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BOOK YOUR FREE STRATEGY SESSION NOW >>What happened on the markets this week?
Among the most important events, the energy sector definitely trended upwards. Natural Gas ended the week higher by 6.5%, Crude Oil and RBOB Gasoline got close to their all-time high, and Heating Oil set a new high. Some Soft Commodities also performed very well, including Orange Juice, which closed the week higher by 10%.
On the other hand, it was a bearish week for stock indexes, meats and cereals, which were all completely negative.
If you want to learn more about how the markets moved over the last few days and understand the volatility's current situation, watch our weekly overview now!
Enjoy! 😎
Hey everybody!
I'm one of the coaches of Unger Academy and this our usual weekend chat about the most important markets trends over the last few days.
Okay, so let's start, as usual, with the stock indexes. As you can see, there's some red here, so this week, yes, we had negative returns for the main American and European stock indexes. Nasdaq is the worst one, losing 1.25%. The Mini S&P 500 is doing a little better, with a -0.97%. The European stock exchanges are doing even better.
As you can see, it was a rather difficult start of the year for the stock indexes, which are still showing some signs of weakness.
On the other hand, the bonds sector shows a reaction this week, even if there seems to be some weakness in this sector as well. So this is a pretty tough time especially for asset allocation models that mix bonds and stocks together because it's been a pretty tough start of the year for both the stocks and the bonds sectors.
Once again, the sector that shows the greatest increase this week is the energy sector. In particular, we see very positive returns on Natural Gas, which rose by 6.5% approximately, even if today is an absolutely bearish day. Let's take a look at Crude Oil, which is close to its all-time high. Gasoline has even exceeded it, or it's close to it, as you can see. And here's Heating Oil, which is also above its all-time high.
Now let's move on to the metals sector. We know that this sector has been quite weak over the past couple of weeks, or at least, it hasn't shown any remarkable returns. This week, it is showing slightly positive returns, but whether this is a sign of recovery or not, we will see in the coming weeks.
The meat sector is all negative.
We've got slightly positive returns on commodities, with Orange Juice rising by almost +10% this week – it is in a strong uptrend - and Cocoa rising by 5%, so there are signs of recovery of this underlying as well.
On the other hand, the cereals sector is completely negative. No underlyings in this sector show positive returns at all.
Currencies are recovering a little against the dollar. Let's take a look at the Euro. It is 1.1446, so it came out of that channel in which it had been lateralizing for some months now.
And finally, here's Bitcoin, whose price is basically the same as last week. We know that the crypto sector is continuing to show some weakness.
Now let's move on to the analysis of the volatility of the stock indexes. We can see that the short-term volatility over a one-month time horizon, measured as standard deviation, is fairly low, but let's not be fooled by it.
If it's true that on these underlyings, the latest values of historical volatility are among the lowest of the last month, it is also true that over a longer time horizon, volatility values continue to be high.
If we look at the volatility term structure, overall we can see an increase in volatility over the past two weeks, even though at the moment, the term structure is still completely in contango. There are no particular warning signs when we analyze the term structure of volatility, and the absolute value of the Vix is still completely in line with its average values. So at the moment, we don't see any worrying spikes on the implied volatility.
Let's also take a look at the rollover calendar. There will be no rollovers next week. However, I have summarized the next rollovers for the following week.
There will be energy futures: Natural Gas, Heating Oil, and Gasoline.
There will be the meats: Live Cattle and Lean Hogs.
Then there will be the Gold future.
And finally cryptos: Bitcoin and Ethereum.
Finally guys if you're interested in understanding something more about systematic trading, and if you want to discover the method that we teach here at the Unger Academy, the method of Andrea Unger, the only 4-time world trading champion with real money, we're going to leave you a link in the description of this video.
It'll take you to a free webinar in which Andrea Unger talks a lot about his trading method and how he developed it, and this webinar is also full of ideas that I'm sure you'll find very useful.
And with that, this video is over. We will see you 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.
