When Mike Wilson turns tactically (and relatively) constructive on equities, you might be inclined to think all’s temporarily right in the world.

I’m just joking. Despite his reputation as a bear, Wilson has in fact turned overtly bullish at many key inflection points for stocks over the years including, most recently, just prior to the October rally which is still intact.

That said, Wilson certainly isn’t shy about expressing skepticism when equities become disconnected from the fundamentals, so when he pivots from a bearish stance — even if such a pivot is tentative, begrudging and/or tactical — people notice. This week was no exception.

But Wilson’s latest note was hardly a ringing endorsement of a situation he still views as a bear market rally. In addition to reiterating his cautious (to put it mildly) take on earnings, he also noted that “from a technical standpoint… the longer-term uptrend that began after the GFC in 2009” has been “critical” for resistance and support for nearly a decade and a half.

Since late last year, it’s been a resistance line, he said, flagging 4150 (or thereabouts) as a potentially important level.

Clearing that level sustainably will likely require two things, according to Morgan Stanley’s US equities team: Lower 10-year US yields and a weaker dollar.

If you don’t like technicals (which I don’t), you needn’t worry: No lines are necessary to come away with the same general conclusion. Stocks have been struggling to break out of a “choppy” environment, and higher long-end yields are an albatross, as is dollar strength.

Remember: A weaker dollar is a boon to the global liquidity impulse and lower yields ease financial conditions. 10s recently retraced the entirety of the rally that began with a favorable CPI report in early November and the dollar has rebounded from what counted among the largest 12-week declines ever. Those developments are headwinds, but given the high bar for upside data surprises from here and the likewise high threshold for additional hawkish escalations in STIRs, some believe the dollar and longer-end yields are biased lower for now.

To recapitulate, we’re at something of a crossroads: If the data continues to surprise to the upside, the Fed will have to lean hawkish, and that could easily put a floor under the dollar, but January’s data will prove a tough act to follow, as detailed in the weekly+.

“The need for a near-perfect run of reports to justify current [Fed] pricing probably leans towards a slightly weaker dollar over the near-term, but this comes with a non-trivial risk of a more significant, indiscriminate move higher if the data keep 50s on the table,” Goldman’s Kamakshya Trivedi said, referring to the (however remote) possibility that the Fed could re-escalate to half-point hike increments.

“While there appears to be a high bar to go back to 50bps increments, we also see little incentive for the Fed to want to push back much on the market pricing some probability of a more aggressive approach,” Trivedi went on. “We therefore expect the Fed to let the data ‘testify.'”

And “testify” the data will this week. Jerome Powell will likewise testify — literally, on Capitol Hill.

As for yields, the macro and policy read-through of the labor market figures obviously matters a lot, as does Powell, just as they do for the dollar. But there’s a technical setup too. “Much of February was spent with 10-year stochastics deep in oversold territory, and with last week’s price action this has shifted [with] momentum now decidedly favor[ing] lower yields in the 10-year sector with ample room to extend before risking overbought conditions,” BMO’s Ian Lyngen and Ben Jeffery wrote Monday, adding that “the move into the 4.0-4.1% range for 10s was significant insofar as it was followed by meaningful buying… consistent with anecdotes suggesting there is dip-buying interest if/when the benchmark reaches a 4-handle.”

Meanwhile, JPMorgan’s Nikolaos Panigirtzoglou cautioned that cash demand from the so-called “precautionary motive” could rise in the event “ongoing inflation pressures raise the risk of a ‘boiling the frog’ scenario [wherein] central banks are unable to pause and have to raise rates materially.” If cash demand increases, excess money supply+ would contract, all else equal. That’d be bearish in the same way the net global liquidity impulse since October was bullish.

Coming full circle to Wilson, his assessment was straightforward. “In the absence of a weaker dollar and lower yields, this bear market rally will fail,” he said. “Our view remains the same — the bear market is not over — time will tell.”