Markets: Another Wave of Declines, What's Happening to Volatility?

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Negative inflation data released during the week and subsequent fears of a possible interest rate hike have negatively impacted many markets.

Almost all asset classes have negative five-day returns from stock indexes to bonds, from soft commodities to currencies.

Exceptions are Silver and Platinum (which have risen slightly despite the general downward trend in metals), Lean Hogs, the US Dollar, Soybeans and their derivatives.

To learn more about how the markets are moving and the volatility trend, don't miss our weekly overview!

Enjoy the video! 😎


Hey guys and welcome back! One of the coaches at Unger Academy here and this is the usual chat that we have every weekend about the market trends over the past week.

Alright, so this week was marked by negative returns in the markets, let's say in almost all asset classes, as shown by the prevalence of red signs on our indicator.

So let’s start with the stock indexes. The Nasdaq is losing 6.85% right now and the MiniS&P is also losing 5.50%.

European stock exchanges have done a little better. Eurostoxx lost only 2%, and the Dax lost 2.50%.

As you can see, volatility has increased compared to the last marked levels.

In fact, for all the stock indexes, we have high percentile values in the short term, and instead, we have medium-high values in the long term.

As I’m sure you know, the wave of declines was triggered by the poor inflation data released this week, which sent stock prices lower on fears of possible interest rate hikes in the future by Central banks, particularly the U.S. Central bank. And these fears also led to a decline in bonds.

And in fact, if we take a look at the bond market, we can see strongly negative 5-day returns here as well.

We see that the T-Bond is currently losing 1.41% and it seems that it has fallen to its June lows.

As far as the energy market is concerned, Crude Oil is currently losing 1.35%. So we see that it hasn’t changed much since last week.

RB loses 0.85%. On the other hand, Heating Oil is performing pretty poorly, losing -10%.

Then Natural Gas, which remains more or less at the same level as last week.

As for metals, we see that Gold is still down -3%, so this market continues to show weakness.

Silver looks a little bit better, +2%, but these are all markets with a clear downtrend.

Then here's Lean Hogs, which is performing pretty well with a +3.30%, and it is one of the few positive signs this week.

The soft commodities market also performed poorly, with Coffee down -6.71% and Cotton down about -5%.

The few positive signs include soybeans and their derivatives, with +2% at the moment.

+2.50% for Soybean Meal and +0.50% for BeanOil at the moment.

The currencies are all negative which means that the US Dollar is stronger than them all. We have a Euro-Dollar moving back towards parity, so values of 1.

And we see some strong movements here. I mean, currencies generally have lower volatility than other futures.

So there’s no doubt that these are remarkable movements. Yeah, I mean, take a look at the Australian Dollar, for example. In the last five days, it's lost 2.17%.

And still related to currencies, Bitcoin’s performance… And you see it, Bitcoin has lost 8.38% this week. So it's lost the positive momentum that gave us hope last week and has more or less returned to the lows of the last three months.

Let’s take a look at the volatility term structure. It's often a good indicator that can help us identify negative market phases and excessive investor concern.

And you know, the curious thing that we’ve been seeing also for the past few months is that despite the significant declines in the stock markets, there has been only a modest increase in volatility, but without any signs of panic.

Yes, the term structure is no longer in full contango, however, we only have partial backwardation in the shorter maturities, with the 9-day Vix being higher than the 30-day Vix.

While the rest of the structure remains in contango, with Vix values more or less in the middle of the range touched over the last 12 months.

So how should we interpret these results? Frankly, I'm a little perplexed. On the one hand, the data shows us that there is no panic among traders, so overall, it seems to be a situation that isn’t causing investors too much concern. On the other hand, however, the fact that volatility isn’t increasing despite the significant declines that we’ve seen this week could point to a further increase in volatility in the future and, therefore, further declines, even if traders aren’t showing signs of panic at the moment.

Now let’s turn to the rollover dates scheduled for next week. There are only two futures on the calendar. Sugar on September 22 and Natural Gas on September 23.

And guys, before I say goodbye, I’d like to remind all of you that if you’re interested in systematic trading, by clicking on the link in the description, you have the opportunity to view a free presentation by Andrea Unger, who will introduce you to his trading method, which helped him win the World Cup Trading Championships in real-money trading 4 times.

You can also get, by covering only the shipping costs, the best seller "The Unger Method", or book a free strategy consultation with one of our coaches. So, guys, please take advantage of it all! It's right there for you to do.

That's it for today!

I invite you to leave a Like if you enjoyed this video. And also be sure to subscribe to our channel and go and click on the notification bell!

And with that, I will see you next week! Until then have a great weekend and great week. Bye-bye!

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Andrea Unger

Andrea Unger

Andrea Unger here and I help retail traders to improve their trading, scientifically. I went from being a cog in the machine in a multinational company to the only 4-Time World Trading Champion in a little more than 10 years.

I've been a professional trader since 2001 and in 2008 I became World Champion using just 4 automated trading systems. 

In 2015 I founded Unger Academy, where I teach my method of developing effecting trading strategies: a scientific, replicable and universal method, based on numbers and statistics, not hunches, which led me and my students to become Champions again and again.

Now I'm here to help you learn how to develop your own strategies, autonomously. This channel will help you improve your trading, know the markets better, and apply the scientific method to financial markets.

Becoming a trader is harder than you think, but if you have passion, will, and sufficient capital, you'll learn how to code and develop effective strategies, manage risk, and diversify a portfolio of trading systems to greatly improve your chances of becoming successful.