Naomi

Welcome to “This Week in Trend”, where each week, we cover key movements and trends in the futures markets, offering insights on commodities and indices shaping the economy. From price surges to notable declines, we provide an overview of the factors driving these changes. Stay informed about the latest developments and navigate the market with confidence. Join us weekly to explore the dynamic world of futures trading and the trends that matter most.

“Surf's Up: Riding the Waves of Trend Following – 29 November 2024”

As of November 28, 2024, the SG Trend Index recorded a month-to-date (MTD) gain of 3.04%, raising its year-to-date (YTD) performance to 0.92%. This represents a modest improvement from last week's MTD of 2.89% and YTD of 0.77%, signalling a favourable environment for trend-following strategies throughout much of November. While equities delivered robust contributions to the month's performance, they were not the sole driver of this momentum. Strong trends in key markets, particularly in soft commodities like coffee and cocoa, also played a significant role in boosting results.

The TTU Trend Barometer, however, registered a reading of 41, down from last week's 45. This decrease reflects a slight softening in the overall trend environment, suggesting fewer markets are exhibiting strong and sustained directional movements. Nevertheless, the continuation of significant trends in select markets, such as the persistent upward trajectory in coffee and cocoa, has provided ample opportunities for systematic traders to capitalize on momentum.

November's broader market landscape presented a fertile ground for trend-following strategies. In addition to equities, which saw gains of 5.7% for the S&P 500 and 7.5% for the Dow Jones Industrial Average, the energy and soft commodity sectors have been particularly dynamic. Coffee continued its bullish ascent, driven by persistent weather-related supply constraints and regulatory concerns in key producing regions. Similarly, cocoa maintained its strength, buoyed by production shortfalls and ongoing supply chain disruptions in West Africa. These strong, sustained trends in soft commodities have been a boon for trend-following strategies, offering diversification beyond traditional equity markets.

This week's trading was also influenced by the Thanksgiving holiday in the United States, which traditionally signals lighter trading volumes and a more subdued market environment. The holiday season often results in reduced liquidity, which can temper the formation and strength of trends. Despite these conditions, the persistence of strong trends in soft commodities underscores the resilience of specific market opportunities, even in a lighter trading environment.

Looking ahead, the interplay between seasonal dynamics and the continuation of strong trends in key markets will shape the close of 2024. The softer TTU Trend Barometer reading highlights the importance of vigilance and flexibility, as trend-followers adjust to evolving market conditions. While lighter trading volumes may introduce challenges, the broader positive backdrop—spanning equities, commodities, and more—suggests continued opportunities for systematic strategies to thrive as the year winds down.

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

This week, movements across asset classes reflected diverse influences ranging from macroeconomic data to geopolitical events. Here’s a detailed breakdown of the notable percentage changes and the factors driving them:

• Volatility Index (VIX): -7.57%: The sharp decline in the VIX reflects significantly reduced market uncertainty. This drop can be attributed to a combination of easing recession fears, stabilizing equity markets, and strong U.S. economic data. Additionally, the lighter trading volume surrounding the Thanksgiving holiday contributed to the lower perceived risk environment. With equities maintaining momentum, the VIX trended downward in line with improving investor sentiment.
• Grains: -0.88%: Grains saw a slight decline this week, driven by favourable harvest conditions in key producing regions such as the U.S. and South America. Increased supply from strong wheat exports out of Russia and competitive pricing in global markets placed downward pressure on the grain sector. This comes despite ongoing concerns over long-term production risks tied to climate factors.
• Meats: +0.99%: The meat sector showed a modest gain as strong seasonal demand and improving export trends lifted prices. The upcoming holiday season typically boosts consumption of beef and pork, with additional support from rising international demand, particularly in Asian markets.
• Bonds: +1.43%: The bond market experienced gains this week as U.S. Treasury yields retreated slightly after recent highs. This movement reflects a combination of Federal Reserve commentary hinting at a more cautious approach to future rate hikes and increased demand for fixed-income assets amid stabilizing inflation expectations.
• Energy: -2.32%: Energy prices declined this week, with both crude oil and natural gas under pressure. Crude oil experienced a pullback as concerns about OPEC's potential supply cuts diminished and traders adjusted positions following last week’s rally. Natural gas, which saw significant gains earlier in November, softened due to improved production levels and mixed weather forecasts, tempering bullish sentiment.
• Metals: -2.09%: The metals sector dipped this week, with palladium and platinum leading the declines. This drop comes as the dollar strengthened slightly and industrial demand for these metals showed mixed signals. Additionally, profit-taking by investors following recent rallies in safe-haven metals like gold weighed on the sector.
• Soft Commodities: +1.42%: Soft commodities maintained positive momentum, bolstered by ongoing supply constraints in coffee and cocoa. Coffee prices surged due to unfavourable weather in Brazil and regulatory uncertainties in Europe. Cocoa benefited from continued production challenges in West Africa, further tightening global supplies and supporting prices.
• Equity Indexes: +0.82%: Equities delivered another solid week of gains, driven by better-than-expected U.S. GDP growth and strong corporate earnings reports. The S&P 500 and Dow Jones maintained their upward trajectories, further buoying investor confidence and contributing to one of the best Novembers for equity markets in recent years.
• Currencies: +1.07%: Currencies showed modest gains, with the U.S. dollar continuing to exhibit strength. This movement reflects ongoing confidence in the U.S. economy and a divergence in global monetary policy, as other central banks, such as the ECB and Bank of Japan, signal a more dovish outlook compared to the Federal Reserve.

This week’s asset class moves highlight a tug-of-war between improving economic conditions and shifting market dynamics. Equities and soft commodities shone, riding strong momentum, while energy and metals stumbled under mixed signals.monitor economic, geopolitical, and seasonal drivers to effectively navigate the evolving financial landscape.

Top 10 Bear and Bull Price Moves

Here's a detailed analysis of the key market movers for the week.

What’s Moving Up

Coffee: +6.04%

Coffee prices surged by 6.04% this week, extending an impressive rally that has brought the market to its highest levels in nearly 47 years. This continued strength reflects a confluence of factors that have tightened global supplies and fuelled robust demand. In Brazil, the world's largest coffee producer, a combination of severe droughts and heavy rains has severely impacted crop yields, raising concerns about future shortages. Adding to the supply pressures, farmers in Brazil have delayed delivering this year’s harvest, exacerbating the tightness and creating financial challenges for traders managing dwindling inventories.

Beyond weather-related issues, regulatory changes are also playing a role in the market's dynamics. The European Union's upcoming anti-deforestation laws have prompted importers to secure supplies in advance, further driving up prices as companies look to safeguard their inventories against future regulatory hurdles. This environment of constrained supply and heightened demand has created fertile ground for sustained upward momentum in coffee prices.

The weekly chart reflects this strong trend, with prices consistently climbing to higher highs and maintaining bullish momentum. The 6.04% increase over the past week reinforces the clear directional movement that trend-following traders rely on. For these systematic traders, coffee has been a standout performer, offering significant opportunities to capture gains in a well-defined and persistent uptrend.

In this favourable environment, trend-following strategies have thrived, capitalizing on the strong and steady momentum in coffee prices. As the market continues to respond to supply constraints, weather challenges, and regulatory shifts, coffee remains a powerful contributor to positive results for systematic trading approaches.market.

JPY: +3.38%

The Japanese yen appreciated by 3.38% this week, marking a significant shift in its recent performance. This movement is largely attributed to higher-than-expected inflation data from Tokyo, which has intensified expectations of an imminent interest rate hike by the Bank of Japan (BOJ). Specifically, Tokyo's core consumer price index, excluding fresh food, rose by 2.2% year-on-year in November, surpassing forecasts and suggesting that the BOJ may tighten monetary policy sooner than anticipated. 

The yen's strengthening to levels below ¥150 against the U.S. dollar reflects this shift in market sentiment. However, this appreciation poses challenges for trend-following traders who have been capitalizing on the yen's prolonged depreciation. The sudden reversal likely resulted in losses for those holding short positions, as their strategies are typically designed to profit from sustained trends rather than abrupt changes.

In summary, the yen's recent appreciation, driven by unexpected inflation data and potential BOJ policy changes, has disrupted existing trends, presenting difficulties for trend-following traders accustomed to the yen's prior downward trajectory.

Cocoa: +3.38%

Cocoa prices climbed 3.38% this week, continuing a robust bullish trend that has been advantageous for trend-following traders. This upward movement is part of a significant rally, with cocoa futures surging over 16% in November, surpassing 100% gains year-to-date amid persistent supply shortages. 

The primary drivers of this price increase include ongoing supply constraints from major cocoa-producing regions, particularly in West Africa. Poor harvests in countries like Ivory Coast and Ghana have tightened global supplies, contributing to the price surge. 

Additionally, international buyers have injected substantial funds into Ghana's cocoa industry through advanced payments to Cocobod, the state marketing board, aiming to mitigate losses from declining production. 

Despite some recent volatility, the strength of the rises over recent weeks suggests the potential for new highs in the future. The consistent upward trajectory indicates sustained buying interest, reinforcing the bullish momentum. For trend-following traders, this environment has been particularly favourable, allowing them to capitalize on the strong and persistent uptrend in cocoa prices.

The combination of supply shortages, strategic financial interventions, and strong demand continues to drive cocoa prices higher, offering profitable opportunities for trend-following strategies.aintaining or expanding long positions.

30 Year Bond: +2.79%

The U.S. 30-year Treasury bond saw a significant price rally this week, with yields dropping to 4.36% from earlier levels of 4.48%. This movement reflects growing demand for long-term Treasuries, driven by a combination of political developments and shifting economic expectations. The nomination of Scott Bessent as the next U.S. Treasury Secretary has been a key factor, as his reputation as a fiscal conservative and moderate policymaker has boosted investor confidence. Market participants anticipate that Bessent will prioritize deficit control and adopt a measured approach to trade tariffs, fostering a favourable environment for Treasury bonds.

In addition to the political landscape, economic data and Federal Reserve policy expectations have played a significant role. October’s strong consumer spending figures showcased the resilience of the U.S. economy, while persistent inflation concerns have led to speculation about a potential 25-basis-point rate cut by the Federal Reserve in December. This expectation of a more accommodative monetary stance has further fuelled the rally in long-term Treasury prices, sending yields lower.

For trend-following traders, this unexpected shift presented challenges. Many traders were likely positioned short in the 30-year bond market, banking on the continuation of rising yields and declining prices that had defined the broader trend in recent months. The sudden rally disrupted this bearish momentum, leading to unfavourable outcomes for systematic strategies dependent on sustained trends. Such reversals underscore the complexities of navigating markets influenced by a mix of political, economic, and monetary factors.

This week’s rally in the 30-year Treasury bond highlights the unpredictable nature of financial markets, where shifts in sentiment and policy expectations can quickly reverse established trends.

Natural Gas: +2.46%

Natural gas prices rose by 2.46% this week, signalling a potential shift toward a bullish trend after a prolonged period of consolidation since early 2023. This uptick is influenced by several factors impacting supply and demand dynamics.

In Europe, colder-than-expected weather has increased heating demand, leading to early withdrawals from gas storage facilities. Notably, the UK's largest storage site, Rough, began injecting gas into the network earlier than usual this winter, reflecting concerns over supply adequacy. 

Simultaneously, U.S. liquefied natural gas (LNG) exports are nearing record levels, driven by heightened global demand and fewer operational disruptions. The Freeport LNG plant, the nation's second-largest exporter, has ramped up output, contributing to increased supply to international markets. 

These developments have tightened the global natural gas market, supporting recent price increases. The weekly price chart indicates a potential breakout from the consolidation phase, with prices approaching previous resistance levels. If this momentum continues, it could confirm the onset of a new bullish trend.

For trend-following traders, this emerging pattern offers promising opportunities. Identifying and capitalizing on sustained upward movements could lead to favourable outcomes, provided that the trend solidifies in the coming weeks.

The combination of increased demand due to colder weather and robust LNG exports has set the stage for a potential bullish trend in natural gas prices, presenting advantageous conditions for trend-following strategies.

What’s Moving Down

VIX Futures: -7.57%

The Cboe Volatility Index (VIX), commonly known as Wall Street's “fear gauge,” declined by 7.57% this week, bringing it to levels not seen since early 2023. This decrease indicates a significant reduction in market anxiety, as the VIX measures expected volatility in the S&P 500 over the next 30 days. The current low levels suggest that investors anticipate a period of relative calm in the equity markets.

This decline in the VIX aligns with a broader trend observed throughout November, where the index has plunged approximately 36.6%. Such a substantial drop reflects increased investor confidence, likely influenced by positive economic indicators and a stable geopolitical environment.

While VIX futures are not typically a focal point for trend-following traders, the index serves as a crucial barometer of market sentiment. A low VIX corresponds with reduced volatility, which can impact the performance of trend-following strategies. In low-volatility environments, markets may exhibit fewer pronounced trends, potentially leading to fewer opportunities for trend-followers to capitalize on significant price movements.

Conversely, a high VIX indicates heightened market uncertainty and increased volatility, conditions that often give rise to more substantial and sustained trends across various asset classes. Therefore, monitoring the VIX provides valuable insights into the prevailing market climate, helping traders adjust their strategies accordingly.

The recent decline in the VIX to very low levels suggests a market environment characterized by stability and reduced volatility. For trend-following traders, this may signal a period where strong, sustained trends are less prevalent, underscoring the importance of adapting strategies to current market conditions.strategies are crucial to effectively navigate the evolving landscape of the canola market.

Gasoline RBOB: -5.52%

Gasoline RBOB futures saw a significant decline of 5.52% this week, mirroring the broader weakness across the energy sector. This movement aligns well with the strategies of trend-following traders, who are likely positioned bearishly in the current market environment. The price drop reflects a combination of factors weighing on gasoline markets.

Ongoing concerns about global energy demand have played a pivotal role. The Organization of the Petroleum Exporting Countries (OPEC) recently lowered its 2024 oil consumption forecast for the fourth consecutive month, signalling reduced demand expectations. This bearish outlook has intensified pressure on gasoline prices, particularly as inventories remain robust, creating a supply-demand imbalance that favours lower pricing.

Seasonal trends have also contributed to the decline. The transition to winter-blend gasoline, which is cheaper to produce, has led to the usual seasonal softening in prices during this time of year. This factor, combined with broader market dynamics, has accelerated the downward momentum in gasoline futures.

For trend-following traders, the sustained bearish trajectory in gasoline RBOB has provided an opportunity to profit from short positions. The consistent alignment of market fundamentals with the existing trend has reinforced their ability to capture gains as the market continues its decline.

Overall, the drop in gasoline RBOB futures reflects a perfect storm of weakening demand forecasts, ample supply, and seasonal factors. For systematic traders, this environment has been highly favourable, offering opportunities to capitalize on the clear and persistent downward trend.conditions, policy changes, and global economic developments.

Crude Oil WTI: -4.34%

West Texas Intermediate (WTI) crude oil prices fell by 4.34% this week, continuing a broader decline across the energy sector. This downward move has been favourable for trend-following traders, many of whom are likely holding bearish positions in alignment with the market's prevailing trend.

The price drop can be traced to a combination of geopolitical developments, market fundamentals, and inventory data. The announcement of a cease-fire between Israel and Hezbollah has eased concerns about potential disruptions to Middle Eastern oil supplies, effectively reducing the geopolitical risk premium that had been supporting oil prices. At the same time, OPEC+ postponed its much-anticipated meeting on potential production cuts, rescheduling it from November 30 to December 5. This delay has introduced uncertainty into the market, contributing to a bearish sentiment as traders wait for clarity on future supply adjustments.

Adding to the pressure on WTI prices, the Energy Information Administration reported an unexpected increase in U.S. gasoline inventories, suggesting a potential slowdown in demand. This rise in inventories has compounded concerns about weaker consumption, further weighing on crude oil prices.

For trend-following traders, this combination of factors has created an ideal environment to capitalize on the sustained bearish momentum. The alignment of geopolitical shifts, supply dynamics, and market fundamentals with the broader downtrend has enabled traders to benefit from short positions as crude oil prices continue to decline.

The drop in WTI crude oil prices reflects a confluence of easing geopolitical tensions, uncertainties around OPEC+ decisions, and rising U.S. gasoline inventories. These factors have reinforced the bearish trend, providing lucrative opportunities for systematic trading strategies.d in unfavourable outcomes, especially for those holding long positions.

Crude Oil Brent: -3.46%

Brent crude oil prices declined by 3.46% this week, mirroring the downturn observed in West Texas Intermediate (WTI) crude. This decline has been advantageous for trend-following traders who have maintained short positions in the market.

The price reduction is attributed to several factors. The cease-fire between Israel and Hezbollah has alleviated concerns about potential disruptions in Middle Eastern oil supplies, leading to a decrease in the geopolitical risk premium previously factored into oil prices. 

Additionally, the Organization of the Petroleum Exporting Countries and its allies (OPEC+) postponed a critical meeting on production cuts from November 30 to December 5, introducing uncertainty regarding future supply adjustments and contributing to bearish sentiment in the market. 

For trend-following traders, the sustained decline in Brent crude oil prices has presented profitable opportunities. The alignment of market fundamentals with the prevailing bearish trend has enabled traders to capitalize effectively on short positions.

In summary, the combination of easing geopolitical tensions and uncertainties surrounding OPEC+ production decisions has driven Brent crude oil prices lower, creating a favourable environment for trend-following strategies.

Heating Oil: -3.45%

Heating oil prices declined by 3.45% this week, aligning with the broader downturn observed across the energy sector. This movement has been favourable for trend-following traders who have maintained short positions in the market.

The price reduction can be attributed to several factors. The cease-fire between Israel and Hezbollah has alleviated concerns about potential disruptions in Middle Eastern oil supplies, leading to a decrease in the geopolitical risk premium previously factored into oil prices. 

Additionally, the Organization of the Petroleum Exporting Countries and its allies (OPEC+) postponed a critical meeting on production cuts from November 30 to December 5, introducing uncertainty regarding future supply adjustments and contributing to bearish sentiment in the market. 

For trend-following traders, the sustained decline in heating oil prices has presented profitable opportunities. The alignment of market fundamentals with the prevailing bearish trend has enabled traders to capitalize effectively on short positions.

In summary, the combination of easing geopolitical tensions and uncertainties surrounding OPEC+ production decisions has driven heating oil prices lower, creating a favourable environment for trend-following strategies.

Conclusion

This week’s trends offered a rich tapestry of market movements, reflecting the complexities and opportunities of the current financial landscape. While equities continued their upward trajectory, soft commodities like coffee and cocoa showcased their resilience with sustained bullish momentum, delivering strong returns for systematic traders. The energy sector, on the other hand, maintained its downward slide, with crude oil, gasoline, and heating oil all presenting favourable conditions for trend-following strategies driven by bearish positions.

