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BOOK YOUR FREE STRATEGY SESSION NOW >>Among the most exciting market movements occurred this week, there is the rise of the stock indexes, which, as usual, translated into a decrease in historical volatility.
The Bonds, the Metals, and the Meats were all positive this week. As for currencies, Eurodollar continues to be near its lows while Bitcoin continues to hover around its all-time highs.
Do you want to learn more about how the markets moved this week?
Then don't miss out on this video!
Hey guys, welcome to this brand new video!
I'm one of the coaches of Unger Academy, and this is our usual weekend chat about how the markets moved over the last few days.
So, what happened on the markets this week? Here is a chart that we have already prepared for you. Let's turn to the candlesticks view because everything is much clearer that way. As you can see, in early October, the Nasdaq touched its lows after falling to around 14,400 points. Now, however, it has touched 16,400 points. This market went up by 2,000 points in just one month, which means an increase of about 14% in a very short period of time.
But there were also other markets that behave in a similar way to the Nasdaq this week. Take Mini S&P 500, for example. It went up in a truly explosive way! And the same goes for the European indexes, which followed their US fellows closely. This is the EuroStoxx. Wow, look at all those green bars! And then here's the Dax. It went up too after being sideways for some time, and now it's on an all-time high.
In addition to stock indexes, bonds have also been on the rise this week. The bond futures, and the bonds more in general, all went up, which was very good for our asset allocation models, which, thanks to the rise of both stock indexes and bonds, have been performing extremely well this week. This is the chart of the T-bond. You see the latest upward movement, really significant. And the same goes for other bond futures such as the 10-Year US Treasury Note and the German Bund.
Now let's take a look at what happened in the other sectors. Energy futures took a break and, after several months on the rise, now they are going down. Here's the chart of Crude Oil, and here you see Natural Gas, which was countertrend this week.
There's not much to say about the Metals, which made some positive returns. And the same goes for the Meats, which were also positive. As far as Soft Commodities are concerned, we know that they have been in a trading range for several months now. We certainly see interesting returns on Cotton, which managed to break through its recent highs this week. Finally, the Cereals moved in both directions, so some went up, and some went down.
The currencies were almost totally negative, and Eurodollar is still going down after being on the lows for quite a long time.
Finally, let's take a look at the cryptocurrency market, represented by Bitcoin in this chart. As you can see, Bitcoin is currently around its all-time high. It has recently broken through it a little bit, but then it came down, and there was a compression phase. So let's wait and see if it will resume rising in the coming months, especially towards the end of this year.
Let's talk about volatility now. Stock indexes went up, so as usual, this translated into decreased volatility. In this case, I'm talking about historical volatility measured as a standard deviation, and as you can see, the values have been quite low for a very long time. You see it here, the short-term volatility percentiles are very low too. And even on a time horizon greater than one year, the values are really very low.
On the other hand, implicit volatility has been sideways over the last five days, but the values are still very low, as we can see by looking at VIX.
The term structure of volatility, which in this chart is represented by the volatility indexes on the SPX, is totally in contango, which is the typical term structure of the stock market in bullish phases. So at the moment, nobody seems to be worried about the future behavior of the markets.
Let's take a look at the rollover calendar now. We are approaching the first notice day for Cocoa, Cotton, and Coffee, which means that we'll have to roll over these futures next week. Also, remember that the expiration date of the Crude Oil contract is getting closer; it'll be on November 19, so starting from next Friday, it will be possible to roll over this future. And don’t' forget the expiration date of the VIX future which is also getting closer.
Alright, guys. If you want to learn more about what we do at Unger Academy and how we teach our students the trading method developed by the only 4-time world trading champion Andrea Unger, I invite you to watch our free webinar. You can find the link in the description of this video.
And finally, if you have any questions or curiosities, please write them in the comments! We'll get back to you, and maybe your comments will give us some exciting ideas for new videos and new content as well.
So that's it for this week, thanks so much for watching.
And I will see you on our next video, 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.
