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BOOK YOUR FREE STRATEGY SESSION NOW >>Among the week’s most interesting events was the rise in equity indexes. This asset class has responded and performed well to the release of various macroeconomic data these past few days.
Not only did the indexes close higher, but they also had decidedly low levels of implied volatility (VIX), which shows that traders aren’t worried about the future performance of the stock market.
In contrast, the energy sector was down significantly, with negative five-day returns for all the leading futures. The worst performer was Natural Gas, which continued its long descent and closed with a loss of -16%.
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 as we do every weekend, we’re going to be talking about the recent market trends.
Alright, so it was a busy week in the markets due to the many macro data released in just the last five days, that have impacted of course the market, especially the stock indexes, which initially reacted very well, and I’m referring in particular to Wednesday and Thursday, and then reversed today with the release of the Non-Farm Payrolls data. Regardless of today's downswing, however, this is data that showed that the economy is in good health.
And that’s why we’re seeing significant returns this week in the stock indexes, especially the U.S. ones.
We take a look at the Nasdaq, it's up almost +3.5%.
The Mini SP 500 is up +1.70%.
The European stock exchanges are a little bit close behind. The Dax gains +1.40% and the Eurostoxx +0.81%.
Also, we can see that the long-term volatility of stock indexes is definitely low.
We see percentile values that are even below the 10th percentile, while short-term volatility is a little bit higher, especially for the Nasdaq.
That's because we see that historical volatility has increased a little bit with the recent market firing and is now near the highs of the last month.
On the other hand, we see nothing significant in the bond market.
Five-day returns are all very close to zero. Anyway, the market is holding well.
We have a +0.40% for the Bund, which has moved the most of any bond futures this week.
So with that, let’s move on to the energy market.
In particular, here we have -16.18% for Natural Gas, which continues to fall in a really astonishing way.
If we also look at the longer-term trend, we see that this asset class, after it peaked in the midst of the energy crisis, has only gone down over the last six months or so.
A downswing is also seen for RBOB Gasoline, -6%.
-8% for Heating Oil and -3.68% for Crude Oil.
The metals sector is also a sector that has exclusively negative returns this week.
The biggest loser is Silver, -3.11% at this point.
And it is followed by Gold, Copper, and Platinum.
On the Meat front, there is little to report.
We have got some negative returns for Lean Hogs, while Live Cattle and Feeder Cattle are bucking the trend.
Turning instead to the soft commodities market, we have a +14% increase in Orange Juice, which has managed to break all of its recent all-time highs, gaining 14% in the course of a single week.
In some of the other commodities, the soft commodities for example, not much to report. -2.90% for Cocoa and little else.
As for the Grains, we have got Soybean Meal at +4.98%, which has just hit a high, and not much else.
Let's move on to the currencies and then in particular the cryptocurrencies now. We have strength on the U.S. Dollar again this week, especially against the British Pound, which loses -2%, and also against the Australian Dollar, we can take a look at it, -1.81%.
The Euro-Dollar is at the moment at 1.0880.
Cryptocurrency. We see another positive week, not particularly remarkable, but Bitcoin has managed to hold the levels that it reached last week.
This is still a good signal, because we know it managed to re-enter the previous trading range and break the strong resistance that kept it below $18,500.
So, all in all, I’d say Bitcoin's performing quite well. It’s in the upper part of this trading range, although it isn’t going to be easy to break it because there’s an important resistance level here.
Next week we'll see whether it will continue the bullish momentum it seems to have gained in recent weeks.
Let’s move on and take a look at the implied volatility term structure as measured by volatility indexes on the SPX.
We see that the term structure is in contango, it's in full contango, so there is an absolute lack of concern among traders about the future performance of the equity markets.
I’d like to point out that the VIX at 18.49 is one of the lowest values seen in recent years. Okay?
So, we have to go back to the beginning of 2022 to find lower values than the current ones.
So the implied volatility has fallen sharply in recent weeks, and that's a sign that traders have no reason to doubt the future performance of equity indexes.
Let’s now turn to the rollover schedule for the coming week.
We start on February 8 with the rollover on Cocoa futures and VIX, and we end on February 10 with Coffee and Cotton.
Alright, guys, so before I leave you, I just want to give you some advice. If you’re interested in systematic trading, please go and check out the link in the description of this video. Through this link, you can watch a free presentation by Andrea Unger, who will introduce you to his trading method, that's called the Unger Method, which has enabled him to win the World Cup Trading Championships in real-money trading four times.
Through that same link, you can also get the best seller "The Unger Method” by covering only the shipping costs, or even sign up for a free strategy consultation with one of our tutors. Really good!
Alright, that's it for today guys!
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Have a great weekend and we'll see you next week! Bye bye for now!
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 >>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.
