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 >>2022 seems to have started very badly for the stock market, with drops up to -5%. The bonds also went down despite the inverse correlation that usually binds this sector to the stock indexes. Cryptocurrencies also fell this week, and they are clearly going through a period of weakness.
On the other hand, among the markets that closed higher this week there are Crude Oil and its derivatives (Gasoline set a new all-time high), metals, soft commodities, meats, and cereals.
To learn more about how the markets moved over the last few days, and to know more about the volatility situation after the dips of the stock market, check out our weekly overview!
Enjoy! 😎
Hey everybody! One of the coaches of Unger Academy here, and this is our weekly chat about how the markets moved over the last five days.
So this was a pretty heavy week for the stock indexes, especially in the American stock Exchanges. In this chart you can see the Nasdaq, which went down by almost 5% this week. And here is the Mini S&P, which ended the current week lower by 4.2%. On the other hand, the European stock exchanges did a little better. EuroStoxx lost 1.5% and the Dax is losing 2.18%.
As you can see, the downtrends in this sector have been pretty significant, especially over the last few days. The prices of stock indexes seem to have come close to a support level where these downtrends might stop, at least momentarily.
The volatility is obviously quite high but not as high as one might expect from such a decline. Over a one-year time horizon, we can see quite high volatility percentiles, so the values are medium-high at the moment. In the short term, the percentile values are lower also because in the last month, as you can see, the historical volatility has remained more or less at the same levels.
Parallel to the fall of the stock indexes, we can see that the bonds sector also went down and continued to be pretty weak. Over the last 5 days, the T-Bond fell by 0.5%, and the other bond futures, namely the TY, the American 10-year, and the Bund, show positive but very small returns. So also this week, there continues to be weakness on both the stock indexes and the bonds sectors.
The energy futures, on the other hand, continue to climb. RBOB Gasoline reached a new all-time high over the past week. And the same goes for Crude Oil and Heating Oil. On the other hand, Natural Gas went down and lost 8.9% this week, getting closer to the lows that it has recently reached.
The Metals are among the strongest sectors of the week. They have resumed performing very well, as you can see from their remarkable returns. Here we see Platinum, which earns 8%, and here is Silver, which earned 6.1%. Copper did a little less, and Gold went up by 1.45%. As you know, the metals are a safe haven, which means that the markets in this sector often tend to move in a contrary way compared to the stock indexes.
As for the meats, the week the best performer is Lean Hogs, which ended higher by almost +9%. While on the other hand, Live Cattle and Feeder Cattle didn't move that much.
The soft commodities sector performed very well this week. As you can see, Sugar, SB, rose by almost 5%, while Orange Juice it's still on the rise. It made a truly parabolic trend and it's around its highest values now. Let's wait and see if it will be strong enough to continue in this really very impulsive movement.
Moving on to the cereals, we also see positive returns: Wheat went up by +5% and Beanoil by +8%.
As for the currencies, the most significant movement is certainly that of the Euro-Dollar, which went down by -1%. The value of the Euro-Dollar is now around 1.1350, so it's gone back into that channel in which it stayed for several months.
This week the cryptocurrency markets did very badly, with Bitcoin losing -10%. And Bitcoin wasn’t even one the worst-performing ones, because there were other cryptos that lost even more. So the cryptocurrency sector continues to go down remarkably. The downtrends are very significant, so let's wait and see if these markets will stop around a floor, a support level that seems to be around $35,000.
Now let's take a look at the term structure of implied volatility, which represents a sort of "barometer" of the stock market's performance. We see an increase in implied volatility, which is obviously related to the fall of the stock indexes that occurred this week. However, we're not in backwardation yet, except for the very short-term VIX, so the first expiration, which shows some signs of backwardation. Apart from this, all the other values are still in contango.
However, it's also true that, in absolute terms, the values of the VIX are very high. We are around 27. This is clearly a situation that requires some attention because in case this term structure went completely into backwardation, the market would enter a phase of turbulence, of instability. As you know, the term structure of volatility is very important to understand the situation of the stock market, and full backwardation may hint to possibilities of some steep falls ahead.
Now let's move on to the rollover calendar. There will be several rollovers next week.
The first future to roll over is Natural Gas, on January 24th.
Then there will be two energy futures, Heating Oil and Gasoline.
Then Live Cattle and Lean Hogs.
Then Gold, and finally two cryptocurrencies, Bitcoin and Ether.
Finally, I remind you that if you are interested in systematic trading and want to learn more about how we trade here at the Unger Academy, following the method of Andrea Unger, our founder and the only 4-time world trading champion with real money, you can see a free video made by Andrea Unger himself, where he explains the details of his method, the one that let him achieve those extraordinary results that we all know. If you want to watch, simply click on the link that you can find in the description of this video.
And with that, our video is over!
But before we say goodbye, I invite as always you to please leave us a Like if you enjoyed this video and subscribe to our channel.
Thank you so much for watching and we'll see next week! 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.
