From the Trading Desk: 4-14-2025
The Weakness in equities, the US Dollar, Commodities and Bonds paints a cautious picture!
Markets across the board are flashing yellow, caution signals as equities, the dollar, commodities, and even bonds struggle to find footing. The trend in equities remains negative, suggesting the recent rebound lacks conviction. The Dollar Index continues to weaken, and the commodity index is also trading in bearish territory, further reinforcing the idea that we may be entering a more defensive phase of the market cycle.
The proprietary Stipelis Equity Index Indicator has recently run into a technical ceiling. Even on days when equities managed to rally, such as this past Friday, the move came on significantly lower-than-average volume—casting doubt on the strength and sustainability of any upside. This lack of participation is a red flag, signaling that institutional buyers may still be on the sidelines.
In the currency space, the Stipelis Forex Complex is staging a rally, which reflects continued softness in the U.S. dollar. A declining dollar often points to broader macroeconomic stress, and when paired with weakness in equities and commodities, it suggests that risk appetite is falling. This type of coordinated move across asset classes is often a precursor to more meaningful corrections or periods of economic slowdown.
On the fixed-income side, our bond index has shown signs of life after enduring five straight days of selling pressure. The recent bounce could be viewed as a flight to safety, but the broader weakness in the bond market remains a concern. When equities, commodities, and bonds all exhibit volatility or weakness simultaneously, it typically reflects uncertainty in the underlying economy.
From a macro perspective, the convergence of weakness in the U.S. dollar, commodities, and bonds increases the probability of a slowdown or recession. These signals, particularly when they appear together, are often early warnings for investors to consider reducing exposure to high-beta or cyclical assets and to think more defensively.
At Stipelis, we are closely monitoring these trends and caution against assuming that the recent pullbacks are over. While markets may offer short-term rallies, the broader structure continues to look fragile.
Until we receive clear signals that the correction has run its course—such as stronger volume on up days, improving breadth, and resilience across asset classes—it may be premature to shift into a more aggressive investment stance.