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BOOK YOUR FREE STRATEGY SESSION NOW >>This week we finally witnessed a rebound in the stock and bond sectors, with 5-day returns up to +5.5% for U.S. stock markets and positive performances for both U.S. and European bonds.
Another important event is the decline in commodities, including energy markets and grains. Given the current inflation situation, we can only view these declines as a positive sign.
The last few days have also seen a slight rebound in Bitcoin, which managed to get back above $20,000 after a sharp drop last weekend.
For more on how the markets are moving, volatility trends, and rollovers in sight for the coming days, don't miss our weekly overview!
Enjoy the video!
Hey everyone and welcome back to a brand new video! One of the coaches at Unger Academy here and this is our usual chat that we have every weekend about the market trends.
So, we can say that it was all in all a good week for the markets because we saw a rebound in equity indexes and a concomitant rebound in bonds, a decline in commodities, which we know have been weighing on inflation, and a slight rebound for cryptocurrencies as well. But let's go in order.
So, let's start with the stock indexes. Now, this past week we saw a rebound in the U.S. stock indexes, with a +5.70% for the Nasdaq and a +4.70% for the e-Mini S&P 500.
The European stock exchanges, which nevertheless rebounded at least partially, performed less well, especially the Dax, whose 5-day returns are still negative.
Anyway, this was a good bounce from the lows, which we haven't seen in quite some time. Long-term volatility remains pretty high but short-term volatility is going down. We can see this on the Mini SP 500 as well. The volatility over the past month is significantly lower than the peaks we have seen recently in the stock indexes.
As I was telling you, this week along with the rebound in equity indexes we also saw a rebound in bonds. In particular, we saw a nice rebound in the European Bund, +2.12%. U.S. bonds also went up, +1.60% for the T-bond and +1.20% for the U.S. ten-year bond.
On the other hand, as far as energy markets and commodities in general are concerned, we did see some declines pretty much everywhere. This, as we said, was good because prices, especially in the energy sector, have been weighing heavily on inflation and consequently on the Fed's aggressive interest rate policy.
Natural Gas went down -10%, so we had a decent drop for Natural Gas, which was on really important extremes.
The same applies to the metals sector, which, as we've been saying for several weeks now, is one of the weakest sectors. And this week it continued in its bearish trend.
On the other hand, as far as soft commodities are concerned, we saw a very important downtrend in Cotton, which until not too long ago was in a strong uptrend. Here we can see it better over the long term, so the cotton up trend and the recent downtrend.
Turning to Grains, we saw very significant declines here as well, particularly in Wheat. A commodity that is certainly affected by the conflict between Russia and Ukraine, losing almost 12% this week.
We also see some major declines on SoybeanOil and the Hard Red Winter Wheat.
In terms of currencies, we saw a rebound of the Euro against the US Dollar, but quite modest. The current value is 1.06.
Finally, a small rebound for cryptocurrencies as well: +3.70%. In the last weekend, Bitcoin touched values below $20,000, if I remember correctly they were around $17,500. And so, it was a nice rebound although you can't see it from this chart because the CME futures are closed over the weekend.
Turning now to an analysis of volatility, it remained generally high in all markets, and I'm referring to the long-term trend.
This is a phase of the market where volatility takes over, although in the last month we've seen a slight drop in volatility, also thanks to the rebound in stocks and bonds that took place this week.
If we go and take a look instead at implied volatility, so let's say, measured either by the Vix index or the other volatility indexes on the SP 500, we notice a rather peculiar structure, somewhat mixed if you will.
We are neither in contango nor in backwardation. So this is a volatility term structure that denotes some uncertainty about market performance, as is normal at this stage.
Overall, the Vix is still at fairly high levels, but not at panic levels. So just keep in mind that the situation in the markets could evolve very quickly.
Let's take a look at the rollovers for next week. As you can see there are quite a few, all on the 27th as a recommended date.
We have Corn, Soybeans and their derivatives, and Wheat. Then we have the energy futures, Heating Oil and Gasoline, and finally the metals: Copper, Platinum, and Silver.
Alright guys, before I say goodbye, I’d like to remind you all that if you're interested in systematic trading, you have a resource at your disposal. I'll leave you a link in the description of this video. It's a free presentation by Andrea Unger, who will introduce you to his trading method, which has enabled him to win the World Cup Championships in real-money trading four times. By clicking on the link you'll also get, by covering only the shipping costs, the best-seller "The Unger Method" and much more. So please, do yourself a favor and go and check it out!
Okay, guys, that's it for this week as well.
I ask you to leave a Like if you liked the video and invite you to subscribe to our channel if you haven't already done so.
And with that I will see you next week! Have a fantastic weekend, 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.
