Hey everyone, welcome back! One of the coaches at Unger Academy here, and this is our usual chat we have in the weekends about the market trends over the past few days.
Now, this has not been one of the best weeks in the markets. There’s an apparent prevalence of red and negative signs in the 5-day returns of the major asset classes.
So let’s start with the stock indexes: the Nasdaq is losing 2.21% at the moment. The Mini S&P, -1.65%. The Eurostoxx is also performing very poorly at -2.30%. The Dax is slightly better, -0.33%. Anyway, all negative 5-day, 1-month, 3-month and 1-year returns. So, this reflects well the underlying market trend, which doesn’t seem to have bottomed out yet.
Despite the declines in recent days, volatility, although it has certainly increased over the past month, hasn’t reached exceptionally high levels. Let’s go and look at the chart of volatility measured as standard deviation. All in all, we are still at pretty low levels.
As for the bond market, returns are negative here as well. -2.27% for the 30-year U.S. bond. -1% on the 10-year U.S. bond. -1.14% for the Bund. So negative returns on both equities and bonds.
Very bad for energy, especially Heating Oil, but also Crude Oil and RBOB Gasoline, and a little bit also Natural Gas, which remains near the highs.
Bad for metals too. We know it’s an asset class that has suffered so much and continues to have negative returns over all periods, similar to the stock market. And yeah, it’s one of the weakest asset classes.
As for Meat, we have got slightly positive returns.
As for soft commodities, the returns are mixed. In particular, Orange Juice is near the highs, so it bounced back near the highs it reached recently. Everything else is negative, especially Cotton, -8%.
Returns are also mixed for Grains. We don’t see particularly noteworthy results. Maybe Soybean Meal, at -3%. But this market has been more or less sideways over the last week.
The US Dollar, on the other hand, is strong against all currencies. We have a Euro-Dollar in a slight countertrend. Currently, the last traded value is around parity, which is the value of 1 Euro against the US Dollar. But in general, we see a strong dollar against all other currencies.
Bitcoin also shows weak performance and is essentially unchanged, -1% from last week. We are back at the recent lows. Let’s see if these lows hold or will be crossed, as on previous occasions, and we will see further bearish prices. Indeed, the entire cryptocurrency market is definitely suffering quite badly at the moment.
On the other hand, as far as volatility is concerned, we’ve already talked about the historical volatility of stock indexes, which is not exceptionally high. And the implied volatility term structure remains in contango. So volatility has increased over the last 5 days… 5 or 10 days.
However, as you can see, the Vix currently has relatively low values compared to all the importance it has reached during 2022. Thus, the volatility term structure remains in contango. The absence of panic among traders and overall volatility is still low.
Let’s look at the rollover schedule planned for next week. We have the major US stock index futures, so the Mini S&P 500, the Mini Nasdaq… Let me remind you that they roll about a week before their expiration date, unlike European stock index futures, that roll just before their expiration date on the third Friday of the month. And then finally, on September 9, we have the rollover for all major currencies.
And that’s it. Well, guys, before I say goodbye, I’d like to remind you that if you’re interested in systematic trading, if you click on the link in the description of this video you’ll have the opportunity to attend a free presentation by Andrea Unger, the only 4-time world champion in real-money trading, who will introduce you to his trading method. You will also be able to receive the best-seller "The Unger Method" by only paying the shipping costs. Or alternatively, you can sign up for a free strategy consultation with one of our tutors. So be sure to take advantage of the above opportunities.
Well guys, that’s it for today and for this week.
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And with that, we will see you again next week! Have a great weekend! Bye-buy for now!
