Call it the crude comeback.
Oil is tracking for its second positive month of the year, and with the commodity now up 12 percent from its late June low, technician Scott Redler says we could be witnessing a major turnaround for crude and it could be a key driver for the markets this summer.
"What I'm seeing is a bounce in crude, which has pretty much been in a range all year, and crude and energy stocks have been laggards for all of 2017," Redler, chief strategic officer at T3Live, said Tuesday on CNBC's "Futures Now." Crude is down more than 12 percent this year while oil equities have fallen 13 percent.
"So for the first time potentially, it could be a focus to help the S&P actually get up to that 2,500 level because [the most recent rally has been] driven mostly by big-cap tech."
Redler turned to the charts to make his case for a bigger rally for crude. While oil has been in a "downtrend" this year, Redler stresses that the commodity has still stayed above "support" and has recently bounced back to its 50-day moving average. As a result, Redler believes that if oil can still hold $45, there could be room to run up to $51, back to its highs in May.
And a bounce in crude would be positive for energy stocks, as he sees the sector heading back to its May high.
"If we can hold just $63 in the XLE, we might be able to take back the 50-day moving average around $66, and get a little bit of a bounce to about $68," he said. That's a 4 percent rally from current levels. "[This would] be a nice move for traders, and that would also help the broader indices."
In other words, Redler sees energy stocks bouncing up to the 100-day moving average in the XLE.
Crude was up by more than 1 percent Wednesday.