Stocks rally after becoming "extremely oversold" but another decline coming

Markets continued their rally on Wednesday.

The S&P 500 rose 0.4 percent and the STOXX Europe rose 0.7 percent.

Earlier on Wednesday, stocks in Japan and Shanghai surged by more than 4 percent following the overnight jump in US stocks.

The resilience of stocks lately has led even the usually-pessimistic Marc Faber to acknowledge that stocks have become "extremely oversold" and that a "relatively strong rally" is possible.

Still, Faber thinks that after the near-term rally, stocks are likely to decline again.