Hey everyone, welcome back! One of the coaches at Unger Academy here, and this is the usual weekend chat about market trends over the past week.
Okay, so we can say that it was a week of light and shadow in the markets. There are positive events, such as the recovery of the stock indexes that seemed destined to continue their downward trend, the downward trend of the last three weeks.
We have a fairly stable bond market overall.
Natural Gas prices have dropped significantly in both the U.S. and Europe.
And we also had a slight recovery of the metals market. Prices have risen this week, although the metals sector is still in a downtrend.
However, on the other hand, we have seen an increase for Grain prices, which is of course a negative thing. Nonetheless, prices are still at a reasonably low level, nothing like what we’ve seen with the outbreak of the crisis due to the war between Russia and Ukraine.
But let’s go in order and start as usual with the equity indexes.
This chart shows the Nasdaq, which in this moment is up about 1.40% this week.
The Mini SP, also positive with an increase of +1.7%.
The European stock exchanges are also positive, so Eurostoxx and Dax, albeit with more modest returns.
We see that in the last three days, the stock market has had three consecutive up days, which is almost a rarity, you know, but still, the underlying trend seems to be bearish.
As for volatility, it is at a very low level compared to the last six months.
However, if we extend the time horizon and go back even a year, we see that the current volatility level is quite high, I mean, all things considered.
And that picture holds true for pretty much all stock indexes.
In bonds, we’re seeing some stability. There are still declines, but they are pretty small. The T-Bond has lost -0.49% and the 10-year U.S. bond is down by -0.12%.
On the other hand, the 10-year European bond, so the Bund, did worse and is currently losing -1%.
Moving on to the energy market, we’re seeing stable prices in oil. Little has changed from last week for both Crude Oil and oil derivatives.
On the other hand, I want to show you the 13% drop in Natural Gas.
We know how much energy costs affect the economy, so this is definitely good news.
I’d also like to show you the evolution of the European gas price, which has fallen sharply from August 26 until today. So, from 325… 333 euros per megawatt hour to 207.50.
Then we have a sign of life from the metals market, but it remains a weak market despite the increases this week. This is clear if we look at the one-year, the three-month, and the one-month returns. This week, however, we see only increases… except for Gold, whose prices have remained relatively stable.
Nothing noteworthy to report in the meat market.
So let’s move on to the soft commodities. We see that Orange juice is retreating from last week’s highs.
Cotton, another commodity that has rallied so much over the past year, along with Orange juice, is currently showing negative returns and is at -3.50%.
Grains are rising, particularly wheat, which is up +6.86% this week. But as I showed you at the beginning of this video, these prices are back to pre-crisis levels, so they aren’t particularly worrisome from a macroeconomic perspective.
In terms of currency developments, the Euro-Dollar is recovering somewhat against the… I apologize, the Euro is recovering slightly against the US Dollar.
This happened for all the other currencies apart from the Japanese Yen.
Finally, a sign of life from Bitcoin, showing a nice bullish bar today. Let’s see if it will be a flash in the pan.
So for now, these levels, these lows that have been recently touched, are holding. But let’s wait and see if after this consolidation, the price of Bitcoin and cryptocurrencies more in general will be able to reverse the underlying trend, which is currently clearly bearish.
Now let’s take a look at the volatility term structure.
This chart shows the Mini SP 500 as an index with the various volatility indexes underneath. So the Vix, the 9-day Vix, the 3-month Vix, the 6-month Vix, and the 1-year Vix.
We can see that we are currently in full contango, meaning that short-term volatility is lower than long-term volatility, indicating normality and the absence of turbulence in the stock markets.
Alright, let’s turn over to the… let’s turn now to the rollovers scheduled for next week.
As a reminder, next week, we have the third Friday of the month when stock index futures expire.
We have already rolled the US futures while as early as the 13th of next week, it will be possible to roll over the Dax and EuroStoxx, a few days before their expiration date.
Finally, the 14th is the recommended date to roll over the Vix. And the 15th is the recommended date for the Crude Oil Future.
Okay, guys, that’s it for today. Before we say goodbye, I’d like to remind you that if you’re interested in systematic trading, by clicking on the link in the description, you’ll have the opportunity to see a free presentation by Andrea Unger, where he’ll introduce to you his trading method, known as the Unger Method, which he has used to win the World Cup Trading Championships in real-money trading four times.
You also have the opportunity to obtain, covering only the shipping costs, the best seller "The Unger Method" or to book a free strategy consultation with one of our tutors.
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We look forward to seeing you next time. Until then, have a great weekend! Stay safe, buy buy!
