Markets: Stocks & Bonds Headed for a Retest of Their June Lows, US Dollar on Fire

by Andrea Unger | The Trading Show

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It has been another week of sharp declines in most major asset classes.

The U.S. and European stock markets are near the lows reached in June and are experiencing high volatility in both the short and medium term.

Volatility is also very high in currencies, where we are seeing powerful five-day moves (almost -3.50% for the British Pound Futures) and an increasingly strong dollar.

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

Enjoy the video! 😎

Transcription

Hey guys, one of the coaches at Unger Academy here, and welcome to this video. This is the chat that we have on the weekends to take a look at the markets trends over the past few days.

Alright, so it was another week marked by significant declines in the markets. We can see a clear prevalence of red signs. And as you know, this indicator represents the 5-day performance of the major asset classes.

As I said, there were several red signs and negative returns, with a few exceptions, for example, in soft commodities and grains and agricultural commodities, such as Wheat or Coffee. Otherwise, there are red signs almost everywhere.

But let's go in order and start with the stock indexes as usual. And here we see the Nasdaq down 4.50% this week.

It's coming back to the lows it reached last June. And that's a level that is pretty important also from a psychological perspective.

The same is true for the Mini SP 500. It's also near the 3,650 level, which is the low that this market reached in June.

And the same situation applies to the European stock markets as well, where things are going in a very similar way.

As far as the bond market is concerned, we've also seen a significant decline in bonds.

-2.14% for the T-Bond. -1.90% for the Treasury Note and -1.88% for the European Bund. So still declines in the bond market.

As for energy commodities, on the other hand, we have a sharp decline in Natural Gas, -12%. And that's perhaps the only positive thing that happened in the markets this week.

We also see declines in Crude Oil and Gasoline. And also bucking the trend this week is Heating Oil.

Further weakness in the Metals market. We're used to that by now. We have negative 5-day, 1-month, 3-month, and 1-year returns. So, this market is definitely in a downtrend.

The meat market is also negative.

As far as the soft commodities asset class is concerned, we can see some green signs, especially for Orange juice, which is still near its recent highs.

There was also a +2% gain for Coffee this week.

On the contrary, Cotton is at -6.50%, and Cocoa is at -3.50%.

Turning now to Grains, negative signs also prevail. However, Wheat is back on the upswing.

You know that Wheat has been showing an upward trend for several weeks.

As for all other agricultural commodities, they are all losing.

Currencies, which generally tend to be less volatile than other markets, have seen significant, even sharp, declines this week.

We even have a -2.66% Euro against the US dollar. So, we have a strong US dollar against all other currencies.

And in terms of cryptocurrencies, it was another negative week for Bitcoin as well, as it reached July's lows again.

Well, with declines of this magnitude, let's go and see what volatility is doing because it's undoubtedly going up on the stock indexes. In the short term, we are at a very high level, so a very high percentile, the 75th, 100th percentile. The 95th percentile on the Mini SP. And it's a volatility that's also high in the long term.

We can also see it on the standard deviation chart. So let's go and take a look at the Mini SP 500. Here we are at the highest levels on the monthly time frame. And also on a longer time frame, we can see that the volatility levels are all pretty high.

However, the volatility term structure doesn't seem to confirm this trend. I mean, it's true that we've seen an increase in volatility since mid-August. But we have a structure that shows a reasonably mixed situation.

Because the short-term volatility, which is this white line representing the 9-day Vix, is higher than the Vix, but the rest of the term structure, it remains in contango.

So, we have an increase in volatility that is confirmed by the Vix, which is certainly high compared to its historical values but which is not at extreme levels yet.

And this is quite strange if we consider that there have been many down days and the market has been in a downtrend for several weeks now.

Now let's turn over… let's turn to the rollover calendar scheduled for next week. Starting September 26, the rollover of all meat futures will take place.

Platinum, Heating Oil, and Gasoline will follow the next day. And finally, on September 28, Bitcoin and Ethereum.

Before we say goodbye, I'd like to leave you with just one more piece of advice. You have the opportunity to watch a free presentation by Andrea Unger, we'll leave the link in the description, where he'll introduce you to the trading method he used to win the World Cup Trading Championships in real-money trading 4 times.

You also can get the best seller "The Unger Method," covering only the shipping costs, or you know, sign up for a free strategy consultation with one of our tutors.

If you liked this video, please leave us a Like, go and subscribe to our channel and click on the little notification bell to stay updated on the release of all our new content.

And that's it for today, have a great weekend, we will see you again next week. Bye-bye!

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Andrea Unger

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.