Trend Following - Week in Review - May 23, 2025

“Cocoa Cracks, Volatility Roars—Signals Scatter”

This Week In Trend

Welcome to This Week in Trend, your lens into the evolving rhythms of global futures markets and the adaptive world of trend-following.

After last week’s violent surges in softs and reversals in metals, this week brought a fresh rotation—less continuation, more contradiction. Volatility spiked, metals firmed, and equities took a hit. But the most shocking move? Cocoa collapsed, flipping from outlier to outlier-in-reverse.

“Cocoa Cracks, Volatility Roars”

The fourth week of May reversed many of last week’s themes.

Volatility exploded, driven by macro jitters and renewed equity weakness. Softs—last week’s darling—buckled, as cocoa plunged nearly 10%. Meanwhile, metals rebounded sharply, and currencies showed broad-based gains against the USD.

This wasn’t a gentle unwind. It was a shakeout that reshuffled winners and losers again, catching many systems on the wrong foot.

SG Trend Index Performance

• MTD (as of May 22): -2.56%
• YTD: -11.65%
• (Last week MTD: -3.31% | YTD: -12.32%)

A slight recovery in the SG Trend Index from last week’s steeper drop, but the index remains deep in drawdown territory. Trend systems continue to struggle amid sharp reversals and short-lived bursts of momentum. Energy, bonds, and equity indices again offered limited traction.

TTU Trend Barometer: 34% – Moderately Weak

• Last week: 27%
• 10-day rate-of-change: Rising Weakly

The TTU Trend Barometer ticked up to 34% but remains in a “cold” environment for trend-followers. The brief lift is welcome, but the terrain remains tough—choppy, erratic, and hostile to sustained trends.

“Below 40% is cold. At 34%? Still deep in the icebox.”

The Top Traders Unplugged (TTU) Trend Barometer is a proprietary tool that measures the percentage of markets with medium to strong trends. Similar to a thermometer, where 0 degrees Celsius equates to freezing, a TTU Trend Barometer reading below 40% indicates a “cold” environment for trend-following, while readings above 55% signal a “hotter,” more favourable trend environment.

Weekly Asset Class Snapshot

Source: Finwiz.com

This week flipped last week’s script. Volatility soared while equities slipped. Metals outperformed, softs reversed, and grains rebounded slightly. Bonds and energy drifted lower, while currency strength reflected renewed macro positioning.

Asset Class Breakdown – Whipsaw Continues

• Energy: -0.62% (Prev: -0.39%)
  Minor weakness across crude contracts. Momentum absent.
• Metals: +5.88% (Prev: -1.92%)
  Big rebound. Platinum, copper, and gold all surged.
• Equities: -2.39% (Prev: +3.25%)
  Reversal week. Tech leaders faltered, dragging indices down.
• Soft Commodities: -0.08% (Prev: +4.14%)
  Cocoa collapsed, offsetting gains in orange juice and cotton.
• Grains: +2.23% (Prev: -0.22%)
  Recovery led by wheat and corn.
• Meats: +0.40% (Prev: +0.33%)
  Quiet but positive. Still largely range-bound.
• Bonds: -0.47% (Prev: -0.69%)
  Yields edged higher again. Fixed income remains choppy.
• Currencies: +1.42% (Prev: -0.33%)
  Broad-based USD weakness lifted other majors.
• Volatility Index: +13.55% (Prev: -16.39%)
  The VIX roared back. Uncertainty returns to the surface.

Performance Highlights – This Week’s Market Leaders & Laggards

Top Market Movers

Biggest Gainers

• VIX: +13.55% – Volatility snapped back sharply.
• Orange Juice: +10.69% – Softs diverged. Still climbing.
• Platinum: +10.10% – Strong comeback.
• Copper: +5.91% – Strong base metals rally.
• Gold: +5.35% – Safe haven flows returned.

Biggest Losers

• Cocoa: -9.49% – Massive reversal. Outlier snapped.
• Russell 2000: -3.71% – Small caps under pressure.
• S&P 500 / Nasdaq 100: -2.57%, -2.39% – Tech-led selloff.
• USD: -1.93% – Broad-based weakness across G10.
• Coffee: -1.60% – Faded further after last week’s drop.

Portfolio View - What the Moves Meant for Systems

• Soft Commodities: A whipsaw zone. Cocoa’s crash likely hit long systems, while OJ and cotton offered mixed returns.
• Metals: The week’s winners—finally some trend recovery.
• Equities: Difficult week. Major indices dropped hard.
• Currencies: Some flow potential returned, especially for long non-USD exposures.
• Volatility: Finally sparked. But it likely disrupted risk models more than helped trend signals.
• Bonds and Energy: Still offering little. Chop remains dominant.

Final Reflections – Whiplash Is Not a Trend

The market is moving, but it’s not trending—at least not in the way systems like.

This week saw another hard flip: from cocoa crashes to copper surges, and from complacency to volatility spikes. The SG Trend Index remains negative, and the Trend Barometer, while slightly higher, is still flashing warning signs.

For many trend-followers, these conditions aren't just tough—they're humbling.

It’s not about catching every outlier—it’s about enduring the storm until the signal clears.

“When clarity is absent, discipline is everything.”

 

 

List of Resources used in the Week in Review

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