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BOOK YOUR FREE STRATEGY SESSION NOW >>Even this week we're noticing very high levels of volatility on equity indexes, with negative returns and a volatility term structure that seems close to backwardation.
Crude Oil and its derivatives (which however remain at levels close to historical highs), soft commodities and Bitcoin also fell.
Among the markets that instead closed the week with positive returns are metals, grains and Natural Gas (which rebounded by +17%).
To learn more about what happened in the markets this week, and to get news on volatility trends and rollovers in sight in the next few days, don't miss this video!
Hey guys! One of the coaches of Unger Academy here, and this is the usual that we have every weekend about the financial markets.
So this was another highly volatile week for the stock indexes, which as you can see are negative right now. Look in particular at the European indexes, which are losing around -1.5%.
If we go and take a look at the chart of the Nasdaq, for example, we can see that historical volatility is right on top of the hundredth percentile in both the short and long term.
We can also see it also if we look at the daily ranges of the price, which are really very wide. So we can sum up by saying that the stock indexes are definitely going through a phase of weakness.
The bonds sector didn't do very well either, although it is still positive. Let's take a look at the chart of the T-Bond. You can see that it's recovering slightly from last week. However, it is quite clear that the bonds sector is also going through a phase of weakness. As we all know, this is obviously related to the fears, or rather the certainty, of an increase in the interest rates in the United States. So we may expect that this trend will probably continue throughout the current year.
Let's now see what's happening in the energy sector. The Crude Oil derivatives are losing but in spite of that, they're still close to their all-time highs.
On the other hand, Natural Gas has been rising by almost 17% this week. We all know that this market has really grown a lot in the last year, and we also know that it's exactly this rise, together with that of the whole energy sector, that's causing the strong inflation we are currently experiencing.
On the other hand, the metals sector is doing pretty well. Platinum stands out with an increase of almost +7% and more in general, all these markets are positive. Gold is also performing well, although by looking at the long-term behavior, we can see that it's been sideways for some time.
Among the meats sector, we certainly need to mention Lean Hogs, which is getting close to its all-time highs.
The soft commodities sector, instead, was negative. Cocoa, in particular, has fallen by about 6% this week.
Moving on to the Cereals, we can see mainly positive returns. Soybeans and its derivatives, so Soybean Meal and Soybean Oil, are all close to their all-time highs.
As for the currencies, we see that there has been a recovery against the US dollar. Look, in particular, at the Euro-Dollar, which bounced back at a value of 1.13.
The Australian dollar has also risen a lot. Actually, it moved more than any other currency this week.
Finally, let's take a look at the cryptocurrencies, with Bitcoin that loses about -4%. However, at the moment it's still above an important level that seems to be acting as a support. Let's see if it actually managed to reverse its trend. You see, it has come out of this bearish channel, so it could reach these values again and maybe resume growing in the immediate future.
Okay. Now let's move on to our usual analysis of the implied volatility. We have already seen that the historical volatility is currently very high.
At the moment the volatility term structure is in compression. We are close to backwardation but we haven't entered it yet. Anyway, this is certainly a sign of market instability.
If we go and check the value of Vix - it's about 28 - we see that it's certainly a quite high value, even if it's not close to the highs it recently touched. In any case, this is another sign of danger that together with the term structure of volatility reveals that the markets are going through a phase of instability.
Let's move on to the rollover calendar. There'll be several rollovers in the coming week.
We have some Soft Commodity futures, namely Soybeans, Corn, soybean derivatives, and wheat.
Then we have the metals sector, with Copper and Silver.
We also have all the US bonds, of all durations.
Then we have the energy sector, with Heating Oil and Gasoline.
And then the cryptocurrencies, with Bitcoin and Ethereum.
Finally, if you are interested in the world of systematic trading, and maybe you need help to start investing in the markets in a systematic way, then I suggest you click the link that you can find in the description of this video. It'll take you to a page where you can watch a video presentation by Andrea Unger, who will introduce you to the world of systematic trading. You'll be able to get a copy of our best-selling book, "The Unger Method," by covering only the shipping costs, and you'll also be able to book a free call with a member of our team. It's up to you!
And with that, this video is over!
But before we say goodbye, if you liked this video I ask you - as always - to please leave us a like, subscribe to our channel and click on the bell to stay updated on the release of all our new content.
And with that, we will see you again 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.
