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BOOK YOUR FREE STRATEGY SESSION NOW >>Among this week's most significant market trends, the fall of Natural Gas undoubtedly stands out, with a loss of almost 24%. US stock indexes continue to struggle, and the same goes for most sectors. On the other hand, among the markets that went up this week there are the bonds, Crude Oil and its derivatives, and Coffee.
This week we recommend that you pay special attention to volatility. At the moment, it's at medium-high levels both in the short and in the long term and suggests that the markets are going through a phase of instability.
To learn more about how the markets moved this week and know our opinion about the current volatility levels of the market, watch this video now!
Hey guys, welcome!
One of the coaches of Unger Academy here, and this is our weekend chat about the market trends.
But before we start, I ask you to please leave us a "Like" if you like our videos and subscribe to our channel to stay updated on the release of all our new content.
Okay, so this was a pretty bad week for stock indexes. As you can see, Nasdaq went down by over 1.5%, and Mini S&P 500 is lost almost 1%. The European stock indexes did a little better but let's not forget that they had fallen very strongly the previous week.
In this chart, you can see the Mini S&P 500. There are some clear signs of weakness, and we can also see it from its volatility, which, as you can see, has grown significantly. This indicator shows that the historical volatility of the Mini S&P has grown quite a lot over the last two weeks and touched maximum percentile values not only in the short term, but also in the long term, in which volatility is currently at medium-high levels. And what's more, volatility levels are not increasing only on stock indexes, but also on bonds and energy markets. So at the moment, we can say that the market doesn't really seem to be in such a stable a situation.
As it often happens when stock indexes go down, the bonds tend to go up. This is the chart of the T-Bond, which is now close to reaching its 2021 highs. We can see positive returns for the 10-year bonds as well, and this applies to both the US bond and the European bond, which is the Bund.
Crude Oil has also gone up over the last five days, and the same applies to its derivatives, Gasoline and Heating Oil. On the other hand, Natural Gas collapsed, and in just one week, it lost more than 20%. At the moment, it's down by around 24%. This is partly due to the climate, which is slightly milder than expected, and to an improved offer. Consider, however, that the European Natural Gas prices are still at very high levels, which means that this behavior can only be observed on the American Natural Gas.
The metals sector also went down, so here we can see some pretty negative returns. The Gold ended the week lower by -1%, whereas Silver lost 4%.
The Meats market was also pretty weak. And the same applies to the Commodity market, and even Cotton went down, losing 5.94% and dropping from the all-time high it had recently hit. The only future that moved against this trend in the Soft Commodity sector is Cocoa, which went up by 2.5% this week.
Moving on to the other markets, we can see mixed returns in the cereal sector.
The currencies were negative and Euro-dollar stopped at 1.1275.
Bitcoin made a banal return of 3.2%. At the moment, this cryptocurrency seems to be stabilizing around this price level, and perhaps it might be ready for a new explosion, who knows! In fact, as you know, generally there's an alternation between phases of compression and expansion of volatility in the markets. Right now, we are clearly going through a phase of volatility compression.
Let's also take a look at the chart of implied volatility, which, as you can see, has risen quite a bit over the last two weeks, and right now, we are at the highs of this period.
The term structure of volatility is partially in backwardation. In particular, we can see that the white line, which represents the 9-day VIX, is higher than the 1-month VIX.
And here, too, we can see a compression of the term structure of volatility. Given the instability of the markets at this moment, we can see that we're currently in a pretty delicate - and even possibly dangerous - situation. This is also clear when we look at the values of VIX. They are pretty high now. Actually, they are among the highest of 2021.
So be careful because the situation of the stock indexes is not particularly clear.
Now let's move on to the rollover calendar. We are approaching the third Friday of the month, so we'll have to roll over the futures on the stock indexes and the VIX a week in advance,.
Finally, guys, for those of you who want to learn more about the Unger Academy and how we teach trading following the method developed by Andrea Unger, the only 4-time world trading champion, we're going to leave a link in the description of this video. It'll take you to a free webinar where Andrea will explain much of what he has learned in over 20 years of trading. He will also go through the basic concepts of his method, that is, the trading method that let him achieve those extraordinary results that we all know.
And with that, that's all for today.
I kindly ask you to, once again as always, leave us a "Like" if you enjoyed this video and subscribe to our channel to stay updated on the release of all our new content.
Goodbye everyone and see you next week!
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.
