We'll help you map out a plan to fix the problems in your trading and get you to the next level. Answer a few questions on our application and then choose a time that works for you.
BOOK YOUR FREE STRATEGY SESSION NOW >>How did the financial markets end the year in 2021?
What were the most important trends of this first week of 2022?
In today's video, you'll find a short but comprehensive overview of the returns of the main financial sectors over the past year: stock indexes, bonds, energy markets, metals, soft commodities, grains, currencies, and cryptocurrencies!
Not only that. We'll also talk about the stock indexes' volatility (historical and implied) and the futures rollovers for the coming week.
If you want to learn more, check out our weekly overview now!
Enjoy! 😎
Hey everyone! I'm one of the coaches of Unger Academy and this is our usual weekend chat about the market trends. We've stopped for a few days due to the holiday season. The markets were very illiquid, so it really didn't make much sense to investigate their trends.
So this year, 2022 didn't start in the best possible way for stock indexes. In this chart, you can see the Nasdaq, which has lost 3.20% over the last couple of days. It has already fallen by about 5% compared to the high it touched at the end of the year.
The Mini S&P 500 did a little better. Here it is. It's also going down but less than the Nasdaq. On the other hand, the European stock exchanges are doing better.
If we take a look at the annual returns of the stock indexes, we see that it's been a good year for all of them. Since the beginning of 2021, the Mini S&P 500 has grown by 25%. Its performances at the end of the year were certainly more interesting because we were approaching a 30% return, but all in all, we can certainly say that 2021 was a good year for the stock indexes.
Bonds also went down this week, so both stock indexes and bonds went down. These two markets are usually inversely correlated, but partly due to the fears of increasing rates in the US, the T-Bond fell by 3% and the Treasury Note by 1%.
However, if we look at the medium-long term chart, we see that all the bonds are going down, including the Bund. And even on a longer time horizon - that is, a one-year horizon - we see that 2021 was a negative year for bonds.
On the other hand, the energy sector has done very well. If we look at the returns, we see that Gasoline went up by 80%. Crude Oil by 60%. Heating Oil by 58%. And Natural Gas by 24%. So the energy sector really did well, and it also performed very well over the last 5 days.
On the other hand, as we have already pointed out several times, the metals sector is going through a phase of weakness. As you can see, the returns are negative. Actually, the only metal that has shown positive returns since the beginning of the year 2021 is Copper. And as you can see, the trend of this sector was negative also over the last 5 days.
Now let's take a look at some interesting markets in the soft commodities sector... We've got Coffee, for example. If we look at its one-year performance, we can see excellent returns. Actually, we have a 76% climb from the beginning of January 2021 until today. And it also did very well this week, going up by 6%. Cotton was another commodity that has performed very well, growing by 43% in the last year and by 3% over the last 5 days.
Let's move on to the Cereals. Soybean Oil certainly did very well, especially in the first part of the year. To date, it has gone up by 70%. And let's not forget Corn, which moved in a slightly more regular way and ended 2021 very close to its all-time high.
As far as currencies are concerned, there are many currencies that are showing some weakness against the dollar. The euro lost about 7.5%, for example. And the Japanese yen lost 10%.
Moving on to cryptocurrencies, we can say that the year 2021 has been decidedly volatile for these markets, as we can see remarkable swings both up and down. However, if we look at the returns over the last year, we can see that we are more or less on the same levels as one year ago, so the price of Bitcoin didn't change that much. We know that cryptocurrencies are some of the weakest financial sectors at the moment.
Let's move on to the historical volatility of the stock indexes. As you can see, short-term volatility - so the volatility over a time horizon of one month - is going down. However, although we can see a slight decrease in historical volatility, it's still very high compared to the last year's levels.
As for the term structure of implied volatility, we can see that despite the latest downtrend in the stock market, the structure is still in contango, which means that this downtrend had little impact on implied volatility. So we can say that right now, there are no signs of concern about how the financial markets will move.
Now let's take a look at the rollover calendar. The VIX and Crude Oil futures are getting close to their expiration dates. So we'll have to roll them over next week. First, we'll roll over the VIX future, on the 12th, and then the Crude Oil future, on the 14th.
Alright, guys, this first market overview of 2022 is over. But before we say goodbye, I remind you that, if you're interested in systematic trading, in the description of this video, you can find a link to a webinar by our founder Andrea Unger, who explains how he succeeded in winning 4 World Cup Trading Championships with real money. In this webinar, Andrea explains a lot of what he's learned trading the markets, so I'm pretty sure you're going to find it very interesting.
We'll see you next week! And until then stay safe! Bye-bye!
We'll help you map out a plan to fix the problems in your trading and get you to the next level. Answer a few questions on our application and then choose a time that works for you.
BOOK YOUR FREE STRATEGY SESSION NOW >>Hi, I'm Francesco Placci, a professional trader since 2005 thanks to the systematic approach to the markets.
My skills range from trading on index futures to bonds, from stocks to commodities, with a particular focus on volatility and options, which I consider to be among the most versatile and fascinating instruments available to traders.
After an experience with leading Italian credit institutions where I learned the basics of institutional finance, I became a successful independent trader, with great personal satisfaction.
Founder of Algoritmica.pro, in 2019 I joined Unger Academy as head of Research and Development.