The Thanksgiving holiday brought lighter trading volumes, often associated with subdued market dynamics, yet key opportunities emerged in sectors where strong trends persisted. Notably, coffee reached multi-decade highs, and cocoa continued its remarkable rally, both bolstered by supply constraints and regulatory influences. Meanwhile, natural gas hinted at the start of a potential bullish breakout, adding further intrigue to the evolving market landscape.

As the TTU Trend Barometer dipped to 41, it signalled a slightly softer overall trend environment, underscoring the need for vigilance as we approach the close of the year. While the broader positive backdrop across equities, soft commodities, and select markets remains supportive, the interplay of geopolitical events, seasonal factors, and economic signals continues to demand adaptability and precision.

The week reinforced the core tenets of systematic trading: discipline, the ability to adapt to shifting conditions, and a focus on capitalizing on the trends that endure amidst a constantly changing market environment. As December unfolds, traders must remain attuned to these dynamics, seizing opportunities while navigating the challenges of the year’s final chapter.

List of Resources used in the Week in Review

Important Disclaimers

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This document contains simulated or hypothetical performance results that have certain inherent limitations AND SHOULD BE VIEWED FOR ILLUSTRATIVE PURPOSES. Unlike the results shown in an actual performance record, these results do not represent actual trading. HYPOTHETICAL PERFORMANCE RESULTS HAVE MANY INHERENT LIMITATIONS, SOME OF WHICH ARE DESCRIBED BELOW. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN IN FACT, THERE ARE FREQUENTLY SHARP DIFFERENCES BETWEEN HYPOTHETICAL PERFORMANCE RESULTS AND THE ACTUAL RESULTS SUBSEQUENTLY ACHIEVED BY ANY PARTICULAR INVESTMENT ACCOUNT.

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Welcome to “This Week in Trend”, where each week, we cover key movements and trends in the futures markets, offering insights on commodities and indices shaping the economy. From price surges to notable declines, we provide an overview of the factors driving these changes. Stay informed about the latest developments and navigate the market with confidence. Join us weekly to explore the dynamic world of futures trading and the trends that matter most.

“Divergence Defines the Day: Favourable Benchmarks, Mixed Realities”

As of November 21, 2024, the SG Trend Index recorded a month-to-date (MTD) gain of 2.89%, with the year-to-date (YTD) performance standing at 0.77%. These numbers indicate a continuation of favourable trending conditions in the benchmarks, albeit with slightly moderated momentum compared to last week’s MTD of 3.17%.

The TTU Trend Barometer, which measures the strength of trends across markets, registered a reading of 45%, slightly down from last week's 48%. While this suggests the environment remains moderately supportive, the experiences of individual managers tell a more nuanced story.

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

Despite these promising benchmark results, 2024 continues to be a year marked by divergence. Not all trend followers are experiencing the same level of success, with significant variability in outcomes depending on market exposures, strategy selection, and adaptability to challenging conditions. Some managers have managed to capitalize on opportunities in trending markets like energy and soft commodities, while others have struggled with reversals and heightened volatility in sectors like bonds and currencies.

This dispersion underscores the complexity of this year’s market environment. While benchmarks like the SG Trend Index point to overall positivity, they mask the challenges faced by many individual managers. The reality for some has been less about steady gains and more about navigating a landscape of uneven opportunities, where risk management and flexibility have proven critical.

As we approach the end of the year, divergence remains the theme of the day. The gap between benchmark performance and individual manager results serves as a reminder that while broad trends might indicate favourable times, success in systematic trading ultimately hinges on the ability to align strategy with market conditions. This week’s results reflect the ongoing need for discipline and adaptability in a market environment where favourable benchmarks do not guarantee universal success.

Weekly Asset Class Snapshot

In the past week, asset classes exhibited a wide range of movements influenced by a mix of economic data releases, shifting monetary policy expectations, and geopolitical developments:

• Volatility Index (VIX): The VIX declined by -2.30%, reflecting reduced market uncertainty. This dip corresponds with a more optimistic tone in equity markets, as strong U.S. corporate earnings and easing recession fears helped stabilize investor sentiment.
• Soft Commodities: Soft commodities gained 2.79%, continuing their upward trajectory. Cocoa and coffee led the charge, driven by persistent supply concerns in key producing regions and ongoing regulatory uncertainties in Europe. Cocoa prices remain buoyant due to poor weather conditions in West Africa, while Brazil’s dry spell and EU deforestation regulations added upward pressure on coffee.
• Metals: The metals sector rebounded with a 3.96% gain, led by gold and palladium. Renewed demand for safe-haven assets supported gold prices, while palladium benefited from increased industrial demand. The rally came despite a strong U.S. dollar, which usually weighs on metals, as traders balanced currency effects against geopolitical risks and global industrial trends.
• Grains: Grains declined by -1.87%, reflecting favourable harvest conditions in key producing regions, which bolstered supply. Wheat, in particular, saw downward pressure from strong Russian exports and competitive global pricing, offsetting concerns about longer-term production risks due to climate factors.
• Energy: The energy sector surged 5.27%, driven by a significant rebound in crude oil prices. Both WTI and Brent crude gained amid OPEC signalling potential supply cuts, as well as seasonal demand increases for heating oil. Natural gas also saw a sharp rise, supported by colder weather forecasts and tighter production in the U.S. after disruptions from recent storms.
• Currencies: Currencies saw a slight decline of -0.15%, reflecting stability in forex markets. The U.S. dollar continued to show strength, buoyed by hawkish comments from Federal Reserve officials and resilient U.S. economic data, but its upward momentum was tempered by mixed global inflation trends.

This week’s movements highlight the interplay of diverse factors shaping global markets. Soft commodities and energy exhibited strong trending behaviour, providing fertile ground for trend-followers, while grains and currencies reflected muted or opposing dynamics. Metals rebounded sharply, defying typical headwinds from the strong dollar, and volatility eased amid improving sentiment in equities. These dynamics reinforce the need to monitor economic, geopolitical, and seasonal drivers to effectively navigate the evolving financial landscape.

Top 10 Bear and Bull Price Moves

Here's a detailed analysis of the key market movers for the week.

What’s Moving Up

Natural Gas: +10.82%

Natural gas futures experienced a significant surge of 10.82% this week, marking a notable shift in the commodity's performance. This increase is attributed to several key factors:

• Colder Weather Forecasts: Anticipation of colder-than-usual temperatures across much of the United States has heightened expectations for increased heating demand, contributing to the price rise.
• Supply Dynamics: The U.S. Energy Information Administration (EIA) reported a storage draw of 3 billion cubic feet for the week ending November 15th, contrasting with expectations of a 5 billion cubic feet build. This unexpected drawdown reflects a tighter supply scenario.
• LNG Export Demand: Elevated demand for U.S. liquefied natural gas (LNG) exports, particularly to Europe, has further tightened domestic supply. LNG feed gas flows have risen to a 10-month high, driven by supply concerns in Europe ahead of the year-end.

From a technical perspective, natural gas prices have been confined within a congestion zone since February 2023. The recent breakout above the $3.30/MMBtu level suggests the potential emergence of a bullish trend. For trend-following traders, this development may signal the beginning of a sustained upward movement, offering opportunities to capitalize on the evolving market dynamics.

However, it's essential to approach this potential trend with caution. The natural gas market is influenced by various factors, including weather patterns, production levels, and geopolitical events, which can introduce volatility. Therefore, while the current indicators are promising, continuous monitoring and adaptive strategies remain crucial for effectively navigating this market.

Palladium: +7.60%

Palladium prices experienced a notable increase of 7.60% this week, a movement that may have posed challenges for trend followers positioned within the prevailing bearish trend. Several factors contributed to this bullish reversal:

• Geopolitical Tensions: Escalating geopolitical tensions, particularly involving Russia—a major palladium producer—have raised concerns about potential supply disruptions. The possibility of sanctions on Russian exports has heightened market uncertainty, leading to speculative buying and upward pressure on prices.
• Industrial Demand Fluctuations: Despite a general decline in demand due to the automotive industry's shift towards electric vehicles, short-term industrial demand for palladium has shown variability. This includes increased use in hybrid vehicles, which continue to rely on palladium for catalytic converters, thereby providing intermittent support to prices.
• Market Speculation and Short Covering: The recent price surge may also be attributed to speculative activities and short covering by traders anticipating potential supply constraints or reacting to sudden market movements.

For trend-following traders, this week's upward movement in palladium represents a counter-trend rally within a broader bearish context. Such reversals can lead to challenges, including potential drawdowns or the triggering of stop-loss orders. This scenario underscores the importance of robust risk management strategies and the need for adaptability in response to sudden market shifts. While the long-term outlook for palladium remains influenced by factors such as the transition to electric vehicles and evolving industrial applications, short-term price movements can be significantly impacted by geopolitical events and market sentiment.

Coffee: +6.92%

Coffee prices surged by 6.92% this week, continuing a robust bullish trend that has presented lucrative opportunities for trend-following traders. Several key factors have contributed to this upward momentum:

• Supply Constraints: Adverse weather conditions in major coffee-producing regions, notably Brazil, have led to concerns over reduced yields. Prolonged droughts and irregular rainfall patterns have negatively impacted crop development, tightening global supply.
• Regulatory Developments: The European Union's deforestation regulations have introduced uncertainties in the coffee supply chain. These policies aim to limit imports of products linked to deforestation, potentially affecting coffee sourced from regions where deforestation is prevalent. Such regulatory measures have added upward pressure on prices due to anticipated supply disruptions.
• Rising Production Costs: Increased costs for fertilizers, labour, and transportation have elevated production expenses for coffee growers. These higher costs are often passed down the supply chain, contributing to elevated coffee prices.

For trend-following traders, the sustained bullish trajectory in coffee prices has been highly favourable. The market's consistent upward movement provides clear signals for maintaining or expanding long positions.

Crude Oil WTI: +6.37%

West Texas Intermediate (WTI) crude oil prices rose by 6.37% this week, reaching a two-week high of $71.24 per barrel.

This increase is primarily attributed to escalating geopolitical tensions, particularly the intensification of the Russia-Ukraine conflict, which has heightened concerns over potential disruptions in oil supply. Additionally, the U.S. imposed new sanctions on Russia's Gazprombank and banned imports from about 30 Chinese companies, while China announced measures to boost trade and energy imports.

Despite this upward movement, the overall trend in WTI crude oil remains uncertain. The recent price increase may not have provided a clear signal for trend-following traders, who typically seek sustained directional movements. For those holding bearish positions, this week's rise could have resulted in unfavourable outcomes. The market continues to be influenced by a complex interplay of geopolitical events, economic indicators, and policy decisions, making it challenging to establish a definitive trend. As such, traders may remain cautious, awaiting more consistent signals before committing to new positions.

Crude Oil Brent: +5.97%

Brent crude oil prices climbed by 5.97% this week, reflecting a strong recovery similar to its WTI counterpart.

This rise comes amidst escalating geopolitical tensions, with the ongoing Russia-Ukraine conflict raising concerns about potential disruptions to global oil supplies. Additionally, sanctions on Russian energy exports and China's increased import measures to bolster its energy security have added to the bullish momentum in Brent prices.

For trend followers, Brent's recent price movement offers a situation akin to WTI. While the rebound signals short-term strength, it does not necessarily mark the start of a sustained trend. Traders who have been sidelined may find the lack of a clear directional pattern challenging, while those holding bearish positions may have faced setbacks.

Brent, as the global benchmark, continues to reflect the broader uncertainty in the oil markets. Factors such as OPEC's supply strategies, global demand outlooks, and geopolitical developments will likely dictate whether the current upward movement evolves into a long-term trend or remains a temporary spike. For now, patience remains key for trend followers awaiting stronger, more definitive signals.

What’s Moving Down

Canola: -8.40%

Canola prices declined by 8.40% this week, aligning with the prevailing bearish trend and presenting favourable conditions for trend-following traders. Several factors contributed to this downward movement:

• Increased Global Supply: Recent reports indicate that Canada's canola production may be higher than previously estimated, with expectations that the 2024/25 Canadian canola crop is likely smaller than official estimates, prompting end users to enter the market early.
• Weakening Demand: A lack of end-user demand contributed to the declines, with exporters and domestic crushers thought to be covered for the time being.
• Technical Selling Pressure: Speculative funds were adding to their short positions as canola fell below nearby chart support levels, indicating a bearish sentiment among traders.

For trend-following traders, this week's decline in canola prices reinforces the existing bearish trend, providing opportunities to maintain or expand short positions. However, it's essential to remain vigilant, as market dynamics can shift due to factors such as weather conditions, policy changes, and global economic developments. Continuous monitoring and adaptive strategies are crucial to effectively navigate the evolving landscape of the canola market.

Soybean Oil: -7.66%

Soybean oil prices declined by 7.66% this week, aligning with the medium- to long-term bearish trend and presenting favourable conditions for trend-following traders. Several factors contributed to this downward movement:

• Increased Production Forecasts: Improved weather conditions in major soybean-producing regions, such as the United States and Brazil, have led to higher yield expectations, easing concerns about supply constraints.
• Weaker Demand: A softening in global demand for biodiesel, which utilizes soybean oil as a primary feedstock, has further pressured prices. The broader edible oil market has also seen declining prices, reflecting an easing of prior disruptions in global supply chains.
• Technical Selling Pressure: Speculative funds were adding to their short positions as soybean oil fell below nearby chart support levels, indicating a bearish sentiment among traders.

For trend-following traders, this week's decline in soybean oil prices reinforces the existing bearish trend, providing opportunities to maintain or expand short positions. However, it's essential to remain vigilant, as market dynamics can shift due to factors such as weather conditions, policy changes, and global economic developments.

Lumber: -2.56%

Lumber prices declined by 2.56% this week, presenting challenges for trend-following traders who may have held long positions. Several factors contributed to this downward movement:

• Weakening Housing Market: The U.S. housing market has experienced a slowdown, with residential construction declining. This reduction in building activity has led to decreased demand for lumber, exerting downward pressure on prices.
• Increased Supply: Despite the demand slowdown, lumber production has remained steady, leading to an oversupply in the market. This surplus has further contributed to the decline in prices.
• Economic Uncertainty: Broader economic uncertainties, including fluctuating interest rates and inflation concerns, have impacted consumer confidence and spending on housing, indirectly affecting lumber demand.

For trend-following traders, this week's decline in lumber prices may have resulted in unfavourable outcomes, especially for those holding long positions.

VIX: -2.30%

The Volatility Index (VIX), often referred to as the “fear gauge,” declined by 2.30% this week, reflecting reduced market uncertainty. This drop coincides with improved investor sentiment, bolstered by strong corporate earnings reports and a stabilization in broader equity markets. A lower VIX generally suggests that market participants are perceiving less risk, which aligns with easing recession fears and more stable macroeconomic conditions.

While VIX futures are not typically traded by trend followers, they serve as an essential barometer of overall market sentiment. A declining VIX can indicate a more stable environment for equities, potentially reducing opportunities for significant price moves that trend followers rely on. Conversely, a rising VIX often signals increased volatility and potential trend development across asset classes.

For trend-following strategies, the drop in the VIX this week may point to a market environment where trends in certain sectors, particularly equities, could become less pronounced. However, it remains crucial to monitor shifts in volatility, as changes in the VIX can signal broader transitions in market dynamics that impact trend development.

Soybeans: -1.38%

Soybean prices declined by 1.38% this week, continuing to align with the broader bearish trend. Much like soybean oil, this move reinforces the favourable environment for trend-following traders who have been positioned short in this market. The price action this week marked a reversion back into the prevailing bearish trend, offering an opportunity for traders to maintain or extend their positions.

The downward pressure on soybean prices can be attributed to favourable weather conditions in key producing regions, including the United States and South America, which have bolstered crop yields and increased global supply. Additionally, softened demand from major importers, coupled with subdued biodiesel market activity, has further weighed on prices.

For trend followers, this week’s move reaffirms the consistency of the bearish trend in soybeans, with market dynamics continuing to support a downtrend. However, as with any agricultural commodity, vigilance is necessary due to the potential for sudden weather-related disruptions or shifts in global demand that could impact the trajectory of this trend.

Conclusion

This week in trend-following has underscored the diverse and often divergent forces shaping market performance in 2024. While benchmarks like the SG Trend Index and the TTU Trend Barometer reflect broadly supportive conditions, the dispersion in manager outcomes tells a more nuanced story. Opportunities have been abundant in trending markets such as natural gas, coffee, and soft commodities, where consistent upward or downward movements have rewarded systematic approaches. However, reversals in markets like palladium and the indecisive nature of crude oil trends have highlighted the challenges of maintaining alignment with broader benchmarks.

Energy and soft commodities continued to lead the charge this week, offering fertile ground for trend-followers to capitalize on supply disruptions and shifting demand dynamics. On the other hand, bearish trends in grains, soybean oil, and canola reaffirmed their reliability for systematic traders, while sectors like lumber and metals demonstrated the importance of risk management and adaptability in the face of fluctuating demand and macroeconomic uncertainties.

As we approach the end of 2024, divergence remains the prevailing theme. The broader positive signals from benchmarks conceal the uneven terrain individual managers are navigating. Success in this environment requires not just discipline and adherence to proven processes but also the flexibility to adjust to dynamic market conditions. In this landscape of mixed fortunes, trend-following strategies continue to demonstrate their resilience, thriving in pockets of opportunity while managing the inevitable challenges of a complex and unpredictable market environment.

List of Resources used in the Week in Review

Important Disclaimers

This document is directly solely to Accredited Investors, Qualified Eligible Participants, Qualified Clients and Qualified Purchasers. No investment decision should be made until prospective investors have read the detailed information in the fund offering documents of any manager mentioned in this document. This document is furnished on a confidential basis only for the use of the recipient and only for discussion purposes and is subject to amendment This document is neither advice nor a recommendation to enter into any transaction. This document is not an offer to buy or sell, nor a solicitation of an offer to buy or sell, any security or other financial instrument. This presentation is based on information obtained from sources that TopTradersUnplugged (“TTU”) (“considers to be reliable however, TTU makes no representation as to, and accepts no responsibility or liability for, the accuracy or completeness of the information. TTU has not independently verified third party manager or benchmark information, does not represent it as accurate, true or complete, makes no warranty, express or implied regarding it and shall not be liable for any losses, damages, costs or expenses relating to its adequacy, accuracy, truth, completeness or use.

All projections, valuations, and statistical analyses are provided to assist the recipient in the evaluation of the matters described herein. Such projections, valuations and analyses may be based on subjective assessments and assumptions and may use one among many alternative methodologies that produce different results accordingly, such projections, valuations and statistical analyses should not be viewed as facts and should not be relied upon as an accurate prediction of future events. There is no guarantee that any targeted performance will be achieved Commodity trading involves substantial risk of loss and may not be suitable for everyone

TTU is not and does not purport to be an advisor as to legal, taxation, accounting, financial or regulatory matters in any jurisdiction. The recipient should independently evaluate and judge the matters referred to herein. TTU does not provide advice or recommendations regarding an investor’s decision to allocate to funds or accounts managed by any manager (“or to maintain or sell investments in funds or accounts managed by any manager, and no fiduciary relationship under ERISA is created by the investor investing in funds or accounts managed by any manager, or through any communication between TTU and the investor

In reviewing this document, it should be understood that the past performance results of any asset class, or any investment or trading program set forth herein, are not necessarily indicative of any future results that may be achieved in connection with any transaction. Any persons subscribing for an investment must be able to bear the risks involved and must meet the suitability requirements relating to such investment. Some or all alternative investment programs discussed herein may not be suitable for certain investors This document is directed only to persons having professional experience in matters relating to investments. Any investment or investment activity to which this document relates is available only to such investment professionals. Persons who do not have professional experience in matters relating to investments should not rely upon this document.

