BCA Research warns that a sharp correction in resource stocks could be in the works.

“A potentially sharp correction in global resource stocks appears to be in the early stages,” the firm says in a new research note.

“Global resource stocks stumbled last week after surging by nearly 20% the first two months of the year,” it reports. “The sector remains vulnerable to profit taking, especially with the broad market under pressure from rising bond yields.”

BCA says that the extent of the correction will likely depend on oil and commodity prices, “which also look over-extended, although they held firm last week in part because of U.S. dollar weakness.”

“While the fundamental backdrop is still encouraging, a shakeout in resource stocks could unfold in the near term,” the BCA report concludes.