The Stipelis Trading desk is monitoring warning signs as equities Rally.
After a strong run in U.S. equities, the Stipelis Trading desk is approaching the current rally with caution. The Stipelis Equity Complex Indicator has climbed in 8 of the last 9 sessions, but the move lacks convincing confirmation. Technically, several components of the equity complex appear overbought, while others are not participating fully in the rally. Notably, the S&P E-Mini futures remain below 5800 and Nasdaq 100 futures have yet to push above 20,500—levels the desk sees as critical to validate this upward move.
At the same time, the U.S. dollar is flashing concern. After a three-day bounce, the dollar reversed course and traded lower in Friday’s trading session despite stronger-than-expected nonfarm payrolls. A weakening dollar complicates the inflation outlook and may reflect growing investor anxiety over trade policy and geopolitical uncertainty.
April’s jobs report painted a mixed picture: payrolls rose more than expected at 177,000, but prior months were revised lower, and average hourly earnings underwhelmed. While the unemployment rate held steady at 4.2%, lingering worries around tariffs and hiring hesitation are beginning to surface. Businesses remain cautious, with several large companies holding back on forward guidance and workforce expansion.
The desk is weighing whether to shift from a cautious posture to a more neutral one. The soft dollar, conflicting macro signals, and technical divergence within the equity complex suggest this rally may not be built on solid ground. Until broader confirmation emerges—both in price and economic resilience—the rally looks more like a relief bounce than a durable trend.
Stephen Coleman 5-2-2025