5% decline in S&P 500, approaching the 200-day moving average, with seasonal factors improving in late March and hope that uncertainty has peaked.
- Key to sustaining the rally is breaking the correlation between higher oil prices and lower equity prices; oil above $100-$105 is a breaking point for equities, but a range of $85-$100 is manageable based on historical comfort levels.
- Cyclical stocks, including banks, energy, and industrials, are outperforming, with value beating growth, indicating economic resilience supported by AI tailwinds and consumer strength.
- Economic data shows robustness: Atlanta Fed GDP tracker at 2.7%, low weekly jobless claims, retail sales core up 4% for two consecutive months, and industrial production up for four months.
- Modern investors are characterized by rotation into strong sectors rather than liquidation during declines, focusing on energy stocks like Chevron, Exxon, refiners, and oil services names.
- Financials are expected to drive earnings and gains in the second half of 2026, with bullish views due to consistent earnings growth and perceived under-exposure, though there is disagreement on whether they were already overweighted by momentum funds.
- Private market concerns exist but are not reflected in public market instruments like junk bond ETFs, suggesting isolated panic.
- The market is transitioning from a multiple expansion phase to an earnings-driven phase, with sector-level earnings quality and consistency looking good for 2026.
Trade Ideas
Josh highlighted that Chevron and Exxon are making record highs, refiners like Marathon, Phillips 66, and Valero are performing well, and oil services name Baker Hughes has recovered after a hit and is back in an uptrend. Investors are rotating into these energy-related stocks because they are in substantial uptrends and showing strength, ignoring traditional panic signals during market declines. LONG direction as these stocks are where money is flowing, indicating sustained investor interest and positive momentum in the energy sector. If oil prices spike well beyond $100-$105, it could break the equity market's comfort zone and negatively impact these stocks.
Brian stated that financials are going to drive earnings in the second half of the year, and both institutional and private wealth clients are under-exposed to this sector. With the market transitioning to an earnings-driven phase, financials have very good quality and consistency of earnings growth, positioning them for significant gains. LONG direction due to expected outperformance, supported by earnings fundamentals and current underweight positioning among investors. Disagreement on whether financials were already overweighted by momentum funds at the end of 2025, which could limit upside potential if positioning is more crowded than perceived.
Up Next
This CNBC video, published March 17, 2026, features Josh Brown, Brian Sullivan discussing CVX, XOM, MARA, PSX, VLO, BKR, XLF. 2 trade ideas extracted by AI with direction and confidence scoring.
Speakers: Josh Brown, Brian Sullivan · Tickers: CVX, XOM, MARA, PSX, VLO, BKR, XLF