This document and its contents are proprietary information of TTU and may not be reproduced or otherwise disseminated in whole or in part without TTU’s prior written consent.

This document contains simulated or hypothetical performance results that have certain inherent limitations AND SHOULD BE VIEWED FOR ILLUSTRATIVE PURPOSES. Unlike the results shown in an actual performance record, these results do not represent actual trading. HYPOTHETICAL PERFORMANCE RESULTS HAVE MANY INHERENT LIMITATIONS, SOME OF WHICH ARE DESCRIBED BELOW. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN IN FACT, THERE ARE FREQUENTLY SHARP DIFFERENCES BETWEEN HYPOTHETICAL PERFORMANCE RESULTS AND THE ACTUAL RESULTS SUBSEQUENTLY ACHIEVED BY ANY PARTICULAR INVESTMENT ACCOUNT.

ONE OF THE LIMITATIONS OF HYPOTHETICAL PERFORMANCE RESULTS IS THAT THEY ARE GENERALLY PREPARED WITH THE BENEFIT OF HINDSIGHT IN ADDITION, HYPOTHETICAL TRADING DOES NOT INVOLVE FINANCIAL RISK, AND NO HYPOTHETICAL TRADING RECORD CAN COMPLETELY ACCOUNT FOR THE IMPACT OF FINANCIAL RISK IN ACTUAL TRADING FOR EXAMPLE, THE ABILITY TO WITHSTAND LOSSES OR TO ADHERE TO A PARTICULAR TRADING PROGRAM OR OTHER ASSET.

There are numerous other factors related to the markets in general or to the implementation of any specific trading program which cannot be fully accounted for in the preparation of hypothetical performance results and all of which can adversely affect actual trading results. No representation is being made that any investment will or is likely to achieve profits or losses similar to those being shown.

Welcome to “This Week in Trend”, where each week, we cover key movements and trends in the futures markets, offering insights on commodities and indices shaping the economy. From price surges to notable declines, we provide an overview of the factors driving these changes. Stay informed about the latest developments and navigate the market with confidence. Join us weekly to explore the dynamic world of futures trading and the trends that matter most.

“Momentum Builds: Trend Followers Ride Strong November Gains”

As of November 14, 2024, the SG Trend Index recorded a month-to-date (MTD) gain of 3.17%, bringing the year-to-date (YTD) performance to 1.05%. This marks a continuation of the positive momentum seen last week, with the MTD rising from 1.61% and the YTD shifting into positive territory from -0.48%.

The TTU Trend Barometer rose to 48%, up from last week's 39%, signalling a potential transition into a “good” trend environment. This improvement reflects strengthening trend dynamics across markets, further bolstering optimism for trend-following strategies as we move deeper into November.

The Top Traders Unplugged (TTU) Trend Barometer is a proprietary tool that measures the percentage of markets with medium to strong trends. Just as a thermometer reading of 0 degrees Celsius equates to freezing, when the TTU Trend Barometer reads a value that is less than 40%, market trendiness begins to get “colder” or weaken. Likewise, when the TTU Trend Barometer gets above 55%, the environment gets “hotter” (better).

Weekly Asset Class Snapshot

In the past week, various asset classes have experienced notable movements influenced by economic data releases and geopolitical developments:

• Volatility Index (VIX): The VIX rose by 5.18%, indicating increased market uncertainty. This uptick reflects investor caution amid recent economic indicators and geopolitical events.
• Soft Commodities: This sector led gains with a 5.68% increase, driven by significant price surges in cocoa and coffee. Supply concerns and robust demand have contributed to these movements.
• Metals: Metals declined by 4.37%, with gold and palladium experiencing sharp drops. A strengthening U.S. dollar and shifting investor sentiment have pressured prices in this sector.
• Grains: The grains sector fell by 2.42%, influenced by favourable harvest conditions in major producing regions, leading to increased supply and downward pressure on prices.
• Energy: Energy prices edged down by 1.18%, as crude oil markets faced headwinds from global supply dynamics and demand expectations. Concerns over a potential supply surplus and soft demand from China have impacted this sector.
• Currencies: Currencies posted a modest decline of 1.20%, reflecting cautious sentiment in forex markets. The U.S. dollar's strength has influenced currency movements, affecting emerging-market stocks and commodities.

These developments underscore the dynamic nature of global markets, highlighting the importance of monitoring economic indicators and geopolitical events to navigate the evolving financial landscape effectively.

Top 10 Bear and Bull Price Moves

Here's a detailed analysis of the key market movers for the week.

What’s Moving Up

• Cocoa: +22.26%

Cocoa futures have climbed to approximately $8,700 per tonne, nearing the recent high of $8,760 set on November 14th, as concerns over limited supplies persist. The price surge has been driven by challenging weather conditions in key West African cocoa-growing regions like Ghana and Nigeria. Unseasonably low rainfall and higher-than-average temperatures have created concerns about diminished yields, which have added upward pressure to the market.

The situation has been further complicated by recent regulatory changes in Europe. On November 14th, the European Parliament voted to delay and adjust parts of its “deforestation law,” which enforces strict due diligence requirements on imports of specific raw materials, including cocoa. This legislation aims to ensure that products entering the European market are not linked to deforestation or forest degradation globally. The potential reduction of cocoa imports from countries like Ivory Coast and Ghana, where deforestation remains an issue, has amplified concerns about future supply availability, fuelling bullish sentiment in the market.

The weekly chart reflects a powerful resumption of the upward trend, with prices decisively breaking previous resistance levels and showing no significant signs of slowing down. Accompanied by rising volume, the rally indicates strong buying momentum. For medium to long-term trend followers, this sustained move has likely resulted in substantial profits. Traders employing systematic trend-following strategies would have benefited significantly from the persistent bullish trajectory, solidifying cocoa's position as a key market mover this week.

• Coffee: +12.80%

Coffee futures surged past $2.80 per pound, marking the highest levels seen since mid-2011, as concerns over supply conditions intensified. This bullish move has been highly favourable for trend followers who have been riding the sustained upward momentum in coffee prices. Market participants remain focused on the implications of the European Union's decision to delay its Deforestation Regulation by one year, a policy aimed at limiting imports of products linked to deforestation. This delay has added uncertainty to the supply chain, particularly for coffee sourced from Brazil and Indonesia, where deforestation remains a concern.

Meanwhile, attention is also fixed on the upcoming 2024 crop in Brazil, the world’s largest producer of Arabica coffee. Despite recent rainfall, soil moisture remains insufficient, leading to poor fruit development and excessive leaf growth, both of which have raised alarms about next year’s harvest. The weather forecast for Minas Gerais, Brazil’s primary Arabica coffee-producing region, continues to predict hot and dry conditions, further exacerbating supply worries and providing a firm underpinning for prices.

The weekly chart underscores the strength of the bullish trend, with prices breaking above key resistance levels and maintaining momentum throughout the week. For trend-following traders, this has likely been an exceptionally profitable position, as the market continues to move decisively higher with limited signs of reversal. The combination of supply-side constraints and regulatory uncertainty reinforces the narrative of sustained upward pressure on coffee prices, making it a standout performer in the commodity markets.

• Natural Gas: +6.29%

Natural gas futures rose by 6.29% this week, settling near $2.80/MMBtu. Despite the increase, the price action remains confined to a well-established congestion pattern, making it less appealing for trend followers, who typically look for sustained directional movements. This week's rally came as the U.S. Energy Information Administration (EIA) reported a storage build of 42 billion cubic feet (bcf), slightly below expectations of 43 bcf. However, gas inventories remain robust, sitting 6.1% above the seasonal average, marking the fourth consecutive week of above-average builds—a trend last observed in October 2022.

Forecasts indicate that while heating demand may increase as colder weather sets in later this month, warmer-than-usual temperatures are expected to persist until November 20, with average conditions likely afterward. This muted demand outlook has tempered some of the bullish momentum in the market. Meanwhile, production levels have declined slightly, with average output in the Lower 48 states dropping to 100.0 billion cubic feet per day (bcfd) in November, down from 101.3 bcfd in October. This drop included a nine-month low of 98.3 bcfd earlier this week, partially due to Hurricane Rafael’s disruptions in the Gulf of Mexico.

From a technical perspective, the weekly chart shows that prices remain range-bound, with no decisive breakout in sight. This lack of a clear trend means trend followers are likely sidelined, awaiting stronger directional signals before entering the market. The continued oscillation within the congestion zone reflects uncertainty and a lack of sustained momentum, underscoring why natural gas may not yet capture the interest of systematic traders relying on trend-following strategies.

• VIX Futures: +5.18%

The Volatility Futures, often referred to as the “Fear Index,” experienced a 5.18% increase this week, reflecting heightened market uncertainty. While trend followers typically do not trade VIX futures directly, the VIX serves as a crucial barometer of investor sentiment, particularly in the U.S. equity markets. A rising VIX indicates growing fear among investors, often leading to increased volatility in stock prices. Conversely, a declining VIX suggests a more complacent market environment. This week's uptick in the VIX may signal potential caution for equity investors, as it often precedes market downturns.

Rough Rice: +4.49%

Rough rice futures climbed by 4.49% this week, marking a reversal that likely challenged trend followers. The commodity's price increase was primarily driven by concerns over potential supply disruptions caused by ongoing El Niño conditions, which are expected to impact major rice-producing regions in Asia. These weather-related challenges have heightened fears of reduced yields, adding bullish pressure to the market. Additionally, export restrictions by some countries aiming to protect domestic supplies have contributed to the upward momentum.

From a technical perspective, the weekly chart shows a sharp upward movement, disrupting the prevailing downtrend. For trend followers who were likely positioned short, this rally may have resulted in losses, as the price failed to maintain its bearish trajectory. The sudden reversal underscores the inherent volatility in agricultural commodities, where external factors such as weather and policy changes can significantly impact market dynamics. For systematic traders relying on trend-following models, this week served as a reminder of the importance of risk management in navigating unpredictable market conditions.

What’s Moving Down

• Soybean Oil: -6.79%

Soybean oil futures dropped by 6.79% this week, aligning with the medium-to-long-term bearish trend, which likely benefited trend followers positioned short. The decline was driven by a combination of increased production forecasts and weaker demand. Improved weather conditions in major soybean-producing regions, such as the United States and Brazil, have contributed to higher yield expectations, easing concerns about supply constraints.

Additionally, a softening in global demand for biodiesel, which utilizes soybean oil as a primary feedstock, has further pressured prices. The broader edible oil market has also seen declining prices, reflecting an easing of prior disruptions in global supply chains.

The weekly chart illustrates a continuation of the bearish trajectory, with the price breaking lower and resuming the downtrend. For trend followers, the persistence of this movement would have provided opportunities to extend or maintain short positions following the recent retracement. The strong alignment of fundamental and technical factors underscores soybean oil’s role as a consistent performer for systematic trend-following strategies this week.

• Cotton: -6.20%

Cotton futures fell by 6.20% this week, continuing a well-established bearish trend that has likely benefited trend followers holding short positions. The drop in prices reflects several fundamental factors. Favourable weather conditions in major producing regions, including the United States and India, have improved harvest expectations, alleviating supply concerns. Additionally, global demand for cotton has softened amid an economic slowdown, with reduced activity in the textile manufacturing sector.

The strengthening of the U.S. dollar has further weighed on cotton prices, making U.S. exports less competitive on the global market. This dynamic has contributed to a persistent downward trajectory in the commodity, reinforcing bearish sentiment.

The weekly chart shows a clear continuation of the downward trend, with prices breaking lower and confirming the bearish momentum. For medium- to long-term trend followers, this price action aligns well with systematic strategies targeting sustained declines. The consistency of the move provides confidence for maintaining or extending short positions, with cotton remaining a favourable market for trend-following strategies this week.

• Wheat: -6.20%

Wheat futures dropped by 6.20% this week, aligning with the broader bearish trend that has likely been rewarding for trend followers holding short positions. The decline is primarily attributed to strong harvests in major producing countries like Russia and Canada, which have bolstered global supply. This surplus has weighed heavily on prices, particularly as export competition has intensified, with cheaper suppliers dominating the market.

Global demand for wheat has remained subdued, partly due to declining global food prices, as reflected in the FAO Food Price Index. Furthermore, the stronger U.S. dollar has added downward pressure on wheat exports, making them less competitive in the international markets.

The weekly chart supports this narrative, showing a consistent downward trajectory with prices breaking lower and reinforcing the bearish momentum. For medium- to long-term trend followers, the move has provided a continuation of favourable conditions for systematic short strategies. Wheat remains a reliable performer in aligning with bearish trends, offering profitable opportunities for traders in this environment.

• Copper: -5.63%

Copper futures stabilized near $4.08 per pound by the end of the week but remained on course for their steepest weekly decline in four months, dropping 5.63%. The sell-off was driven by persistent concerns about weak demand, particularly in China, and a strengthening U.S. dollar. Market participants expressed disappointment with Beijing’s latest measures to support the economy, which included tax incentives for home and land transactions announced on Wednesday. However, these initiatives were seen as insufficient to meaningfully boost copper demand, with Eagle Metal International, a key copper importer in China, emphasizing the need for more robust economic stimulus.

Chinese economic data for October further weighed on sentiment, with mixed results reinforcing uncertainty about the demand outlook in the world’s largest metals consumer. Adding to the bearish tone, the U.S. dollar continued its rally following comments from Federal Reserve Chair Jerome Powell, who indicated that the central bank is unlikely to cut interest rates anytime soon due to the ongoing strength of the U.S. economy. A stronger dollar typically puts downward pressure on dollar-priced commodities like copper, making them more expensive for holders of other currencies.

The weekly chart shows signs of mounting bearish momentum, with prices breaking lower from recent levels and testing key support areas. While the longer-term trend remains unclear, this week’s movement may signal the early development of a more pronounced bearish trend. For trend followers, this could be an opportunity to position for potential further declines, but caution remains warranted until the trend solidifies. The interplay of macroeconomic forces, including Chinese demand and U.S. monetary policy, will likely remain key drivers in the weeks ahead.

• Crude Oil WTI: -3.84%

WTI crude oil futures dropped 3.84% this week, continuing a mild bearish trend as concerns over waning global demand and a stronger U.S. dollar weighed on prices. Futures settled at $67 per barrel, marking a weekly decline of approximately 5%. China's crude oil processing fell by 4.6% in October, a reflection of slower industrial activity and ongoing demand challenges in the world’s second-largest economy. The situation was compounded by the International Energy Agency (IEA) and OPEC both revising down their global demand growth forecasts. The IEA projected a 1 million barrel per day supply surplus in 2025, while OPEC lowered its 2023 and 2025 demand outlooks, citing persistent weakness in key markets such as China and India.

Adding to the bearish pressure was the continued rally in the U.S. dollar, which surged to a two-year high. The stronger dollar has made dollar-priced commodities like crude oil more expensive for buyers using other currencies, further dampening demand. U.S. crude inventories also rose by 2.1 million barrels last week, surpassing expectations of a 1.9-million-barrel increase, according to data from the U.S. Energy Information Administration.

The weekly chart reflects a continuation of a mild bearish trend, with prices drifting lower and testing key support levels. For trend followers, this gradual decline may align with short positions already in place, though the lack of strong momentum might limit opportunities for new entries. As the market grapples with a combination of oversupply concerns and sluggish demand, crude oil is likely to remain under pressure, providing a challenging environment for directional traders.

Conclusion

This week’s trends have showcased the resilience and adaptability of trend-following strategies in the face of volatile and evolving market conditions. The SG Trend Index, with its impressive month-to-date gain of 3.17% and a year-to-date performance returning to positive territory at 1.05%, reflects the strength of systematic approaches in capturing sustained momentum. Meanwhile, the TTU Trend Barometer's rise to 48% underscores the improving trend environment, providing fertile ground for disciplined traders to capitalize on emerging opportunities.

From cocoa and coffee’s remarkable rallies fuelled by supply disruptions and regulatory developments to bearish moves in soybean oil, cotton, and wheat driven by favourable production and weaker demand, this week underscored the diverse forces shaping global markets. While the energy and metals sectors grappled with headwinds such as oversupply, waning demand, and a stronger U.S. dollar, soft commodities continued to lead the charge, delivering standout performances for traders positioned to capture these moves.

However, not all markets provided clear opportunities for trend followers. Natural gas remained range-bound, offering little directional clarity, while the Volatility Index served as a key sentiment indicator rather than a tradable trend. These instances remind us of the importance of selectivity and risk management in navigating the complexities of financial markets.

As we move deeper into November, the interplay of macroeconomic factors, geopolitical developments, and shifting weather patterns will remain central to market movements. For trend followers, this week reinforces the importance of maintaining a systematic and adaptive approach, ready to seize opportunities where trends emerge while mitigating risks in less favourable environments. The dynamic world of futures trading continues to reward those who stay disciplined, vigilant, and focused on the long-term power of trend following.

List of Resources used in the Week in Review

Important Disclaimers

This document is directly solely to Accredited Investors, Qualified Eligible Participants, Qualified Clients and Qualified Purchasers. No investment decision should be made until prospective investors have read the detailed information in the fund offering documents of any manager mentioned in this document. This document is furnished on a confidential basis only for the use of the recipient and only for discussion purposes and is subject to amendment This document is neither advice nor a recommendation to enter into any transaction. This document is not an offer to buy or sell, nor a solicitation of an offer to buy or sell, any security or other financial instrument. This presentation is based on information obtained from sources that TopTradersUnplugged (“TTU”) (“considers to be reliable however, TTU makes no representation as to, and accepts no responsibility or liability for, the accuracy or completeness of the information. TTU has not independently verified third party manager or benchmark information, does not represent it as accurate, true or complete, makes no warranty, express or implied regarding it and shall not be liable for any losses, damages, costs or expenses relating to its adequacy, accuracy, truth, completeness or use.

