Investing.com -- The latest equity pullback appears to be nearing its later stages, according to Morgan Stanley strategist Michael Wilson, who argued that the bar “remains high for the oil spike to threaten the business/earnings cycle.”

Wilson wrote in a note on Monday that while modest near-term downside cannot be ruled out, “we maintain our view that this correction is closer to its ending stages in time and price.”

The strategist noted that the downturn is already“mature, with 50% of stocks in the Russell 3000 down at least 20% from 52-week highs.

He said the market once again moved “well in front of the risks that are now obvious,” adding that this year’s pattern resembles last year’s early warning signals.

However, he expects the current drawdown to be “notably more modest” than the prior year, though volatility may continue given geopolitical tensions.

The bank pointed to a broad trading range in the weeks ahead, flagging durable support in the 6,400–6,500 area if the 200-day moving average breaks, and resistance near 6,850.

Wilson also stated that the bank is taking profits in small caps and moving to neutral in the group for now.

Despite near-term uncertainty, Morgan Stanley emphasized that the constructive 6- to 12-month outlook remains intact.

The bank highlighted accelerating S&P 500 earnings growth of 13%, contrasting with prior late-cycle periods when oil shocks ended expansions, and noted significant fiscal support and improving business-cycle momentum.