BCA Research says that global equities are oversold, but they aren’t likely to rebound without positive news to dampen the selling pressure.

“The ongoing rise in crude oil prices and persistent credit market turmoil has shaved more than 10% off the global stock market index since mid-May,” the independent research firm says in a research note.

BCA says that its composite technical indicator dropped back into clearly oversold territory last week, “suggesting markets have entered a convulsion phase during which stocks seem likely to re-test their March lows.”

“Equities face two stern tests this week, with the S&P 500 hovering just above its 2008 closing low and the ECB threatening to raise interest rates when it meets on Thursday. A breach of the S&P 500 low and a rate hike with hawkish rhetoric from the ECB could force a further capitulation by equity investors,” BCA adds.

“Relief on the oil price front represents the main source of potential support for equities in the near term,” it suggests. “Equities are still technically vulnerable in the short term.”