All projections, valuations, and statistical analyses are provided to assist the recipient in the evaluation of the matters described herein. Such projections, valuations and analyses may be based on subjective assessments and assumptions and may use one among many alternative methodologies that produce different results accordingly, such projections, valuations and statistical analyses should not be viewed as facts and should not be relied upon as an accurate prediction of future events. There is no guarantee that any targeted performance will be achieved Commodity trading involves substantial risk of loss and may not be suitable for everyone

TTU is not and does not purport to be an advisor as to legal, taxation, accounting, financial or regulatory matters in any jurisdiction. The recipient should independently evaluate and judge the matters referred to herein. TTU does not provide advice or recommendations regarding an investor’s decision to allocate to funds or accounts managed by any manager (“or to maintain or sell investments in funds or accounts managed by any manager, and no fiduciary relationship under ERISA is created by the investor investing in funds or accounts managed by any manager, or through any communication between TTU and the investor

In reviewing this document, it should be understood that the past performance results of any asset class, or any investment or trading program set forth herein, are not necessarily indicative of any future results that may be achieved in connection with any transaction. Any persons subscribing for an investment must be able to bear the risks involved and must meet the suitability requirements relating to such investment. Some or all alternative investment programs discussed herein may not be suitable for certain investors This document is directed only to persons having professional experience in matters relating to investments. Any investment or investment activity to which this document relates is available only to such investment professionals. Persons who do not have professional experience in matters relating to investments should not rely upon this document.

This document and its contents are proprietary information of TTU and may not be reproduced or otherwise disseminated in whole or in part without TTU’s prior written consent.

This document contains simulated or hypothetical performance results that have certain inherent limitations AND SHOULD BE VIEWED FOR ILLUSTRATIVE PURPOSES. Unlike the results shown in an actual performance record, these results do not represent actual trading. HYPOTHETICAL PERFORMANCE RESULTS HAVE MANY INHERENT LIMITATIONS, SOME OF WHICH ARE DESCRIBED BELOW. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN IN FACT, THERE ARE FREQUENTLY SHARP DIFFERENCES BETWEEN HYPOTHETICAL PERFORMANCE RESULTS AND THE ACTUAL RESULTS SUBSEQUENTLY ACHIEVED BY ANY PARTICULAR INVESTMENT ACCOUNT.

ONE OF THE LIMITATIONS OF HYPOTHETICAL PERFORMANCE RESULTS IS THAT THEY ARE GENERALLY PREPARED WITH THE BENEFIT OF HINDSIGHT IN ADDITION, HYPOTHETICAL TRADING DOES NOT INVOLVE FINANCIAL RISK, AND NO HYPOTHETICAL TRADING RECORD CAN COMPLETELY ACCOUNT FOR THE IMPACT OF FINANCIAL RISK IN ACTUAL TRADING FOR EXAMPLE, THE ABILITY TO WITHSTAND LOSSES OR TO ADHERE TO A PARTICULAR TRADING PROGRAM OR OTHER ASSET.

There are numerous other factors related to the markets in general or to the implementation of any specific trading program which cannot be fully accounted for in the preparation of hypothetical performance results and all of which can adversely affect actual trading results. No representation is being made that any investment will or is likely to achieve profits or losses similar to those being shown.

Welcome to “This Week in Trend”, where each week, we cover key movements and trends in the futures markets, offering insights on commodities and indices shaping the economy. From price surges to notable declines, we provide an overview of the factors driving these changes. Stay informed about the latest developments and navigate the market with confidence. Join us weekly to explore the dynamic world of futures trading and the trends that matter most.

“A New Dawn: U.S. Election Boosts Market Sentiment and Trend Resilience”

As of November 7, 2024, the SG Trend Index reflects a positive start to November, showing a month-to-date (MTD) gain of 1.61%. This has brought the year-to-date (YTD) result closer to breakeven, now at -0.48%, a relief after October’s MTD decline of -3.98% and a YTD drop of -1.78%.

The U.S. election outcome has injected a dose of optimism into the markets, sparking bullish trends, particularly among U.S. equity indices. The renewed market sentiment has set a hopeful tone, reinforcing expectations for a brighter economic future.

This week, the TTU Trend Barometer registered a reading of 39%, up from last week’s 32%, signalling a “moderately weak” trend environment. The Barometer’s rise reflects growing optimism and stability, as markets respond positively to the post-election landscape.

The Top Traders Unplugged (TTU) Trend Barometer is a proprietary tool that measures the percentage of markets with medium to strong trends. Just as a thermometer reading of 0 degrees Celsius equates to freezing, when the TTU Trend Barometer reads a value that is less than 40%, market trendiness begins to get “colder” or weaken. Likewise, when the TTU Trend Barometer gets above 55%, the environment gets “hotter” (better).

Weekly Asset Class Snapshot

The recent U.S. presidential election has significantly influenced futures price movements across various asset classes. The election outcome has instilled renewed confidence in the U.S. economy, leading to notable shifts in market dynamics.

• Volatility Index (VIX): The VIX experienced a sharp decline of -24.35%, reflecting reduced market uncertainty following the election results. This decrease indicates a more stable environment for investors and trend followers.
• Equity Indices: U.S. equity indices surged by +3.26%, driven by investor optimism regarding the new administration's economic policies. The anticipation of pro-business initiatives has bolstered market sentiment, leading to significant gains in stock prices.
• Bonds: Bonds edged up by +0.25%, as cautious optimism post-election influenced expectations around U.S. monetary policy. Investors are closely monitoring potential policy shifts that could impact interest rates and bond yields.
• Metals: Metals rose by +1.02%, benefiting from renewed economic confidence and serving as a hedge against potential inflation. The prospect of increased infrastructure spending under the new administration has also contributed to the rise in metal prices.
• Energy: The energy sector declined by -4.05%, impacted by global supply dynamics and evolving demand expectations. While the election outcome has influenced market sentiment, factors such as OPEC+ production decisions and global economic recovery continue to play a significant role in energy prices.
• Currencies: Currencies remained mostly stable with a slight dip of -0.06%, as the U.S. dollar adjusted post-election. The currency markets are reflecting a wait-and-see approach, with traders assessing the potential impact of forthcoming fiscal and monetary policies.

The U.S. election has been a pivotal event this week, shaping futures price movements across various asset classes. The resulting market optimism is evident in the surge of equity indices and the decline in volatility, while other sectors adjust to the evolving economic landscape.

Top 10 Bear and Bull Price Moves

Here's a detailed analysis of the key market movers for the week.

What’s Moving Up

• Russell 2000: +8.61%

The Russell 2000 index, representing U.S. small-cap stocks, saw a remarkable surge of 8.61% this week, which has been a significant boost for trend followers holding long positions. This impressive performance can be attributed to the recent U.S. presidential election outcome, which has instilled a sense of renewed confidence among investors, especially in the small-cap sector.

The election has brought with it an optimistic outlook for domestic economic policy, particularly with expectations that the new administration will favour pro-business initiatives. Small-cap stocks, which tend to be more sensitive to U.S. economic policies due to their domestic focus, are anticipated to benefit from potential tax reforms and reduced regulatory burdens. This sentiment has driven a rally in small caps, as investors view them as particularly well-positioned to gain from an environment with fewer regulatory constraints and possible tax advantages.

Beyond policy expectations, the overall market sentiment post-election has been marked by a surge in optimism. Investors are eagerly repositioning their portfolios to capture the potential growth ahead, and small-cap stocks, known for their agility and growth potential, have attracted significant interest. This shift reflects a broader anticipation that a supportive economic environment may foster rapid expansion for these companies.

For medium to long-term trend followers, the Russell 2000's strong upward movement aligns well with a bullish outlook. The weekly chart indicates a clear and consistent uptrend, reinforcing the case for maintaining or even adding to long positions.

Nevertheless, it’s essential to exercise caution, as the post-election rally may lead to heightened volatility. Implementing disciplined risk management strategies will be key in navigating any sudden market fluctuations that may emerge as initial euphoria gives way to the realities of policy implementation and economic conditions.

• Nasdaq 100: +5.33%

The Nasdaq 100 index, which tracks the performance of the 100 largest non-financial companies listed on the Nasdaq stock exchange, experienced a significant increase of 5.33% this week. This upward movement continues the bullish trend that has been favourable for trend followers.

The recent U.S. presidential election has played a pivotal role in boosting investor confidence, particularly in the technology sector. The election outcome has reduced market uncertainty, leading to increased optimism about the economic policies that may favour tech companies. Additionally, strong earnings reports from major tech firms have reinforced positive sentiment, contributing to the index's rise.

For medium to long-term trend followers, the Nasdaq 100's consistent upward trajectory aligns well with a bullish outlook. The weekly chart indicates a clear and sustained uptrend, suggesting that maintaining or initiating long positions could be advantageous.

• Soybean Oil: +5.29%

Soybean oil prices rose by 5.29% this week, a movement that may have been unfavourable for trend followers holding bearish positions. This increase is primarily attributed to a surge in demand for biofuels, particularly biodiesel, which utilizes soybean oil as a key feedstock. Additionally, recent adverse weather conditions in major soybean-producing regions have raised concerns about supply constraints, further supporting the price uptick.

For medium to long-term trend followers, this upward movement challenges existing bearish positions. The attached weekly chart indicates a potential shift in momentum, suggesting that the previous downtrend may be reversing. Trend followers should closely monitor this development and consider adjusting their strategies accordingly to mitigate potential losses and capitalize on emerging opportunities.

• Coffee: +4.73%

Coffee prices surged by 4.73% this week, a movement that has been well-received by trend followers who have maintained long positions in the commodity. This upward shift aligns with the broader bullish trend and offers a welcome recovery after recent declines over the past few weeks.

The rise in coffee prices is influenced by several key factors, primarily adverse weather conditions in major coffee-producing regions like Brazil. Unfavourable weather patterns, including droughts and unexpected frosts, have affected coffee yields, raising concerns about potential supply shortages. Additionally, ongoing supply chain disruptions have exacerbated the situation, with logistical challenges and higher transportation costs creating bottlenecks in the distribution of coffee beans. These disruptions, coupled with rising production costs for labour and inputs, have further tightened supply, contributing to the recent price increase.

For medium to long-term trend followers, this price recovery reinforces the prevailing bullish outlook on coffee. The weekly chart reflects renewed upward momentum, suggesting that maintaining long positions remains favourable.

S&P500: +4.61%

The S&P 500 index experienced a significant increase of 4.61% this week, reinforcing the long-term bullish trend that has been favourable for trend followers. This upward movement is largely attributed to the recent U.S. presidential election outcome, which has bolstered investor confidence and optimism regarding future economic policies.

The election results have reduced market uncertainty, leading to increased investor optimism about potential pro-business policies and economic growth. This sentiment has driven a rally in the stock market, with the S&P 500 reaching new highs.

For medium to long-term trend followers, the S&P 500's consistent upward trajectory aligns well with a bullish outlook. The weekly chart indicates a clear and sustained uptrend, suggesting that maintaining or initiating long positions could be advantageous. However, it's essential to remain vigilant for any signs of trend reversal or market corrections, as the post-election optimism may lead to increased volatility.

What’s Moving Down

• VIX Futures: -24.35%

The CBOE Volatility Index (VIX), often referred to as the “Fear Index,” experienced a significant decline of 24.35% this week, indicating a substantial reduction in market volatility. This sharp drop is primarily attributed to the resolution of uncertainties surrounding the recent U.S. presidential election, which has bolstered investor confidence and stabilized market sentiment.

While trend followers may not commonly trade VIX futures directly, the VIX serves as a crucial indicator of equity market volatility. A declining VIX suggests a more stable and less volatile market environment, which can be favourable for trend-following strategies in equity markets. Lower volatility often corresponds with more predictable market movements, allowing trend followers to identify and capitalize on sustained trends more effectively.

However, it's important to note that a rapidly declining VIX can also signal complacency among investors, potentially leading to unforeseen market corrections. Therefore, while the current decrease in the VIX reflects a more stable market environment, trend followers should remain vigilant and continue to employ robust risk management practices to navigate any unexpected market shifts.

• Palladium: -10.49%

Palladium prices declined by 10.49% this week, aligning with the long-term bearish trend that has been favourable for trend followers holding short positions. This significant drop is primarily attributed to a combination of factors affecting both demand and supply dynamics.

On the demand side, the automotive industry, which accounts for a substantial portion of palladium consumption, has been shifting towards electric vehicles (EVs) that do not require palladium in their catalytic converters. Additionally, automakers are increasingly substituting palladium with platinum due to cost considerations, further reducing demand.

Supply factors have also played a role in the price decline. Despite geopolitical tensions, major producers like Russia have maintained steady output, alleviating concerns of supply shortages that could have otherwise supported prices.

For medium to long-term trend followers, this downward movement reinforces the existing bearish outlook on palladium. The weekly chart indicates a continuation of the downtrend, suggesting that maintaining short positions could be advantageous.

• Oats: -9.08%

Oats experienced a significant price decline of 9.08% this week, reflecting the commodity's ongoing volatility and lack of clear directional movement. This sharp drop is primarily attributed to favourable weather conditions in major oat-producing regions, leading to improved harvest yields and increased supply. Additionally, a decrease in demand from the livestock feed sector has contributed to the downward pressure on prices.

For medium to long-term trend followers, the current market environment presents challenges. The weekly chart illustrates a congested pattern with significant price fluctuations, lacking a clear trend. Such conditions make it difficult to establish and maintain positions, as the absence of a definitive trend increases the risk of false signals and potential losses. Trend followers are likely to remain on the sidelines, awaiting more stable and predictable market conditions before committing to new positions.

• Lean Hogs: -4.13%

Lean hog futures saw a decline of 4.13% this week, a movement that offered mixed conditions for trend followers. The recent drop aligns with a shorter-term bearish trend, benefiting those who have positioned short. However, the lean hog market remains challenging due to its inherent volatility and rapid price changes, which make it difficult to establish and hold consistent positions.

The downward pressure on lean hog prices can be attributed to a combination of seasonal, demand-driven, and cost-related factors. Autumn typically brings an increase in slaughter numbers, leading to a higher pork supply that depresses prices.

Additionally, fluctuations in export demand, particularly changes in purchasing patterns from major importers, have influenced price dynamics. Feed cost variations also impact production expenses, indirectly affecting the market price for lean hogs.

For medium to long-term trend followers, navigating the lean hog market requires careful risk management. The recent decline supports the current bearish outlook, yet the market’s unpredictable nature means that trend followers must stay alert to shifting conditions. Cautious monitoring and strategic adjustments are essential in dealing with the complex and volatile lean hog market effectively.

• Silver: -3.84%

Silver prices declined by 3.84% this week, presenting challenges for trend followers who have been capitalizing on a sustained bullish trend. This downturn is primarily attributed to profit-taking activities following a significant rally earlier in the month, where silver prices surged nearly 42% year-to-date, including a 7.4% rise in October alone.

Additionally, a stronger U.S. dollar has exerted downward pressure on silver prices, as commodities priced in dollars become more expensive for holders of other currencies. The anticipation of the U.S. payrolls data, expected to provide insights into the Federal Reserve's interest rate plans, has also contributed to market uncertainty, influencing precious metal prices.

For medium to long-term trend followers, this pullback may disrupt the established bullish trend. The attached weekly chart indicates that while the overall uptrend remains intact, the recent decline suggests potential consolidation or a correction phase. Trend followers should exercise caution, closely monitoring market developments and economic indicators that could impact silver prices. Maintaining disciplined risk management strategies is essential to navigate potential volatility and capitalize on long-term opportunities in the silver market.

Conclusion

This week’s review reflects a vibrant and optimistic start to November, driven largely by the positive impact of the recent U.S. presidential election on market sentiment. The election has acted as a catalyst for renewed confidence, especially in U.S. equity indices, with small-cap stocks and the tech-heavy Nasdaq 100 showing remarkable gains. Trend followers have seen favourable conditions in these sectors, aligning with the broader bullish sentiment.

At the same time, the reduction in the Volatility Index (VIX) has signalled a less anxious market, as the perceived risks surrounding policy changes and regulatory adjustments have been tempered by the new administration's pro-business stance. Investors are cautiously optimistic, with bond markets responding with modest gains, while precious metals like silver have faced downward pressure due to profit-taking and a stronger dollar. In the agricultural sector, coffee and soybean oil have shown significant upward movements, driven by supply concerns and increased demand, while oats and lean hogs have exhibited declines due to seasonal dynamics and supply factors.

For trend followers, this period emphasizes the importance of adaptive strategies and disciplined risk management. While certain markets present clear bullish opportunities, others remain volatile or congested, requiring a prudent approach. The U.S. election has undeniably reinvigorated market momentum, yet the outlook remains complex, with varying conditions across asset classes. As November unfolds, trend followers must remain vigilant, ready to navigate both the opportunities and challenges that come with evolving economic policies and market adjustments. The path forward may be filled with optimism, but resilience and careful positioning will be essential to capitalizing on these dynamic trends.

List of Resources used in the Week in Review

Important Disclaimers

This document is directly solely to Accredited Investors, Qualified Eligible Participants, Qualified Clients and Qualified Purchasers. No investment decision should be made until prospective investors have read the detailed information in the fund offering documents of any manager mentioned in this document. This document is furnished on a confidential basis only for the use of the recipient and only for discussion purposes and is subject to amendment This document is neither advice nor a recommendation to enter into any transaction. This document is not an offer to buy or sell, nor a solicitation of an offer to buy or sell, any security or other financial instrument. This presentation is based on information obtained from sources that TopTradersUnplugged (“TTU”) (“considers to be reliable however, TTU makes no representation as to, and accepts no responsibility or liability for, the accuracy or completeness of the information. TTU has not independently verified third party manager or benchmark information, does not represent it as accurate, true or complete, makes no warranty, express or implied regarding it and shall not be liable for any losses, damages, costs or expenses relating to its adequacy, accuracy, truth, completeness or use.

All projections, valuations, and statistical analyses are provided to assist the recipient in the evaluation of the matters described herein. Such projections, valuations and analyses may be based on subjective assessments and assumptions and may use one among many alternative methodologies that produce different results accordingly, such projections, valuations and statistical analyses should not be viewed as facts and should not be relied upon as an accurate prediction of future events. There is no guarantee that any targeted performance will be achieved Commodity trading involves substantial risk of loss and may not be suitable for everyone

TTU is not and does not purport to be an advisor as to legal, taxation, accounting, financial or regulatory matters in any jurisdiction. The recipient should independently evaluate and judge the matters referred to herein. TTU does not provide advice or recommendations regarding an investor’s decision to allocate to funds or accounts managed by any manager (“or to maintain or sell investments in funds or accounts managed by any manager, and no fiduciary relationship under ERISA is created by the investor investing in funds or accounts managed by any manager, or through any communication between TTU and the investor

In reviewing this document, it should be understood that the past performance results of any asset class, or any investment or trading program set forth herein, are not necessarily indicative of any future results that may be achieved in connection with any transaction. Any persons subscribing for an investment must be able to bear the risks involved and must meet the suitability requirements relating to such investment. Some or all alternative investment programs discussed herein may not be suitable for certain investors This document is directed only to persons having professional experience in matters relating to investments. Any investment or investment activity to which this document relates is available only to such investment professionals. Persons who do not have professional experience in matters relating to investments should not rely upon this document.

This document and its contents are proprietary information of TTU and may not be reproduced or otherwise disseminated in whole or in part without TTU’s prior written consent.

