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BOOK YOUR FREE STRATEGY SESSION NOW >>Market fluctuations have shown a general downward trend over the past week. In fact, only soft commodities, grains and Natural Gas recorded significant rises.
Among the sectors with the greatest losses were stock indexes and bonds, which despite their usual inverse correlation both fell.
In spite of the drop in stock indexes, the Vix remains at low values (22 points) and the term structure of implied volatility is still in contango, a sign that at the moment there is no particular concern about the future performance of the markets.
To learn more about how the markets are moving and the volatility trend, don't miss our weekly overview!
Enjoy the video!
Hey everyone and welcome back! One of the coaches of Unger Academy here and this is our usual chat that we have on the weekends about market trends.
Alright, so the markets didn't do so well this week. Let's start as usual from the stock indexes, where we see some pretty extensive declines especially on the Nasdaq, which is losing about 3.60% at the moment.
The European stock exchanges also suffered: -2.10% for the EuroStoxx50. -1.70 for the Dax. A little better for the Mini S&P, which lost only around -1.50%.
You can see that the market has reversed from the recent highs. It had rebounded nicely, so a reversal of this magnitude seems quite reasonable, although we hope this will be a momentary phase.
Despite this fall we see that the volatility measured as standard deviation is declining. So this usually means that the market is not showing particular concern at the moment, although long-term volatility is still quite high.
The bond sector also performed pretty badly. Let's look at the T-Bond for example, it lost 4.13%. It was in free fall in the previous weeks and things have gotten even worse. We're at the lows of the last two and a half years, so I would say that this is actually one of the markets that is suffering the most from the current situation.
As for energy, oil derivatives went down and lost 2.70%. And the same goes for RB and Heating Oil, which also went down. However Natural Gas continues to be affected by the bullish pressures arising from the war between Ukraine and Russia and keeps on rising in a rather alarming way.
Metals, on the other hand, remained unchanged. We see some minor fluctuations such as the ones we've become accustomed to in recent weeks.
The meat sector is completely negative, led by Lean Hogs losing 5.60% this week. Feeder Cattle also did badly, going down by 4%.
While, on the other hand, soft commodities, all positive, as was the Cereals sector.
Outstanding performers include Sugar, +4.5%, and Orange Juice, +4%. Let's take a look. We are close to the recent highs.
Unfortunately, Wheat continues its upward trend at +6%. We are still at very high levels. Last week the situation had somewhat retreated but upward pressure from the conflict between Russia and Ukraine continues to linger on these markets. In fact Corn is also going up, and the same goes for soybeans and its derivatives. So as far as Soft Commodities and Grains are concerned, the pressure is on the rise.
Instead, if we take a look at currencies, we have a decidedly different picture. The Euro-Dollar is back near the lows it has recently touched. It is around 1.08 right now, so it's losing 1.80%. In the currency sector we only see red numbers. This means that the US Dollar is strengthening against all major currencies.
Bitcoin is also negative and lost 7.5% this week. It reentered in the trading range in which it had been stationed for several months. In theory there should be some sort of support here. Let's see if it will be able to hold and bounce back to return to the highs that it has recently reached.
Obviously, there's still a long way to go, however I imagine there could be some resistance, some support in this area, and let's see what happens in the next few weeks.
Alright, let's take a look at the situation of implied volatility. Despite the decline in the stock indexes, we can see that implied volatility rose only slightly. Moreover, the volatility term structure, as you can see from this chart, is still in full contango.
In addition, despite the market decline the Vix value is all together low, especially given the values of the last months. It's 22.05 now. So I'd say that at the moment, this is absolutely among the lowest values that it's touched recently.
So you see, this is a somewhat peculiar situation. The markets are falling but volatility is rising only very little. This is a signal that at the moment traders aren't particularly worried about the situation they're experiencing on the markets, despite the war in Russia. There are reasons for concern, of course, but at the moment, they are not reflected on the stock markets.
Let's now move on to the rollover schedule. Next week we'll have three rollovers. We'll start with the Vix, on the 13th, and then on the 14th, we'll have to roll over Cotton and Crude Oil.
Alright guys, I would like to leave you with some advice. If there is someone among you who's interested in systematic trading and wants to learn a little bit more about it, we'll leave a link in the description below where you can watch a free presentation by Andrea Unger that will introduce you to his trading method called the "Unger Method", that has allowed him to achieve extraordinary results, such as winning the World Championship in real money trading 4 times. You'll also be able to get his best seller "The Unger Method" covering only shipping costs, or even book a free strategic consultation with a member of our team.
And of course finally, if you haven't done so yet, please subscribe to our channel and leave a Like if you liked the video.
And with that we will see you again next week. Have a nice week end. 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.
