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BOOK YOUR FREE STRATEGY SESSION NOW >>Again this week we’re seeing a prevalence of falling markets. Indeed, many sectors are showing negative returns, from Bonds to Metals, from Grains to Energetics (except Natural Gas, which rose 8%).
Among the few positive sectors are Equity indexes, with an interesting rebound of the Nasdaq that came close to +4%, and upward closings for both U.S. and European stock exchanges.
Positive returns for Cryptocurrencies as well, where Bitcoin resumed its climb by surpassing $21,000.
To learn more about how the markets are moving and the volatility trend, don't miss our weekly overview!
Enjoy the video!
Hey everyone, welcome back! One of the coaches at Unger Academy here, and this is our usual chat that we have every weekend about the market trends.
Ok, so once again, this week we had a clear prevalence of red signs with downturns for the major asset classes, except for the equity indexes.
At the moment the Nasdaq is gaining more than +4%, while the Mini S&P is performing slightly less well at +1.90%. European stock exchanges remained positive as well.
At the same time, we saw a decline in volatility in the last period, so a fluctuation, which is particularly visible from the daily ranges and tends to decline in the short term. However, this level of volatility is still high over a one-year time horizon.
Turning to the Bond market, we saw a decline in the principal bond futures. In particular, right now we're seeing the T-bond losing by -1.40%.
It was a bad week, but the impression is that these underlying assets are trying to reverse the trend and leave the decidedly more bearish trend of the previous months behind.
Turning instead to the Energy market, we can see all oil derivatives are falling, and in particular, for example, RB, -8% this week, and Crude Oil, -4.30%.
In contrast, the price of Natural Gas rose by +8% this week. Of course, we know that the price trend of this underlying asset is closely linked to the conflict between Russia and Ukraine.
The entire Metals sector performed poorly, and has been in a strong downtrend for several months now, I'd say almost a year now, with the only exception of Platinum. Here we also see Copper and Gold. And clearly the bearish trend in this asset class is quite pronounced.
Lean Hogs performed very well at +6% this week.
Soft commodities have shown mixed returns, mostly negative to be honest. For example, Orange Juice and Cotton, which rose so much in the past few days, and are now losing more than -5%, and Coffee as well.
All Grains prices were negative, with the biggest drops concentrated on Bean Oil at -7%. We have a -5% on Soybeans, so this asset class also performed badly, and overall, I'd say, especially for Wheat prices, that this isn't a negative note because we all know the shortage situation of these commodities. So, it's a healthy decline.
It's also interesting to go and look at the performance of currencies. In particular, the strength of the US Dollar against all other currencies is evident.
Specifically, we see the Euro-Dollar which right now is worth 1.0196, so a discrete drop from last Friday to today, at -2.70 and that's a noteworthy movement on currencies because usually, the volatility of this asset class is much lower.
Turning to Bitcoin, we have a +10%, which signals a note of awakening for cryptocurrencies. We’re still at very low levels: 21,210 at the moment. But in the last few days, we've noticed a sort of reaction occurring on all cryptocurrencies. Let's see if we've finally bottomed out.
Lastly, about the volatility term structure of stock indexes, as we can see in this chart showing the volatility indexes on the SPX, we are in contango, so this is a normal situation.
Let me remind you that contango means that volatility is measured over the short term, which is represented by this white line, the 9-day Vix, and then we have the 30-day Vix, etc. until we get to one-year Vix. Short-term volatility is lower than long-term volatility, which is the characteristic structure of equity markets with no turbulence.
So right now, the volatility term structure isn't causing any kind of concern regardless of the Vix value being at 25.74 right now, which isn't amongst the lowest values. We are more or less in the middle of the range of the last few months.
Let's now turn to the rollover calendar. For next week we have got two rollovers due, specifically the Vix futures on the 13th and then Crude Oil futures on the 15th.
Alright guys, before we say goodbye, I’d just like to remind you that if you're interested in systematic trading, I’ll leave you a link in the description of this video to a very useful resource. Through this link you'll be able to access a free presentation video by Andrea Unger, the only 4-time winner of the World Cup Trading Championships in real-money trading, who will introduce you to his trading method, the Unger Method precisely. You'll also be able to get the best seller "The Unger Method" by covering only the shipping costs and much more. So guys do yourselves a favor and be sure to check it out.
And that is it for today.
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Cheers everyone and we will see you next time! 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.