This document contains simulated or hypothetical performance results that have certain inherent limitations AND SHOULD BE VIEWED FOR ILLUSTRATIVE PURPOSES. Unlike the results shown in an actual performance record, these results do not represent actual trading. HYPOTHETICAL PERFORMANCE RESULTS HAVE MANY INHERENT LIMITATIONS, SOME OF WHICH ARE DESCRIBED BELOW. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN IN FACT, THERE ARE FREQUENTLY SHARP DIFFERENCES BETWEEN HYPOTHETICAL PERFORMANCE RESULTS AND THE ACTUAL RESULTS SUBSEQUENTLY ACHIEVED BY ANY PARTICULAR INVESTMENT ACCOUNT.

ONE OF THE LIMITATIONS OF HYPOTHETICAL PERFORMANCE RESULTS IS THAT THEY ARE GENERALLY PREPARED WITH THE BENEFIT OF HINDSIGHT IN ADDITION, HYPOTHETICAL TRADING DOES NOT INVOLVE FINANCIAL RISK, AND NO HYPOTHETICAL TRADING RECORD CAN COMPLETELY ACCOUNT FOR THE IMPACT OF FINANCIAL RISK IN ACTUAL TRADING FOR EXAMPLE, THE ABILITY TO WITHSTAND LOSSES OR TO ADHERE TO A PARTICULAR TRADING PROGRAM OR OTHER ASSET.

There are numerous other factors related to the markets in general or to the implementation of any specific trading program which cannot be fully accounted for in the preparation of hypothetical performance results and all of which can adversely affect actual trading results. No representation is being made that any investment will or is likely to achieve profits or losses similar to those being shown.

Welcome to “This Week in Trend”, where each week, we cover key movements and trends in the futures markets, offering insights on commodities and indices shaping the economy. From price surges to notable declines, we provide an overview of the factors driving these changes. Stay informed about the latest developments and navigate the market with confidence. Join us weekly to explore the dynamic world of futures trading and the trends that matter most.

“A Month Full of Twists and Turns: Navigating October's Market Whipsaws”

As of October 31, 2024, the SG Trend Index closed the month with a month-to-date (MTD) decline of -3.98%, deepening from last week's -3.55% MTD. This brings the year-to-date (YTD) return to -1.78%, reflecting the hurdles CTAs faced throughout October. The month’s market narrative was defined by high volatility, rapid reversals, and limited trending behaviour, presenting a real test for trend followers.

October, along with the first trading day of November, was marked by sharp turns and sudden reversals, creating a challenging landscape for trend followers. This week, the TTU Trend Barometer settled at 32%, well below last week's 41%, signalling a “moderately weak” trend environment. These conditions make it difficult for trend followers to find consistent directional movement amid frequent shifts. While market volatility moderated, with the VIX rising 2.78% this week compared to last week’s 8.74% increase, the overall environment remains tense and unpredictable.

The Top Traders Unplugged (TTU) Trend Barometer is a proprietary tool that measures the percentage of markets with medium to strong trends. Just as a thermometer reading of 0 degrees Celsius equates to freezing, when the TTU Trend Barometer reads a value that is less than 40%, market trendiness begins to get “colder” or weaken. Likewise, when the TTU Trend Barometer gets above 55%, the environment gets “hotter” (better).

Weekly Asset Class Snapshot

This week’s market presented further twists, with asset classes reacting to economic data and global events in divergent ways.

• Volatility Index (VIX): The VIX rose 2.78%, signalling continued market caution amidst a mix of geopolitical tensions and inflation worries. While this increase was moderate, it reflects the market’s anxious sentiment and challenges trend followers in managing risk.
• Energy: The energy sector dropped sharply by -4.24%, reversing its prior rally as demand expectations fluctuated amidst an unstable geopolitical backdrop. This sector continues to reflect the volatile twists that have defined October.
• Metals: Metals declined by -3.19%, with industrial metals especially impacted by global economic uncertainty. This drop adds to recent struggles in the sector, which has seen sentiment-driven swings throughout the month.
• Soft Commodities: Soft commodities offered a glimmer of stability, rising by +1.63%, led by continued resilience in cocoa and orange juice. Supply-side constraints remain in focus, creating selective opportunities within the sector.
• Currencies: Currency markets remained largely range-bound, with a minor dip of -0.33%, as U.S. monetary policy uncertainty kept currencies in a holding pattern, lacking clear trends for followers.
• Equity Indices: Equity indices fell by -0.72%, with smaller-cap indexes like the Russell 2000 under particular pressure. Persistent economic and inflationary concerns have weighed heavily on equity markets, causing continued twists in the trend landscape.
• Bonds: Bonds declined by -0.86%, reflecting higher U.S. bond yields as strong economic data points to potential continued rate hikes. This ongoing trend of rising yields presents a headwind for trend followers in the fixed-income space.

With October now behind us, the month’s twists and turns across sectors highlight the importance of agility and disciplined risk management for trend followers. While isolated gains in sectors like soft commodities offered some relief, the broader market context remains challenging. Navigating an unpredictable landscape requires resilience, adaptability, and a commitment to disciplined strategy execution.

Top 10 Bear and Bull Price Moves

Here's a detailed analysis of the key market movers for the week.

What’s Moving Up

• Cocoa: +7.75%

Cocoa prices surged by 7.75% this week, reflecting ongoing volatility in the market. This increase is primarily attributed to persistent supply concerns from major cocoa-producing regions. In Côte d’Ivoire, the world's leading cocoa producer, the government raised the farmgate price by 20% to 1,800 CFA francs per kilogram, effective October 1, 2024, to support farmers amidst challenging conditions. Additionally, heavy rains in West Africa have caused flooding, delaying harvests and affecting bean quality, further tightening supply.

For medium to long-term trend followers, this week's sharp rise in cocoa prices presents challenges. The market has exhibited an extreme whipsaw environment, with rapid price reversals making it difficult to maintain consistent positions. The weekly chart illustrates these abrupt movements, highlighting the lack of a clear, sustained trend. Such conditions necessitate cautious risk management and may prompt trend followers to reduce exposure until a more stable trend emerges.

• Lumber: +5.77%

Lumber prices increased by 5.77% this week, continuing a bullish trend observed in the daily chart below. This upward movement is primarily driven by a rebound in U.S. housing demand, which has been a significant factor influencing lumber prices. Analysts anticipate that this demand will push lumber prices higher in 2024, as large U.S. homebuilders order wood to begin construction in the coming months.

For medium to long-term trend followers, this consistent upward trajectory is favourable. The daily chart indicates a clear bullish trend, suggesting potential opportunities for those positioned accordingly. However, it's essential to remain vigilant, as the lumber market has historically been volatile, with prices influenced by factors such as supply chain disruptions and changes in housing market dynamics.

• Lean Hogs: +5.43%

Lean hog futures experienced a 5.43% increase this week, reflecting a volatile market environment characterized by rapid price fluctuations. This surge is primarily attributed to strong U.S. pork export data, with the USDA reporting a 4% increase in pork exports for 2024, reaching 7.08 billion pounds. Additionally, U.S. pork production is projected to rise by about 2% to 27.88 billion pounds in 2024.

For medium to long-term trend followers, the current whipsaw environment presents challenges. The attached weekly chart illustrates abrupt price movements, lacking a clear, sustained trend. Such conditions make it difficult to maintain consistent positions, as sudden reversals can lead to potential losses.

• Soybean Oil: +5.16%

Soybean oil prices rose by 5.16% this week, a movement that may have been unfavourable for trend followers holding bearish positions. This increase is primarily attributed to a surge in demand for biofuels, particularly biodiesel, which utilizes soybean oil as a key feedstock. Additionally, recent adverse weather conditions in major soybean-producing regions have raised concerns about supply constraints, further supporting the price uptick.

For medium to long-term trend followers, this upward movement challenges existing bearish positions. The attached weekly chart indicates a potential shift in momentum, suggesting that the previous downtrend may be reversing.

Oats: +4.67%

Oats prices increased by 4.67% this week, reflecting ongoing volatility within a congested market pattern. This uptick is primarily attributed to supply concerns stemming from adverse weather conditions in key producing regions. In Canada, for instance, heavy rains have delayed harvests, impacting yield quality and quantity. Additionally, global demand for oats has remained robust, particularly in the health food sector, further supporting prices.

For medium to long-term trend followers, the current market environment presents challenges. The attached weekly chart illustrates a lack of clear directional movement, with prices oscillating within a defined range, indicative of a congestion pattern. Such conditions make it difficult to establish and maintain positions, as the absence of a definitive trend increases the risk of false signals and potential losses.

What’s Moving Down

• Natural Gas: -14.33%

Natural gas prices declined by 14.33% this week, continuing to trade within a defined range without a clear breakout. This significant drop is attributed to a combination of mild weather conditions reducing heating demand, high inventory levels that remain above the five-year average, and record-high production rates contributing to oversupply.

For medium to long-term trend followers, the current market environment presents challenges. The weekly chart shows natural gas prices oscillating within a range, lacking a clear directional trend. Such conditions make it difficult to establish and maintain positions, as the absence of a definitive trend increases the risk of false signals and potential losses. Trend followers are advised to exercise caution, employing stringent risk management strategies and awaiting a breakout before committing to new positions.

• Palladium: -8.16%

Palladium prices dropped by 8.16% this week, benefiting trend followers who have maintained a bearish outlook. The recent decrease reflects several key factors. Demand for palladium has been waning as automakers shift towards electric vehicles, which do not require palladium in their components. Additionally, the automotive industry is increasingly substituting palladium with platinum due to its lower cost, further eroding demand.

On the supply side, while Russia—a major palladium producer—continues to face the prospect of sanctions, recent reports suggest that production has remained steady, easing supply concerns that could otherwise support prices.

For medium to long-term trend followers, this decline reinforces the bearish trend that has been in place for some time. What initially appeared to be a potential breakout to the upside may have been a false signal, as the weekly chart indicates a continuation of the downtrend. Trend followers positioned on the short side are likely to benefit from this ongoing weakness, though it’s essential to monitor for any signs of reversal or unexpected shifts in the supply-demand balance.

• Gasoline RBOB: -3.65%

Gasoline RBOB futures declined by 3.65% this week, supporting a bearish outlook for trend followers. The price decrease can be attributed to the seasonal decline in demand, as the end of the summer driving season typically leads to reduced gasoline consumption. Additionally, U.S. gasoline inventories have remained stable, with stockpiles slightly higher than last year, adding downward pressure to prices. Broader weaknesses in the oil market have also influenced gasoline prices, with recent factors such as resolved disputes affecting Libyan oil output and weak manufacturing data from China contributing to the decline.

For medium to long-term trend followers, this steady downward movement aligns well with a bearish stance. The attached weekly chart shows a sustained downtrend, indicating that those holding short positions may continue to benefit from this environment. Nonetheless, it remains important to stay alert, as market conditions could change due to unexpected geopolitical events or shifts in the supply-demand balance. Effective trend navigation will require continuous monitoring and disciplined risk management.

• Crude Oil Brent: -3.60%

Brent crude oil prices fell by 3.60% this week, reinforcing the prevailing bearish outlook. This decline is attributed to a combination of easing geopolitical tensions, economic concerns, and stable supply dynamics. Recent developments in the Middle East, particularly a de-escalation of conflicts involving Israel and Iran, have lessened fears of potential disruptions to oil supply. Israel's measured response to Iran, avoiding critical oil infrastructure, has significantly reduced the risk premium associated with potential supply threats from the region.

In addition, ongoing worries about a slowdown in global economic growth, especially in major economies like China, have dampened demand forecasts for crude oil. Analysts have pointed out that OPEC+ production capacity has helped to mitigate any significant price increases despite the tensions in the Middle East. Furthermore, U.S. crude oil production remains robust, contributing to ample supply levels in the market. Although OPEC+ has plans to increase output in December, there may be delays due to expected seasonal demand drops in early 2025.

For medium to long-term trend followers, this steady downward movement aligns well with a bearish stance. The attached weekly chart indicates a sustained downtrend, suggesting that those holding short positions may continue to benefit from this environment. However, staying vigilant is essential, as market dynamics could shift unexpectedly due to geopolitical events or changes in the supply-demand balance. Continuous monitoring and disciplined risk management are crucial for effectively navigating and capitalizing on the current trend.

• Silver: -3.56%

Silver prices declined by 3.56% this week, posing challenges for trend followers who have benefited from the recent bullish trend. This downturn is primarily attributed to profit-taking activities following a significant rally earlier in the month, where silver prices surged nearly 42% year-to-date, including a 7.4% rise in October alone.

Additionally, a stronger U.S. dollar has exerted downward pressure on silver prices, as commodities priced in dollars become more expensive for holders of other currencies. The anticipation of the U.S. payrolls data, expected to provide insights into the Federal Reserve's interest rate plans, has also contributed to market uncertainty, influencing precious metal prices.

For medium to long-term trend followers, this pullback may disrupt the established bullish trend. The attached weekly chart indicates that while the overall uptrend remains intact, the recent decline suggests potential consolidation or a correction phase. Trend followers should exercise caution, closely monitoring market developments and economic indicators that could impact silver prices. Maintaining disciplined risk management strategies is essential to navigate potential volatility and capitalize on long-term opportunities in the silver market.

Conclusion

October and the start of November have presented trend followers with a complex and volatile environment, marked by rapid reversals and limited trending behaviour across most sectors. From the TTU Trend Barometer’s reading of 32% to the SG Trend Index’s month-end decline of -3.98%, it’s clear that the current market climate remains challenging. While certain sectors, such as soft commodities, provided pockets of stability, the broader landscape has been shaped by geopolitical tensions, economic uncertainty, and fluctuating demand across asset classes.

Despite these headwinds, this period serves as a reminder of the importance of adaptability, disciplined risk management, and careful strategy execution. Whether dealing with abrupt price surges in cocoa and soybean oil or navigating the persistent bearish trends in crude oil and gasoline, trend followers are being tested on their ability to stay nimble and resilient. As we move deeper into Q4, monitoring market signals closely and adjusting positions accordingly will be crucial to navigating an environment where twists and turns are the new normal. Trend followers should remain vigilant, as opportunities and challenges alike will continue to emerge within this unpredictable landscape.

List of Resources used in the Week in Review

Important Disclaimers

This document is directly solely to Accredited Investors, Qualified Eligible Participants, Qualified Clients and Qualified Purchasers. No investment decision should be made until prospective investors have read the detailed information in the fund offering documents of any manager mentioned in this document. This document is furnished on a confidential basis only for the use of the recipient and only for discussion purposes and is subject to amendment This document is neither advice nor a recommendation to enter into any transaction. This document is not an offer to buy or sell, nor a solicitation of an offer to buy or sell, any security or other financial instrument. This presentation is based on information obtained from sources that TopTradersUnplugged (“TTU”) (“considers to be reliable however, TTU makes no representation as to, and accepts no responsibility or liability for, the accuracy or completeness of the information. TTU has not independently verified third party manager or benchmark information, does not represent it as accurate, true or complete, makes no warranty, express or implied regarding it and shall not be liable for any losses, damages, costs or expenses relating to its adequacy, accuracy, truth, completeness or use.

All projections, valuations, and statistical analyses are provided to assist the recipient in the evaluation of the matters described herein. Such projections, valuations and analyses may be based on subjective assessments and assumptions and may use one among many alternative methodologies that produce different results accordingly, such projections, valuations and statistical analyses should not be viewed as facts and should not be relied upon as an accurate prediction of future events. There is no guarantee that any targeted performance will be achieved Commodity trading involves substantial risk of loss and may not be suitable for everyone

TTU is not and does not purport to be an advisor as to legal, taxation, accounting, financial or regulatory matters in any jurisdiction. The recipient should independently evaluate and judge the matters referred to herein. TTU does not provide advice or recommendations regarding an investor’s decision to allocate to funds or accounts managed by any manager (“or to maintain or sell investments in funds or accounts managed by any manager, and no fiduciary relationship under ERISA is created by the investor investing in funds or accounts managed by any manager, or through any communication between TTU and the investor

In reviewing this document, it should be understood that the past performance results of any asset class, or any investment or trading program set forth herein, are not necessarily indicative of any future results that may be achieved in connection with any transaction. Any persons subscribing for an investment must be able to bear the risks involved and must meet the suitability requirements relating to such investment. Some or all alternative investment programs discussed herein may not be suitable for certain investors This document is directed only to persons having professional experience in matters relating to investments. Any investment or investment activity to which this document relates is available only to such investment professionals. Persons who do not have professional experience in matters relating to investments should not rely upon this document.

This document and its contents are proprietary information of TTU and may not be reproduced or otherwise disseminated in whole or in part without TTU’s prior written consent.

This document contains simulated or hypothetical performance results that have certain inherent limitations AND SHOULD BE VIEWED FOR ILLUSTRATIVE PURPOSES. Unlike the results shown in an actual performance record, these results do not represent actual trading. HYPOTHETICAL PERFORMANCE RESULTS HAVE MANY INHERENT LIMITATIONS, SOME OF WHICH ARE DESCRIBED BELOW. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN IN FACT, THERE ARE FREQUENTLY SHARP DIFFERENCES BETWEEN HYPOTHETICAL PERFORMANCE RESULTS AND THE ACTUAL RESULTS SUBSEQUENTLY ACHIEVED BY ANY PARTICULAR INVESTMENT ACCOUNT.

ONE OF THE LIMITATIONS OF HYPOTHETICAL PERFORMANCE RESULTS IS THAT THEY ARE GENERALLY PREPARED WITH THE BENEFIT OF HINDSIGHT IN ADDITION, HYPOTHETICAL TRADING DOES NOT INVOLVE FINANCIAL RISK, AND NO HYPOTHETICAL TRADING RECORD CAN COMPLETELY ACCOUNT FOR THE IMPACT OF FINANCIAL RISK IN ACTUAL TRADING FOR EXAMPLE, THE ABILITY TO WITHSTAND LOSSES OR TO ADHERE TO A PARTICULAR TRADING PROGRAM OR OTHER ASSET.

There are numerous other factors related to the markets in general or to the implementation of any specific trading program which cannot be fully accounted for in the preparation of hypothetical performance results and all of which can adversely affect actual trading results. No representation is being made that any investment will or is likely to achieve profits or losses similar to those being shown.

Welcome to “This Week in Trend”, where each week, we cover key movements and trends in the futures markets, offering insights on commodities and indices shaping the economy. From price surges to notable declines, we provide an overview of the factors driving these changes. Stay informed about the latest developments and navigate the market with confidence. Join us weekly to explore the dynamic world of futures trading and the trends that matter most.

“Volatility Surges as Trend Followers Face Renewed Market Challenges”

This week, the trend-following environment saw mixed results, with the TTU Trend Barometer rising to 41 from last week’s 27. While this shift from weak to neutral conditions provides some optimism, it’s still below the level that trend followers typically view as favourable. Market volatility has surged, with the VIX climbing by 8.74%, reflecting persistent geopolitical concerns and heightened market anxiety.

