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BOOK YOUR FREE STRATEGY SESSION NOW >>The week that has just ended was undoubtedly a difficult one for the financial markets. Due to the increasing possibility of an interest rate increase, the equity and bond sectors closed with losses. Metals, currencies and cryptocurrencies also fell.
The only sectors that have held up well are energy (with Natural Gas up 23% and new all-time highs for the RBOB) and grains, driven by soybeans and its derivatives.
This week we've also seen a significant increase in volatility and, very importantly, a reversal of the volatility term structure, which as you know, is a sign of great concern for market performance.
If you want to learn more about what happened in the markets this week and know the details related to the volatility situation, don't miss our weekly overview!
Enjoy the video!
Hello everybody and welcome! I'm one of the coaches of Unger Academy, and this is the usual overview of the markets that we do every weekend.
But before we start, if you're interested in staying updated on all our new content, please go and subscribe to our channel, and why not, also leave us a Like to support our work. Thank you so much!
As you probably already know, this has not been an easy week for the financial markets.
The stock indexes, in particular, went down quite a lot. At the moment, the worst-performing index is the Nasdaq, which is losing 3.6%. Then there is the Mini S&P, falling by 2.14%. As for the European stock indexes, the numbers are more or less the same, with the EuroStoxx losing 2.5% and the Dax falling by 2%.
As you can see, it was a strong downtrend, especially for the Nasdaq, which is the stock index that is suffering most of all. Even the Fed meeting that took place last week couldn't help raise the prices of the stock markets.
The general fears, or rather the awareness and certainty of a rise in the interest rates also affected the bonds sector. Here is the T-Bond, so the thirty-year bond, which is now on the lows, and the same goes for the European Bund, which is around its one-year low.
So both stocks and bonds went down this week, and both of them suffered from the future increase in the interest rates.
The only sector that's reacting very well and continues to rise is the energy sector. As of now, Natural Gas has risen by +23% this week. RBOB Gasoline is around its all-time high. You can see it here: it is at an all-time high and gaining 5% this week. And then follow Heating Oil and Crude Oil.
As usual, the metals market is negative again. Actually, this market has been pretty weak and, as you can see, there's been a lack of trends over the last year. The performance of Silver is particularly negative.
Moving on to the soft commodities sector, we see mixed returns, with Sugar losing 4% and Cocoa also going down.
Finally, we have the cereals sector, which instead is very positive. Let's take a look at the trends of soy and its derivatives because they're very interesting. Currently, soy is certainly a trending market, and the same goes for Soybean Meal and Bean Oil.
I forgot to tell you that there is a soft commodity that is performing very well, and it is Orange Juice, which is still at an all-time high.
The currency and cryptocurrency sectors are, instead, very weak. Let's take a look at the Euro-Dollar in particular, which is now at a value of 1.11. It has finally exited the trading range in which it remained for several months and has now broken through its lows, and now it is at the lows of the current year. So let's wait and see if the weakness of the Euro-Dollar will continue since it is also related to the fears of rising interest rates.
Finally, as for the cryptocurrency market, Bitcoin is still falling, and the same goes for the whole sector, so the cryptocurrency asset class in general. At the moment, the price of Bitcoin is 36,795. It lost around 3.5% this week, which is not too much, actually. At the moment, it seems that the price of Bitcoin is moving within this area, which could be a possible support area, if I remember correctly. So let's wait and see if the fall of Bitcoin will stop at these levels or if it will be strong enough to go further.
As for volatility, we can see that there has been a significant increase in volatility this week, especially in the long term, where the percentile values are pretty high.
In addition to this, if we look at the term structure of volatility, we can see that we are now in backwardation. And as you know, this is a warning sign. The volatility curve has reversed. The short-term volatility is now higher than the long-term volatility, and what's more, the Vix has almost reached 40 this week.
This is obviously not a good sign, and since it seems that the situation is not going to improve any soon, I recommend that you be particularly careful. Let's wait and see if the term structure will return to contango in a short time or if it will remain in backwardation, and in that case, the situation for the markets may become even more troublesome. At the moment, operators seem to be extremely worried about how the markets are currently moving.
Anyway, let's move on to the rollover calendar. Since there won't be any rollovers to make next week, here you can see the upcoming rollovers to make in the week after the coming one, so Cocoa, Vix, and Coffee.
And with that, this video is over!
But before we say goodbye, I'd like to give you some advice. If you're interested in systematic trading and want to learn more about it... Well, we've got you covered! Because there's a webinar - we'll leave you the link in the description of this video - in which Andrea Unger, our founder and the only 4-time world trading champion with real money, talks about his own trading method. The same method that let him achieve these extraordinary results. It's definitely a good chance to understand more of this world, learning from those who have proven their skills and knowledge with facts.
Finally, please, leave us a Like if you enjoyed this video and subscribe to our channel to stay updated on the release of all our new videos.
Will see you 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.
