Markets: Equity Indexes are Pulling Back, Grains Resume Rally, Energy Market & Inflation

by Andrea Unger

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This week we saw another rise in Natural Gas and Wheat prices, which are among the commodities most affected by the war between Russia and Ukraine.

In contrast, equity and bond indexes closed lower, with negative five-day returns in both the US and Europe.

The cryptocurrency market also continues to show weakness, with Bitcoin returning to the recent lows. 

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

Enjoy the video!

Transcription

Hey everyone! One of the coaches at Unger Academy here and welcome back to our usual chat that we have on the weekends about market trends from the previous week.

Okay. So, to begin with, we can say that it was a very positive week for energy commodities, soft commodities and grains. Slightly less positive with regard to the performance of stock and bond indexes though.

But let's start in order, as usual. And we start with the equity indexes, where we see negative five-day returns.

The biggest declines are on the Nasdaq and especially the Mini S&P 500, -2%. Also the Dax, -2.20% at the moment.

We're going to zoom in a little bit on the chart and see that after the strong rise which occurred from the recent lows, the indexes have slightly retraced and entered into an area which we could consider as a potential support.

Turning to the bond market, we see negative signs here as well. Particularly the T-Bond recorded a -0.76% at 5 days. The German Bund performed even worse with -1.53%.

So, while it is true that from one perspective the recent performance of bonds could give us hope as to a recovery in prices, it's also true that the even more recent performance of the past two weeks points to further weakness in this market.

In contrast, the commodities market, especially energy, is still showing a fair amount of strength. In particular, Natural Gas, which is on the highs.

This is U.S. Natural Gas. The European is at even higher prices, and so the energy market is continuing to create inflation problems, thus problems for the economy, which, in a sense also go to impact the performance of the bond sector.

Among the biggest moves we can certainly mention the +8% for Heating Oil and also the -8% for Gasoline.

Turning to the metals market, as usual they seem to be going nowhere. So we see mostly negative returns over a three-month to one-year time frame.

The Meat market is also negative.

Instead, soft commodities were positive with Coffee in particular gaining 12%. A huge upward spike in the last five days.

And the Grains market is also in good shape. We see generalized rises on all these commodities. In particular we have +4.20% for Wheat and +6.50% for Corn.

Turning now to the currency market, we see contrasting returns. Euro-Dollar is virtually unchanged from five days ago. And US Dollar gains, against the Australian dollar, +1.45%.

Lastly Bitcoin, which is also virtually unchanged. The impression was that of a possible bullish trend, which, however, has been broken and we're retesting the lows of about a month ago.

Let's now take a look at the volatility of the stock indexes, which in any case remains quite low on both the short and long term, excluding the Mini S&P 500 on which we definitely see higher volatility.

Turning to the volatility term structure, so the term structure of implied volatility, we can see a slight increase in volatility, which, however, has been reabsorbed in recent days, and in fact, the volatility term structure remains in contango.

Vix values are all in all low compared to the time frame of the past six months. So at the moment, traders don't appear to be overly concerned about the trend of stock prices.

Let's now take a look at the rollovers on the calendar for next week. They are a very few indeed. We have the German Bund on September 2 and on the same day, the other European bond futures.

Well guys, if there is anyone among you who is interested in systematic trading and wants to understand what we teach here at the Unger Academy, we’ll leave a link in the description. Through this link you can watch a free presentation by Andrea Unger, who will introduce you to his trading method, the Unger Method, with which he has managed to win the World Cup Trading Championships of real-money trading 4 times.

You can also book yourself for a free strategy consultation with a member of our team or obtain, by only covering the shipping costs, our best-seller "The Unger Method."

And also, hey, please subscribe to this channel, if of course you haven't already done so, leave this video a like if you liked it, and click on the notification bell to stay updated on the release of all our new content.

And that's all for today guys. I will see you all next week. Until then, bye-bye!

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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.