As of October 24, 2024, the SG Trend Index is down -3.55% month-to-date (MTD), a further slide from last week’s -2.83% MTD. Year-to-date (YTD), the index now stands at -1.35%, showing the continued difficulty in capturing consistent trends amidst turbulent conditions. The overall environment remains challenging, with whipsaws and false breakouts complicating trend-following efforts and few sustained trends emerging across markets.

Despite these hurdles, specific sectors, including energy and precious metals, showed resilience, offering selective opportunities for trend followers. However, major losses in equities and fixed income, compounded by geopolitical pressures, emphasize the need for disciplined risk management as markets remain highly volatile and unpredictable.

The Top Traders Unplugged (TTU) Trend Barometer is a proprietary tool that measures the percentage of markets with medium to strong trends. Just as a thermometer reading of 0 degrees Celsius equates to freezing, when the TTU Trend Barometer reads a value that is less than 40%, market trendiness begins to get “colder” or weaken. Likewise, when the TTU Trend Barometer gets above 55%, the environment gets “hotter” (better).

Weekly Asset Class Snapshot

This week’s market landscape presented renewed challenges for trend followers, with volatility surging amidst ongoing geopolitical concerns and economic uncertainty. Selective opportunities emerged, but the overall environment remains cautious as traders navigate turbulent market conditions.

• Volatility Index (VIX): The VIX surged by +8.74%, indicating heightened market anxiety driven by geopolitical instability, especially the conflict in the Middle East. Investors remain wary of potential disruptions to global energy supplies and inflation volatility, with U.S. interest rate concerns adding to the mix. Elevated volatility reflects the market's cautious sentiment, underscoring the challenging environment for trend-following strategies.
• Energy Sector: Energy rebounded with a +4.54% increase this week, recovering some recent losses as demand expectations stabilized. While the Middle East conflict has not yet caused major supply disruptions, traders remain on edge, with any escalation likely to impact prices significantly. The sector’s volatile conditions make it both an opportunity and a risk for trend followers.
• Metals: Metals gained +2.93% as safe-haven assets like gold and palladium attracted investor interest amidst global uncertainty. Precious metals showed resilience, though industrial metals continued to face headwinds from slower economic growth, particularly in China. The divergence within the metals sector presents selective opportunities, especially in precious metals.
• Soft Commodities: Soft commodities declined by -1.06%, led by a notable drop in cocoa prices, which fell due to improved supply conditions in West Africa. However, orange juice continued its upward momentum, driven by ongoing supply shortages, highlighting selective opportunities within the soft commodities space.
• Currencies: Currency markets were down -0.79%, remaining largely range bound. Persistent uncertainty around U.S. monetary policy and global economic growth has prevented clear directional moves, making it difficult for trend-following strategies to capitalize on strong currency trends this week.
• Equity Indices: Equity indices fell by -1.77%, with significant losses in smaller-cap indexes like the Russell 2000 and major indices like the Dow Jones. Economic concerns and geopolitical tensions have weighed heavily on equity markets, further complicating the environment for trend followers seeking stable upward trends.
• Bonds: Bonds declined by -0.99% as U.S. bond yields remained elevated, driven by strong economic data and expectations of prolonged interest rate hikes. Fixed income markets continue to face pressure, presenting a challenging environment for trend-following strategies positioned for stability in interest rates.

This week, market volatility and geopolitical instability added layers of complexity to the trend-following landscape. While some asset classes, such as energy and precious metals, offered pockets of opportunity, the broader market faced downward pressure, with equities and fixed income experiencing the greatest challenges. On a single market basis, the Dow Jones, Italian Bonds, and Natural Gas encountered notable difficulties, while Soybean Meal, Live Cattle, and Gold emerged as bright spots with positive performances. Traders will need to remain agile and maintain disciplined risk management as market conditions continue to be volatile and unpredictable.

Top 10 Bear and Bull Price Moves

Here's a detailed analysis of the key market movers for the week.

What’s Moving Up

• Natural Gas: +11.11%

Natural Gas prices rose sharply by 11.11% this week, driven by several key factors. With colder weather approaching in the Northern Hemisphere, there’s an anticipated rise in heating demand, which has created upward pressure on prices. Additionally, the U.S. Energy Information Administration (EIA) projects that natural gas prices will increase as the winter season boosts demand, especially with new LNG export facilities ramping up in Texas and Louisiana. These exports are likely to reduce domestic supply and contribute to higher prices through early 2025​​.

For medium- to long-term trend followers, this strong upward move could be promising, as reflected in the attached chart. While natural gas has been volatile, the recent spike in prices might signal a potential breakout from previous range bound congestion. However, trend followers should remain cautious, as the chart shows a history of sharp corrections and oscillations, suggesting that while a bullish trend might develop, it could be accompanied by significant pullbacks. Consistent monitoring and disciplined risk management will be essential to capitalize on these movements effectively.

• Palladium: +10.89%

Palladium prices saw a significant rise of 10.89% this week, driven largely by shifts in demand dynamics and market sentiment. With concerns about a potential supply squeeze amid economic uncertainty, investors have recently shown renewed interest in palladium, a precious metal critical in automotive catalytic converters. Despite palladium's challenges this year—such as declining demand in the auto sector as manufacturers shift to platinum and electric vehicles—short-term demand fluctuations have created a temporary upward price movement. Additionally, seasonal demand from the automotive sector is expected to provide some support in the coming months, which could sustain this momentum briefly.

For medium- to long-term trend followers, this recent price surge may indicate a potential trend reversal or the beginning of a bullish phase, as suggested by the attached chart. However, it’s essential to be cautious, as palladium has faced persistent volatility, and the medium-term outlook remains uncertain due to anticipated increases in recycling and potential oversupply.

• VIX Futures: +8.74%

This week, the VIX, commonly known as the “fear gauge,” surged by 8.74%, reflecting a significant increase in market volatility and investor anxiety. The VIX, which tracks S&P 500 options volatility, often spikes during periods of heightened uncertainty, driven by factors like geopolitical tensions or economic instability. Recent escalations in the Middle East and persistent inflation concerns have added layers of complexity to the global market, pushing volatility higher.

For trend followers, while the VIX itself isn’t typically traded as a distinct asset, its rise has implications for broader market conditions. Increased volatility often leads to abrupt price swings and can make trend-following strategies more challenging. In such environments, markets may experience more frequent whipsaws and false breakouts, which can disrupt established trends and lead to choppy price action.

Higher volatility requires trend followers to exercise cautious risk management, as the likelihood of reversals and unexpected movements grows. In this context, some trend followers may adjust by reducing position sizes or setting tighter risk controls to mitigate potential losses. Overall, the elevated VIX underscores the need for disciplined strategy execution, as volatility can both erode trend-following gains and present new opportunities when carefully navigated.

• Orange Juice: +6.32%

Orange juice futures surged by 6.32% this week, continuing their remarkable upward trajectory over recent years. This strong trend has been driven by multiple supply-side challenges that have positioned orange juice as one of the standout performers for trend followers, making it a significant outlier in commodities markets. Key factors include prolonged droughts and adverse weather conditions affecting major orange-producing regions, particularly in Florida and Brazil. Additionally, diseases such as citrus greening have severely impacted orange yields, reducing supply at a time when demand remains steady​.

For medium- to long-term trend followers, orange juice has provided a robust, sustained trend, reflecting a clear pattern of higher highs and higher lows over the past few years, as seen in the chart. This rally has allowed systematic traders to capitalize on the long-term bullish momentum. Given the ongoing supply constraints, there may still be room for further upside, though prices are already at multi-decade highs. As always, disciplined monitoring is necessary, as any shifts in weather patterns or improvements in supply conditions could impact the trend.

Soybean Oil: +4.37%

Soybean oil prices rose by 4.37% this week, driven by factors such as ongoing global demand for biofuels and supply disruptions due to unpredictable weather patterns impacting major soybean-producing regions. While this uptick aligns with recent market fluctuations in agricultural commodities, it’s likely unfavourable for trend followers who have maintained a bearish stance on soybean oil due to its longer-term downtrend.

The attached chart shows a history of sharp price rises and falls, with soybean oil experiencing a significant rally in previous years, only to enter a prolonged decline. This week’s rally may disrupt established bearish positions among trend followers, who may find this environment challenging due to the commodity’s recent unpredictability and the ongoing demand fluctuations for biofuels​.

For trend followers, the recent bounce could be a temporary disruption in an otherwise bearish trend. However, given the potential for sudden moves influenced by external factors like biofuel policy changes or crop yields, cautious position management remains crucial in this volatile environment.

What’s Moving Down

• Cocoa: -8.78%

Cocoa futures declined by 8.78% this week, continuing a pattern of heightened volatility since reaching historically high levels in April 2024. This significant drop reflects the ongoing instability in the cocoa market, which has been marked by extreme price swings in both directions. The initial rally was driven by severe supply shortages due to adverse weather and disease in key producing regions like West Africa. However, since peaking, the market has experienced sharp corrections as supply conditions have somewhat stabilized, with periodic favourable weather forecasts supporting better crop yields​.

This week’s bearish movement could indicate a potential shift in the medium-term outlook for cocoa, as stabilizing conditions might alleviate some supply pressure. For trend followers, cocoa's recent fluctuations have posed challenges, with rapid reversals making it difficult to maintain consistent positions. This latest downward move could signal a trend shift, but given cocoa’s high volatility, careful monitoring and cautious position sizing are essential to navigate potential further price swings in the coming months.

• Coffee: -3.73%

Coffee prices fell by 3.73% this week, marking a setback for trend followers who had been riding a bullish trend in recent months. This price drop could be attributed to improved weather conditions in key coffee-producing regions, such as Brazil, which has experienced more favourable rainfall, helping to alleviate concerns over crop yields. The potential for a stable or even strong harvest season has relieved some supply pressure, pushing prices lower temporarily​.

For trend followers, this decline may disrupt recent bullish positions. The chart reflects a robust upward trend over the past year, driven by earlier concerns about supply constraints. However, with recent favourable weather conditions, the coffee market may experience more volatility, presenting potential reversals or pauses in the established trend. Given the highly weather-dependent nature of coffee, trend followers should monitor climatic developments closely, as any adverse conditions could quickly reignite bullish momentum in the medium term.

• Russell 2000: -3.16%

The Russell 2000 index dropped by 3.16% this week, which would likely be unfavourable for trend followers who may have taken bullish positions following recent upward momentum. Small-cap stocks, represented by the Russell 2000, are particularly sensitive to shifts in economic sentiment and interest rate expectations, both of which have been volatile recently. Concerns over prolonged interest rate hikes by the Federal Reserve, along with mixed economic data, have pressured equities broadly, with small-cap stocks facing added scrutiny due to their exposure to domestic economic conditions.

For trend followers, this decline interrupts what had appeared to be a potential breakout in the Russell 2000, as indicated by the recent price action on the attached chart. The reversal suggests caution, as the small-cap sector may continue to experience headwinds if economic uncertainties persist. Trend followers will need to manage risk carefully, as further volatility or negative economic signals could hinder a sustained upward trend in this index.

• Soybean Meal: -3.04%

Soybean Meal declined by 3.04% this week, aligning favourably for trend followers who are likely holding short positions. The ongoing downtrend reflects ample global soybean supplies and a relatively stable production outlook, reducing upward price pressures. In addition, improved crop conditions in key producing regions, such as the United States and South America, have contributed to a bearish sentiment in the soybean complex, with soybean meal prices tracking downward alongside.

For trend followers, the attached chart shows a consistent pattern of lower highs and lower lows, suggesting sustained bearish momentum. This trend may continue if favourable crop forecasts hold, allowing trend followers to potentially benefit from extended downside movement in the medium term. However, it will be essential to monitor weather conditions and demand factors, as any unexpected disruptions could introduce volatility to this ongoing trend.

• DJIA: -2.83%

The Dow Jones Industrial Average Futures (DJIA) fell by 2.83% this week, creating a challenging environment for trend followers who were likely bullish on this major index. This downward movement can be attributed to mixed economic signals and continued concerns over the Federal Reserve's interest rate policies. With lingering inflationary pressures and economic uncertainty, investors have exhibited caution, leading to a pullback in the DJIA as some sought safer assets amidst broader market volatility.

For trend followers, this decline disrupts what has been a generally bullish trend for the DJIA, as seen in the attached chart. This setback could signal caution in the near term, especially if economic conditions continue to create uncertainty. However, with the DJIA still near historic highs, trend followers may closely monitor upcoming economic data and Fed signals to determine whether this pullback is a temporary dip or the beginning of a broader shift in market sentiment.

Conclusion

This week has proven to be another challenging period for trend followers as markets grapple with heightened volatility and uncertainty. The TTU Trend Barometer's rise to a neutral 41 suggests a somewhat stabilizing environment, but the continued turbulence reflected in asset classes like equities, bonds, and the VIX underscores the fragile nature of current market trends. The SG Trend Index’s month-to-date and year-to-date declines highlight the difficulty in capturing consistent, profitable trends under these conditions.

Despite the hurdles, selective opportunities emerged in pockets such as energy, natural gas, and orange juice, which continue to benefit from sector-specific supply and demand dynamics. Conversely, equities and fixed income, particularly represented by indices like the Russell 2000 and DJIA, struggled against a backdrop of economic concerns and geopolitical instability, posing challenges for trend followers positioned for bullish momentum.

Looking ahead, the importance of disciplined risk management cannot be overstated. With mixed signals from global economic data and lingering geopolitical tensions, the path forward for trend-following strategies remains complex. Staying agile, carefully monitoring emerging market shifts, and maintaining flexible positions will be essential to navigating the volatility that has come to define today’s trading environment.

List of Resources used in the Week in Review

Important Disclaimers

This document is directly solely to Accredited Investors, Qualified Eligible Participants, Qualified Clients and Qualified Purchasers. No investment decision should be made until prospective investors have read the detailed information in the fund offering documents of any manager mentioned in this document. This document is furnished on a confidential basis only for the use of the recipient and only for discussion purposes and is subject to amendment This document is neither advice nor a recommendation to enter into any transaction. This document is not an offer to buy or sell, nor a solicitation of an offer to buy or sell, any security or other financial instrument. This presentation is based on information obtained from sources that TopTradersUnplugged (“TTU”) (“considers to be reliable however, TTU makes no representation as to, and accepts no responsibility or liability for, the accuracy or completeness of the information. TTU has not independently verified third party manager or benchmark information, does not represent it as accurate, true or complete, makes no warranty, express or implied regarding it and shall not be liable for any losses, damages, costs or expenses relating to its adequacy, accuracy, truth, completeness or use.

All projections, valuations, and statistical analyses are provided to assist the recipient in the evaluation of the matters described herein. Such projections, valuations and analyses may be based on subjective assessments and assumptions and may use one among many alternative methodologies that produce different results accordingly, such projections, valuations and statistical analyses should not be viewed as facts and should not be relied upon as an accurate prediction of future events. There is no guarantee that any targeted performance will be achieved Commodity trading involves substantial risk of loss and may not be suitable for everyone

TTU is not and does not purport to be an advisor as to legal, taxation, accounting, financial or regulatory matters in any jurisdiction. The recipient should independently evaluate and judge the matters referred to herein. TTU does not provide advice or recommendations regarding an investor’s decision to allocate to funds or accounts managed by any manager (“or to maintain or sell investments in funds or accounts managed by any manager, and no fiduciary relationship under ERISA is created by the investor investing in funds or accounts managed by any manager, or through any communication between TTU and the investor

In reviewing this document, it should be understood that the past performance results of any asset class, or any investment or trading program set forth herein, are not necessarily indicative of any future results that may be achieved in connection with any transaction. Any persons subscribing for an investment must be able to bear the risks involved and must meet the suitability requirements relating to such investment. Some or all alternative investment programs discussed herein may not be suitable for certain investors This document is directed only to persons having professional experience in matters relating to investments. Any investment or investment activity to which this document relates is available only to such investment professionals. Persons who do not have professional experience in matters relating to investments should not rely upon this document.

This document and its contents are proprietary information of TTU and may not be reproduced or otherwise disseminated in whole or in part without TTU’s prior written consent.

This document contains simulated or hypothetical performance results that have certain inherent limitations AND SHOULD BE VIEWED FOR ILLUSTRATIVE PURPOSES. Unlike the results shown in an actual performance record, these results do not represent actual trading. HYPOTHETICAL PERFORMANCE RESULTS HAVE MANY INHERENT LIMITATIONS, SOME OF WHICH ARE DESCRIBED BELOW. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN IN FACT, THERE ARE FREQUENTLY SHARP DIFFERENCES BETWEEN HYPOTHETICAL PERFORMANCE RESULTS AND THE ACTUAL RESULTS SUBSEQUENTLY ACHIEVED BY ANY PARTICULAR INVESTMENT ACCOUNT.

ONE OF THE LIMITATIONS OF HYPOTHETICAL PERFORMANCE RESULTS IS THAT THEY ARE GENERALLY PREPARED WITH THE BENEFIT OF HINDSIGHT IN ADDITION, HYPOTHETICAL TRADING DOES NOT INVOLVE FINANCIAL RISK, AND NO HYPOTHETICAL TRADING RECORD CAN COMPLETELY ACCOUNT FOR THE IMPACT OF FINANCIAL RISK IN ACTUAL TRADING FOR EXAMPLE, THE ABILITY TO WITHSTAND LOSSES OR TO ADHERE TO A PARTICULAR TRADING PROGRAM OR OTHER ASSET.

There are numerous other factors related to the markets in general or to the implementation of any specific trading program which cannot be fully accounted for in the preparation of hypothetical performance results and all of which can adversely affect actual trading results. No representation is being made that any investment will or is likely to achieve profits or losses similar to those being shown.

Welcome to “This Week in Trend”, where each week, we cover key movements and trends in the futures markets, offering insights on commodities and indices shaping the economy. From price surges to notable declines, we provide an overview of the factors driving these changes. Stay informed about the latest developments and navigate the market with confidence. Join us weekly to explore the dynamic world of futures trading and the trends that matter most.

“Markets Stabilize as Trend Followers See a Modest Rebound Amid Volatility”

The trend-following environment improved marginally this week, with the TTU Trend Barometer rising to 27 from last week’s reading of 20, indicating slightly more favourable conditions for identifying trends. However, uncertainty around global economic factors and geopolitical tensions continues to create hurdles.

As of October 16, 2024, the SG Trend Index is down -2.83% month-to-date (MTD), a notable recovery from last week’s -5.21% MTD. Year-to-date (YTD), the index now stands at -0.61%, also an improvement over last week’s -3.75%. Despite these better results, the market remains volatile, and sustained trends are still difficult to capture consistently.

The market has offered pockets of opportunities, but false breakouts and whipsaws remain prevalent, making it a challenging environment for systematic trend-following strategies that depend on clear directional moves.

The Top Traders Unplugged (TTU) Trend Barometer is a proprietary tool that measures the percentage of markets with medium to strong trends. Just as a thermometer reading of 0 degrees Celsius equates to freezing, when the TTU Trend Barometer reads a value that is less than 40%, market trendiness begins to get “colder” or weaken. Likewise, when the TTU Trend Barometer gets above 55%, the environment gets “hotter” (better).

Weekly Asset Class Snapshot

This week’s market landscape has shown early signs of recovery for trend followers after a challenging month. While market conditions remain turbulent, some improvement is evident, offering pockets of opportunity amidst ongoing volatility.

Volatility Index (VIX): The VIX has declined by -3.67%, indicating a temporary easing in market anxiety, though the overall geopolitical backdrop remains tense. The conflict in the Middle East continues to introduce uncertainty in global markets, particularly energy, but some investors are seeing this as a sign of a potential stabilization in the near term. Volatility remains elevated, with lingering concerns about U.S. interest rates and the potential for inflation volatility due to geopolitical risk​.

Energy Sector: Energy was hit hardest this week, with the sector posting a significant decline of -5.89%. The continued sell-off in oil markets reflects growing recession fears and softening demand forecasts, particularly as the Middle East conflict has not yet escalated to major supply disruptions. However, traders remain cautious as any escalation in geopolitical tensions could quickly reverse this trend​.

Grains: Grains were down -1.14% this week, as better-than-expected weather conditions and strong harvests in key growing regions, particularly in South America, helped ease earlier supply concerns. The improved outlook for grain production has put downward pressure on prices, challenging trend followers who had anticipated a continuation of previous upward movements​.

Metals: The metals sector declined -0.68%, with mixed performance across individual metals. Industrial metals like copper struggled due to weakened demand from the construction and manufacturing sectors, especially in China, which is experiencing a notable economic slowdown. However, precious metals like gold saw modest gains as investors sought safe-haven assets amidst ongoing market volatility​.

Soft Commodities: Soft commodities stood out this week, rising by +1.05%. The upward movement was primarily driven by a strong performance in Orange Juice, which posted significant gains due to tight supply conditions in major producing regions like Brazil and Florida. The rally in soft commodities provides some relief to trend followers, although opportunities remain selective​.

Currencies: Currency markets were relatively flat, declining by -0.60%. Major currency pairs remained range-bound, with ongoing uncertainty surrounding U.S. monetary policy and global economic growth. The lack of clear directional movement has made it difficult for trend-following strategies to capitalize on strong currency trends​.

Bonds: Bonds dipped slightly by -0.16%, as rising U.S. bond yields continue to weigh on bond prices. Strong economic data and the prospect of prolonged interest rate hikes have contributed to bond market declines, presenting difficulties for trend followers who had been positioned for a more stable interest rate environment​.

Top 10 Bear and Bull Price Moves

Here's a detailed analysis of the key market movers for the week.

What’s Moving Up

• Orange Juice: +7.19%

For this week's Orange Juice Futures, which surged by 7.19%, trend followers likely saw this as a continuation of the long-term bullish trend, as reflected in the chart below. The price has been steadily climbing since early 2022, reaching multi-decade highs. For systematic traders, this upward momentum offers a favourable environment, particularly for those positioned long in the market. The clear pattern of higher highs and higher lows provides a strong signal of sustained trend development, making it an ideal scenario for trend-following strategies.

The primary drivers behind this week’s price surge are several ongoing supply-side challenges. The most critical issue is the continued impact of citrus greening disease, which is devastating orange groves in key producing regions like Brazil and the United States. This incurable disease is leading to reduced yields and a dwindling supply of oranges globally. Brazil, the largest exporter of orange juice, is facing one of its worst harvests in recent memory, with some estimates suggesting a production shortfall of 24% compared to last year. This follows years of already declining inventories, creating a severe supply squeeze.

Extreme weather has also played a significant role. Devastating heatwaves and floods have further damaged crops, compounding the impact of disease and driving prices higher. Florida's orange production has similarly suffered due to a combination of hurricanes and the spread of citrus greening, exacerbating global shortages​.

For trend followers, the current bullish environment in orange juice futures offers a clear and sustained trend, but with prices nearing record highs, the question remains whether this momentum can be sustained or if a correction is imminent. The fundamental supply issues suggest that the market may remain tight in the near term, but traders will need to stay vigilant for any shifts in market dynamics.

• Cocoa: +2.07%

For Cocoa, which posted a 2.07% gain this week, trend followers are likely observing a volatile yet potentially rewarding market. The price chart indicates the market has experienced significant fluctuations, with a steep rally earlier this year followed by an ongoing consolidation phase. Cocoa’s strong upward trend earlier in 2024 saw prices rise to record highs, but since then, sharp corrections have introduced challenges, especially for systematic traders trying to navigate erratic price movements.

The current price environment continues to be driven by a persistent supply shortage. The West African region, particularly Côte d'Ivoire and Ghana, which produces over 70% of the world's cocoa, has been facing severe weather disruptions and the spread of diseases like Cocoa Swollen Shoot Virus Disease (CSSVD). These conditions have significantly reduced yields, with Ghana’s cocoa production down by about 35% and Côte d'Ivoire experiencing similar declines. Climate volatility, particularly erratic rainfall, has further exacerbated these issues, making supply even more unpredictable​.

Adding to this is the logistical disruption caused by geopolitical tensions, including the recent conflict in the Middle East, which has led to increased shipping costs. Additionally, elevated fertilizer prices due to the ongoing Ukraine war have discouraged proper crop maintenance, worsening the supply situation​.

For trend followers, the challenge with cocoa lies in the rapid price swings, which create a difficult environment to capture sustained profits. While the long-term trend remains bullish, the erratic nature of recent movements calls for careful risk management to avoid being caught in sharp reversals. However, the underlying supply concerns suggest that the market could remain tight, potentially offering further opportunities for upside in the medium term.

• Russell 2000: +2.03%

For this week’s Russell 2000 Futures, which climbed by 2.03%, trend followers likely see this as a promising development, reflecting a rebound from the recent choppy market environment. This rise is significant because the Russell 2000 comprises smaller, more domestically focused U.S. companies, which are generally more sensitive to economic growth and interest rate changes.

The primary driver behind this week’s upward movement is renewed optimism around the U.S. economy, spurred by recent economic data indicating resilience in domestic growth and a better-than-expected retail sales report. Investors are also reacting positively to the expectation that interest rates may not rise much further, as inflation pressures have shown signs of easing​.

Moreover, the small-cap sector, represented by the Russell 2000, tends to benefit more from domestic economic policy shifts, including potential subsidies and tax cuts aimed at smaller businesses. This aligns with the growing anticipation of favourable policies in light of the upcoming U.S. presidential election​.

For trend followers, this price action marks a potential continuation of a bullish breakout from the 2022 range, offering an ideal scenario for traders positioned long. However, given the inherent volatility of small-cap stocks, it's important to remain cautious of potential reversals if market conditions shift unexpectedly.

• DAX: +1.81%

For DAX Futures, which rose by 1.81% this week, trend followers likely see this as part of a strong bullish momentum that has been building since mid-2023. The DAX index continues to benefit from positive sentiment surrounding expected rate cuts by the European Central Bank (ECB). Market participants are anticipating cuts in both October and December, which have driven demand for DAX-listed stocks. Moreover, recent stimulus measures from China have bolstered optimism, particularly benefiting Germany’s export-heavy economy, despite broader economic concerns in the region.

For systematic traders, the DAX's clear uptrend and strong technical indicators signal potential for continued upside, especially with the current environment favouring risk-on assets amid dovish monetary policy expectations. However, traders should remain cautious as inflation and economic data releases could still create volatility in the near term.

Gold: +1.2%

For Gold, which rose by 1.2% this week, trend followers are likely seeing continued bullish momentum, driven by several factors. The ongoing geopolitical tensions, particularly the Middle East conflict, have pushed investors toward safe-haven assets like gold. Additionally, there are growing expectations that the Federal Reserve will pause interest rate hikes, further supporting gold’s upward movement. Inflation concerns and global uncertainty remain key drivers behind the demand for gold, positioning it as a hedge against both market volatility and inflationary pressures.

What’s Moving Down

• Natural Gas: -10.64%

For the Natural Gas futures, which experienced a significant drop of -10.64% this past week, trend followers likely found this market particularly volatile. Natural gas prices have been oscillating between sharp peaks and steep declines due to a combination of fundamental and technical factors. The price drop this week reflects multiple ongoing pressures on the natural gas market.

One of the main contributors to this decline is the historically high U.S. natural gas inventory levels. These stockpiles remain well above the five-year average, easing any concerns over supply shortages for the upcoming winter. The market is also reacting to milder weather forecasts, which have reduced the demand for natural gas in power generation for heating purposes.

Additionally, market analysts expect demand to pick up again later in the year, but in the short term, the abundant supply, combined with lower-than-expected demand, has put downward pressure on prices. There is also increased production in the U.S., which is outstripping consumption, contributing further to the price decline.

For trend followers, navigating this market has been challenging, with prices fluctuating significantly and making it difficult to maintain consistent positions. The ongoing volatility in natural gas, driven by both weather patterns and fluctuating demand expectations, will likely continue to pose challenges for systematic traders trying to capitalize on clear trends.

• Heating Oil: -6.45%

For Heating Oil, which dropped by -6.45% this week, trend followers are likely holding short positions, given the clear downtrend that has persisted since mid-2022. The price chart shows consistent lower highs and lower lows, signalling a bearish market environment. This kind of sustained downward momentum typically encourages systematic traders to remain positioned short to capture profits from the declining trend.

The price decline this week can be attributed to several factors. Demand for heating oil has remained subdued as mild autumn weather in key markets has delayed the typical seasonal increase in heating demand. Additionally, there are concerns over excess supply, with distillate inventories remaining robust. Despite ongoing geopolitical risks, such as tensions in the Middle East, no significant disruptions to oil supplies have occurred, keeping downward pressure on heating oil prices.

Given the current technical setup and market conditions, trend followers are likely to maintain short positions unless a significant change in demand or supply dynamics reverses the market’s trajectory. As winter approaches, it will be crucial to monitor any shifts in weather patterns or geopolitical events that could trigger a reversal.

• Crude Oil Brent: -6.22%

For Brent Crude Oil, which fell by -6.22% this week, trend followers are likely maintaining short positions given the continued downward trend that has been evident since early 2022. The price chart shows a gradual decline, with no clear signs of reversal, making it favourable for traders positioned for further downside. The recent price action reinforces the bearish sentiment surrounding oil markets.

Several factors contributed to this week's decline. One of the most prominent drivers is the increased supply concerns due to the slowing demand outlook. Weaker economic data from major economies like China and Europe has weighed heavily on expectations for oil demand, which has been exacerbated by ongoing recession fears. Additionally, despite geopolitical tensions, including ongoing conflicts in the Middle East, there have been no significant supply disruptions to push prices higher.

The global oil market also remains well-supplied, with production from the U.S. and other non-OPEC producers continuing at steady levels, offsetting any concerns about OPEC+ production cuts. As a result, the bearish sentiment has prevailed, driving prices lower.

For trend followers, the current environment suggests that short positions remain favourable, with a clear bearish structure evident on the chart. However, as with any market, monitoring for potential shifts in supply, demand, or geopolitical factors remains key to managing risk in a volatile environment.

• Crude Oil WTI: -6.21%

For WTI Crude Oil, which fell by -6.21% this week, the price action closely mirrors that of Brent Crude, given the highly correlated nature of these two key global oil benchmarks. Both WTI and Brent often move in tandem as they are affected by the same global supply and demand factors, including geopolitical risks, economic data, and production decisions by major oil-producing nations.

This week’s steep decline in WTI, similar to Brent, was driven by concerns over slowing demand as economic data from China and Europe indicated weaker growth prospects. Additionally, the market remains well-supplied, with U.S. oil production remaining resilient. The ongoing geopolitical issues, such as conflicts in the Middle East, have not led to major supply disruptions, reducing any immediate upward pressure on prices.

For trend followers, both WTI and Brent are showing clear signs of a bearish trend, as indicated by their similar price action. The chart patterns for both markets are showing lower highs and lower lows, reinforcing the idea that short positions remain favorable in this environment. However, given the high correlation between these two benchmarks, any significant movement in one is likely to impact the other, making it important for traders to monitor global factors that affect the broader oil market.

• Gasoline RBOB: -5.03%

For Gasoline RBOB, which dropped by -5.03% this week, the chart reflects a downtrend that has persisted for much of 2023. The market has shown a pattern of lower highs and lower lows, which suggests that trend followers likely continue to favour short positions. The price action indicates bearish momentum, and traders positioned for further downside have likely benefited from this week's decline.

The drivers behind this drop are multifaceted. Seasonal factors play a significant role, with gasoline demand typically falling after the peak summer driving season. Additionally, refinery maintenance and steady output have maintained supply levels, contributing to the price pressure. The global macroeconomic environment, with concerns about potential economic slowdowns and lower demand, has further added to the bearish sentiment.

From a technical perspective, the downtrend remains intact, and with no immediate signs of a reversal, trend-following strategies focused on short positions likely continue to be rewarded. However, as always, traders should monitor for any potential disruptions in supply or unexpected demand shifts that could change the current trajectory.

Conclusion

This week has offered a modest rebound for trend-following strategies, with the TTU Trend Barometer ticking up from 20 to 27, and the SG Trend Index recovering some of its recent losses. However, despite the improvement, market volatility remains a major hurdle, driven by ongoing geopolitical tensions, macroeconomic uncertainties, and erratic market movements.

Pockets of opportunity did emerge, particularly in sectors like soft commodities, with Orange Juice continuing its upward surge due to supply-side challenges, while Gold held steady amidst heightened geopolitical risk. On the other hand, the energy sector faced significant headwinds, with sharp declines in Natural Gas, Heating Oil, and Crude Oil, reflecting concerns about global demand and softening economic data from major economies.

The mixed performance across asset classes suggests that while some markets are showing signs of recovery, others continue to present significant challenges for systematic traders. The trend-following environment, while improved, remains delicate, with traders needing to remain agile and vigilant for shifts in market dynamics. As always, robust risk management will be key to navigating the ongoing turbulence and capitalizing on emerging trends in the weeks ahead.

Looking forward, the volatility in global markets will likely continue, making trend identification crucial, but tricky. For trend followers, staying disciplined in this uncertain environment remains paramount.

List of Resources used in the Week in Review

Important Disclaimers

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Welcome to “This Week in Trend”, where each week, we cover key movements and trends in the futures markets, offering insights on commodities and indices shaping the economy. From price surges to notable declines, we provide an overview of the factors driving these changes. Stay informed about the latest developments and navigate the market with confidence. Join us weekly to explore the dynamic world of futures trading and the trends that matter most.

” October's Turbulence Worsens for Trend Followers: Whipsaws Abound”

This week has continued the difficult trend-following environment from the previous one, as geopolitical tensions and macroeconomic factors remain at the forefront, unsettling the markets. Ongoing volatility in the Middle East and persistent uncertainty surrounding U.S. monetary policy have left traders struggling to find their footing. The elevated risk of energy supply disruptions and the shifting interest rate outlook have further amplified market turbulence, impacting both energy and broader asset classes.

The SG Trend Index is now down -4.61% month-to-date (MTD) as of 10 October 2024, a substantial deterioration from last week's -2.53%, with the year-to-date (YTD) performance slipping to -2.44%, compared to -0.31% YTD just one week ago. This downward trend underscores the challenges facing trend-following strategies, as erratic movements and a lack of sustained trends persist.

However, the market's unpredictability may lead to significant dispersion in performance, as some trend followers might still be able to find pockets of opportunity amidst the volatility, while others languish due to false breakouts and whipsawing markets.

The TTU Trend Barometer is now at 20, a slight improvement from last week's abysmal reading of 16, signifying the continuation of a very unfavourable trending environment. As conditions remain noisy and volatile, it becomes increasingly challenging to identify profitable opportunities, and performance across funds is likely to vary widely depending on positioning and strategy.

The Top Traders Unplugged (TTU) Trend Barometer is a proprietary tool that measures the percentage of markets with medium to strong trends. Just as a thermometer reading of 0 degrees Celsius equates to freezing, when the TTU Trend Barometer reads a value that is less than 40%, market trendiness begins to get “colder” or weaken. Likewise, when the TTU Trend Barometer gets above 55%, the environment gets “hotter” (better).

Weekly Asset Class Snapshot

This week’s market landscape remained challenging for trend followers, with volatility continuing to drive significant reversals and uneven performances across key asset classes. Heightened geopolitical tensions, notably in the Middle East, and macroeconomic uncertainty around U.S. interest rates left traders scrambling to adjust their positions. As a result, systematic trend-following strategies encountered major obstacles, with few clear trends to capitalize on.

Volatility Index (VIX) climbed by +5.18%, indicating ongoing nervousness among investors. The surge reflects heightened concerns about geopolitical instability and ambiguous monetary policy, creating a more volatile environment where asset prices experience sharp swings. This increase in market anxiety has injected additional risks into other asset classes, further complicating the landscape for trend followers who are accustomed to capitalizing on sustained market movements.

In the Grains sector, prices fell by -1.82%, reflecting improved supply conditions in key growing regions. The easing of earlier concerns over potential shortages has pushed grain prices lower, making it difficult for trend followers to benefit from continued price gains. The bearish move highlights the impact of seasonal and supply-side factors on commodities markets, where weather conditions and harvest forecasts can trigger sharp price movements.

Bonds also faced pressure this week, with the sector declining -0.68%. Rising U.S. bond yields, driven by stronger-than-expected economic data and concerns about prolonged interest rate hikes, have weighed on bond prices. The bond market has been reacting negatively to indications that the U.S. Federal Reserve might keep rates higher for longer, adding strain to trend-following models that had been positioned for more stable rates. This shift has led to losses for traders who were anticipating a more dovish policy outlook.

In contrast, Meats posted a modest gain of +0.71%, while Soft Commodities climbed +0.97%, providing some relief for traders who had positioned themselves favourably in these markets. The gains were largely driven by seasonal demand patterns and some isolated supply disruptions, which contributed to price increases. However, these pockets of opportunity were few and far between, given the broader volatility in the commodities space.

The Energy sector saw a minor decline of -0.42%, as traders continued to grapple with conflicting signals. While energy prices were initially buoyed by concerns over Middle Eastern supply disruptions, recent bearish pressures from global recession fears have kept the sector volatile. This erratic behaviour in energy markets, especially after last week’s sharp reversals in Brent Crude and WTI Crude, has made it particularly challenging for trend followers who had anticipated further price declines.

The Metals sector remained mixed, with a modest gain of +0.56%. Industrial metals like Copper saw relatively steady demand, supported by sustained activity in the construction and manufacturing sectors. However, Palladium continued its sharp decline, dropping -6.86% due to weakening demand from the automotive industry, which has been transitioning away from internal combustion engines and experiencing weaker-than-expected sales growth.

Meanwhile, Currencies saw little movement, down just -0.44% on average. Most major currency pairs remained range-bound, reflecting broader uncertainty about global economic growth and central bank policies. The market’s focus on U.S. interest rate policy has led to uneven performance in currency markets, with trend followers struggling to capitalize on any strong directional moves.

Overall, this week has been particularly difficult for trend followers. Although some volatility-based strategies may have found opportunities to profit, the broader market environment remains unfriendly to systematic traders who rely on clear, sustained trends. With the TTU Trend Barometer now at 20, one of the weakest readings in recent history, the trending environment continues to deteriorate, offering few reliable signals for profitable trades. The erratic movements across asset classes are likely to lead to further dispersion in performance among funds, highlighting the need for robust risk management in these volatile conditions.

Top 10 Bear and Bull Price Moves

Here's a detailed analysis of the key market movers for the week.

What’s Moving Up

• Cocoa: +9.78%

Cocoa prices surged by 9.78% this week, continuing a volatile journey marked by sharp price swings in recent months. The market has been heavily influenced by supply-side concerns, particularly with weather disruptions in key growing regions like West Africa. These disruptions have tightened supply expectations, pushing prices upward. However, the broader trend for cocoa is less clear. The weekly price chart shows a parabolic rise earlier in the year, followed by a sharp correction, indicating a highly unstable market environment.

For trend followers, this kind of price movement creates significant challenges. Those who were able to capture the initial upward momentum earlier in the year likely saw strong gains, but the rapid correction afterward would have led to losses for traders who held on too long, expecting the trend to continue.

The market's recent bounce back has been difficult to navigate, particularly for medium-term trend followers who may have gone short following the correction, only to be caught out by this week’s sharp rally.

The chart reflects what can be described as a “yo-yo environment,” where price action swings back and forth, making it difficult to determine the next clear trend. This kind of volatility is particularly problematic for systematic traders who rely on stable and sustained price direction. Deciphering where the market will head next is a significant challenge, and with the current lack of clear trend direction, many trend followers are likely finding it tough to generate consistent profits in cocoa at this time. The erratic behaviour and sudden reversals are making the cocoa market particularly tricky for trend-following strategies to navigate.

• Palladium: +6.86%

Palladium prices rose by 6.86% this week, marking a significant rebound after a prolonged downtrend that has dominated much of the past year. However, despite this week's rally, the overall trend for palladium remains clearly bearish, as the metal has been on a consistent decline since peaking in early 2022. The attached weekly chart shows a series of lower highs and lower lows, highlighting the difficulty in finding sustained upward momentum in this market.

For trend followers, this week's price action would have been unfavourable. Many medium- to long-term trend-following strategies would have positioned themselves short, capitalizing on the sustained downward trend over the past year. The sharp rise this week, while notable, appears to be more of a correction within a broader bearish trend, which likely caught many traders off guard. Palladium's volatility, as seen in the chart, has created multiple instances of short-lived rallies during a long-term decline, making it difficult for systematic traders to adjust in real time to these sudden upward moves.

The broader context for palladium is tied to weakening demand from the automotive sector, particularly as the industry transitions away from internal combustion engines, which rely on palladium for catalytic converters. With long-term fundamentals leaning toward lower demand, trend followers who bet on a continued decline may have been frustrated by this week's reversal. While the short-term gain in price suggests a temporary rebound, the overall trend remains negative, and many systematic traders would have faced losses as the price quickly rose against their short positions.

In this context, trend followers are likely struggling to navigate palladium's unpredictable movements. The market has been defined by sudden and erratic price shifts, which are often difficult for longer-term strategies to accommodate. This week’s rise may not signal a longer-term trend reversal, and trend followers could continue to face challenges in this volatile and uncertain environment.

• VIX Futures: +5.18%

VIX Futures rose by 5.18% this week, reflecting heightened concerns around future market volatility. As a gauge of anticipated future volatility, VIX Futures often surge during periods of uncertainty, and this week's rise is no exception. The increase in VIX Futures is likely tied to the ongoing geopolitical tensions, particularly in the Middle East, and uncertainty surrounding global economic conditions, especially the future path of U.S. interest rates.

While VIX Futures are not typically a primary asset traded by trend followers, they serve as an important signal for systematic traders, as higher volatility often impacts price behaviour across multiple markets. Rising VIX levels suggest that the market is anticipating increased turbulence, and this often coincides with more unpredictable and erratic price movements in other assets, such as equities, commodities, and bonds.

For trend-following strategies, increased volatility can be a double-edged sword. On one hand, it can lead to sharper, more pronounced price trends, offering opportunities for profit. On the other hand, higher volatility often results in whipsaws—false signals that disrupt established trends—making it more difficult to maintain consistent positioning. This week's rise in VIX likely indicates that many markets are entering a more volatile phase, where trends could break down or reverse quickly, adding complexity to trading decisions.

The VIX's role as a “fear gauge” also has implications for risk management. When VIX spikes, systematic traders are typically forced to adjust their models, reducing position sizes or tightening stop losses to manage the increased risk. While trend followers may not directly trade VIX Futures, its rise serves as a warning of potential headwinds in other markets, particularly for those relying on stable, long-term trends.

While VIX Futures may not directly affect trend followers' positions, the spike in volatility it signals poses additional challenges. Higher volatility increases the risk of false trend signals, making this a particularly tricky time for systematic traders to navigate the broader market landscape. The current environment, as indicated by VIX, is likely to become more turbulent, and traders will need to exercise caution to protect against sudden market reversals.

• Gasoline RBOB: +2.57%

Gasoline RBOB futures rose by 2.57% this week, continuing a pattern of volatility that has been a hallmark of the energy sector in recent months. The attached weekly chart shows a long-term cycle of peaks and troughs, with Gasoline RBOB prices coming off a multi-year high reached in mid-2022. Since then, the market has experienced significant fluctuations, with prices in a gradual downtrend, marked by periodic short-term rallies like the one seen this week.

For trend followers, this market poses challenges. The long-term trend has been primarily downward, and systematic traders who were short during this overall decline likely faced difficulties this week as Gasoline RBOB prices rose unexpectedly. Such upward moves can result in whipsaws, where short positions are prematurely exited due to stop losses being hit, only for the market to revert back to the broader downtrend afterward.

This week's 2.57% rise likely reflects a combination of seasonal factors and supply-side concerns. Refinery maintenance and geopolitical tensions, particularly in the Middle East, continue to inject uncertainty into energy markets. While this short-term rise provides opportunities for traders who anticipated a temporary reversal, the overall chart suggests that Gasoline RBOB remains in a range-bound, volatile environment. This lack of sustained directional movement makes it difficult for trend-following models to extract profits consistently.

Systematic traders who rely on long-term trends might have found this rally frustrating, as it doesn't signal a clear trend reversal but rather a bounce within a larger, declining trend. The price action suggests Gasoline RBOB is currently in a consolidation phase, and it remains uncertain whether this week's gain marks the beginning of a new upward trend or is simply another short-lived rally in a broader bearish context.

While this week’s 2.57% rise may have been favourable for short-term traders, it likely posed challenges for medium- to long-term trend followers who were positioned for continued declines. The overall lack of clear trend direction in Gasoline RBOB makes it a difficult market for trend-following strategies, as it continues to oscillate between gains and losses without forming a sustained trend.

Orange Juice: +2.25%

Orange Juice futures rose by 2.25% this week, continuing a strong upward trend that has been in place for much of the past year. The weekly chart shows a clear long-term bullish trend, with prices steadily climbing since mid-2022, providing a stark contrast to the more volatile or downward-trending commodities markets we've seen in recent weeks. This sustained move higher has been driven by supply-side issues, particularly adverse weather conditions and disease affecting key orange-producing regions like Florida and Brazil, which have severely limited supply and pushed prices upward.

For trend followers, Orange Juice represents one of the few bright spots in an otherwise challenging market environment. The clear and sustained bullish trend seen in the chart would have provided consistent opportunities for systematic traders to capture gains, particularly for those operating on a medium- to long-term time horizon. The relatively smooth progression of higher highs and higher lows offers an ideal setup for trend-following strategies, which rely on catching these kinds of extended price movements.

This week's 2.25% rise fits within the broader bullish context, and trend followers who have been positioned long in Orange Juice are likely benefiting from the continued strength in this market. The market’s performance has been remarkably steady, with no significant corrections to interrupt the uptrend, which is often rare in commodity markets. This stability has allowed traders to ride the trend with fewer disruptions compared to other, more erratic markets.

As the price approaches record levels near 500, the question for trend followers now is whether this strong momentum can continue or if the market is due for a correction. However, given the persistent supply issues and continued tightness in the orange market, the fundamental backdrop remains supportive of higher prices, suggesting that Orange Juice could remain a favourable market for trend followers in the near term.

Orange Juice has been one of the few consistent opportunities for trend-following traders, with this week’s 2.25% rise reinforcing the long-term bullish trend. For systematic traders who caught this move early, it has been a strong performer, particularly in contrast to the more volatile and unpredictable markets that have been difficult to navigate.

What’s Moving Down

• Natural Gas: -7.92%

Natural Gas futures fell by -7.92% this week, continuing a long-term pattern of volatility and downward pressure. The attached weekly chart reveals a history of sharp peaks and deep troughs, with price surges followed by steep declines. Natural Gas prices hit multi-year highs in 2022 due to supply constraints and geopolitical tensions surrounding the Russia-Ukraine conflict, but since then, the market has experienced a significant reversal, falling sharply from those highs.

This week’s drop reflects ongoing supply and demand dynamics. Natural Gas markets are heavily influenced by seasonal factors, storage levels, and weather conditions. With relatively mild weather in key consumption regions and higher-than-expected storage levels, demand has weakened, leading to this substantial decline in prices. Additionally, global economic uncertainties, including lower industrial demand, have further weighed on prices.

For trend followers, the -7.92% decline likely posed a challenge. Natural Gas has been extremely volatile, and while long-term trend followers who positioned short after the 2022 peak have benefited from the broader downtrend, this market’s tendency to experience sudden reversals has made it difficult to maintain consistent positioning.  Short-term price rallies have frequently interrupted the broader downward movement, resulting in potential whipsaws for traders who attempt to adjust positions too early.

This week’s sharp drop is part of a larger bearish trend, but the overall volatility in Natural Gas makes it a difficult market to navigate for systematic traders. The chart shows frequent price spikes followed by deep corrections, suggesting that this market does not follow smooth, sustained trends. The erratic price behaviour makes it particularly vulnerable to false breakouts, where traders get caught on the wrong side of a trade as the price briefly reverses before resuming the main trend direction.

While long-term trend followers may still be profiting from the broader decline in Natural Gas, this week's steep drop could have been challenging for traders navigating the short-term volatility. The market remains highly unpredictable, and its tendency to oscillate between extremes makes it a tough environment for trend-following strategies. Managing risk and avoiding getting caught in temporary reversals will be key for traders moving forward.

• Soybean Meal: -5.26%

Soybean Meal futures declined by -5.26% this week, continuing a broader downtrend that has been developing over the past several months. The attached weekly chart shows that, unlike some of the more volatile or range-bound markets, Soybean Meal has been following a relatively clear pattern of lower highs and lower lows, indicative of a sustained bearish trend. This kind of market movement is typically more favourable for trend followers, particularly those using medium- to long-term strategies.

The recent decline is largely attributed to improved weather conditions in key producing regions, such as Brazil and Argentina, which have eased earlier supply concerns. With better-than-expected rainfall boosting crop prospects, the supply outlook has improved, leading to lower prices. Additionally, demand from key importers like China has softened in recent weeks, further contributing to the downward pressure on prices.

For trend followers, this week's -5.26% drop likely provided an opportunity to capitalize on the ongoing bearish momentum. Those who positioned short as the downtrend developed over the past several months would have benefited from this week’s continuation of lower prices. The chart suggests that Soybean Meal has been relatively predictable in its recent price behaviour, offering clear entry and exit points for systematic traders following the trend.

Compared to more erratic markets like Natural Gas or palladium, Soybean Meal’s recent performance has been more conducive to trend-following strategies. The price action shows fewer abrupt reversals and more consistent follow-through in the downward direction, making it easier for traders to capture gains. The broader context of ample supply and weakened demand further supports the bearish outlook, and trend followers who have been short in this market are likely seeing consistent returns.

In summary, Soybean Meal’s -5.26% decline this week was likely a favourable move for trend followers, as it aligns with the ongoing bearish trend. With clear technical signals and supportive fundamental factors, this market continues to provide opportunities for systematic traders who are positioned correctly. Compared to more volatile commodities, Soybean Meal has been relatively stable in its downward movement, offering a more straightforward environment for trend-following strategies.

• Sugar: -3.35%

Sugar futures fell by -3.35% this week, marking a continuation of the recent volatility in the soft commodities market. The weekly chart shows that Sugar has experienced a series of price swings, with sharp rallies followed by equally sharp declines. Over the past few months, the market has been choppy, fluctuating between gains and losses as it reacts to shifting supply and demand dynamics.

This week's decline comes as global sugar production forecasts improved, with key producing countries like Brazil reporting strong harvests. The market has also been adjusting to easing concerns over supply disruptions, as the weather in major growing regions has stabilized. Additionally, concerns over weakening demand in key importing regions have further pressured prices, contributing to the -3.35% drop.

For trend followers, this week's movement in Sugar likely posed challenges. The chart shows a market that has been range-bound for some time, making it difficult for traders to identify and capture sustained trends. While Sugar experienced a strong bullish rally earlier this year, the subsequent reversals and lack of follow-through have made it hard for systematic traders to maintain consistent positions. Those who were positioned long during the recent rally may have been caught off guard by this week’s decline, while traders looking for short opportunities may still be waiting for a clearer breakout to the downside.

The overall price action in Sugar suggests that the market is currently in a consolidation phase, where price movements are erratic and do not follow a clear directional trend. This kind of environment is tough for trend-following strategies, as it increases the likelihood of whipsaws—where trades are initiated based on a perceived trend, only for the market to reverse direction shortly after.

The -3.35% decline in Sugar this week may have frustrated trend followers, as the market remains choppy and difficult to trade with clear conviction. The lack of a well-established trend in recent weeks has likely resulted in inconsistent performance for systematic traders. Sugar remains a market to watch closely, but for now, its erratic movements make it a challenging asset for trend-following strategies.

• Soybeans: -3.16%

Soybeans futures declined by -3.16% this week, continuing the downward momentum that has been in place for several months. The attached weekly chart shows that Soybeans experienced a strong rally throughout 2021 and early 2022 but has since entered a prolonged downtrend. The market is now approaching key support levels, and the recent declines reflect improving supply conditions alongside weaker demand prospects.

The fundamental backdrop for Soybeans has shifted as weather conditions in key growing regions, such as Brazil and the U.S., have stabilized. Better-than-expected crop yields have eased earlier supply concerns, leading to downward pressure on prices. Meanwhile, demand from major importers like China has softened amid broader economic uncertainty, further weighing on the market.

For trend followers, this week's -3.16% decline likely offered an opportunity for those who had positioned short in alignment with the broader bearish trend. The clear pattern of lower highs and lower lows on the chart is indicative of a sustained downtrend, which would have been favourable for systematic traders who capitalize on long-term price movements. The market's behaviour over the past several months has offered a relatively consistent trend, making it easier for trend followers to manage positions and profit from the sustained bearish momentum.

However, as Soybeans approach key support levels, there is some uncertainty about whether the downtrend will continue or if the market will stabilize and potentially reverse. For now, the fundamental drivers, including favourable weather conditions and weaker demand, suggest that the bearish trend could persist, offering continued opportunities for traders positioned short.

In summary, this week's -3.16% decline in Soybeans fits within the broader downtrend, which has been more favourable for trend-following strategies. The market has offered clearer directional moves compared to more volatile or range-bound commodities, and traders who have remained short are likely benefiting from the ongoing decline. However, with prices approaching key levels, trend followers will need to stay vigilant for any potential shifts in the market's trajectory.

• Soybeans: -3.16%

Soybeans futures declined by -3.16% this week, continuing the downward momentum that has been in place for several months. The attached weekly chart shows that Soybeans experienced a strong rally throughout 2021 and early 2022 but has since entered a prolonged downtrend. The market is now approaching key support levels, and the recent declines reflect improving supply conditions alongside weaker demand prospects.

The fundamental backdrop for Soybeans has shifted as weather conditions in key growing regions, such as Brazil and the U.S., have stabilized. Better-than-expected crop yields have eased earlier supply concerns, leading to downward pressure on prices. Meanwhile, demand from major importers like China has softened amid broader economic uncertainty, further weighing on the market.

For trend followers, this week's -3.16% decline likely offered an opportunity for those who had positioned short in alignment with the broader bearish trend. The clear pattern of lower highs and lower lows on the chart is indicative of a sustained downtrend, which would have been favourable for systematic traders who capitalize on long-term price movements. The market's behaviour over the past several months has offered a relatively consistent trend, making it easier for trend followers to manage positions and profit from the sustained bearish momentum.

However, as Soybeans approach key support levels, there is some uncertainty about whether the downtrend will continue or if the market will stabilize and potentially reverse. For now, the fundamental drivers, including favourable weather conditions and weaker demand, suggest that the bearish trend could persist, offering continued opportunities for traders positioned short.

In summary, this week's -3.16% decline in Soybeans fits within the broader downtrend, which has been more favourable for trend-following strategies. The market has offered clearer directional moves compared to more volatile or range-bound commodities, and traders who have remained short are likely benefiting from the ongoing decline. However, with prices approaching key levels, trend followers will need to stay vigilant for any potential shifts in the market's trajectory.

Conclusion

This week has proven to be another challenging one for trend followers, as the broader market landscape remains turbulent and uncertain. The erratic movements across a wide array of asset classes, driven by geopolitical tensions, ambiguous economic data, and unpredictable price reversals, have made it increasingly difficult to identify and capitalize on clear trends. While some markets, such as Orange Juice, offered isolated opportunities for those who were positioned correctly, many other assets experienced sudden swings, false breakouts, and whipsaws, creating an environment fraught with difficulty.

The SG Trend Index's significant drop to -4.61% month-to-date reflects the extent of the difficulties faced by systematic traders. With the TTU Trend Barometer lingering at a low 20, the trending environment remains extremely weak, further underscoring the challenge of navigating through this unpredictable market. Despite these headwinds, some traders may have been able to capture gains in select commodities like Orange Juice, which continues to exhibit strong bullish momentum, or capitalize on the bearish momentum in Soybean Meal and Oats.

However, the prevailing theme this week is dispersion. Performance among trend-following funds is likely to be widely varied, with some strategies finding pockets of opportunity while others struggle to manage risk amid choppy and directionless markets. As volatility continues to rise, signalled by the 5.18% gain in VIX Futures, the road ahead is likely to remain bumpy for traders who depend on clear, sustained trends.

Ultimately, this week’s market dynamics emphasize the importance of risk management and adaptability in a volatile environment. As the uncertainty in global markets persists, traders will need to remain agile, ready to adjust positions as new trends emerge or dissipate. Those who can navigate through the noise and maintain disciplined strategies may still find opportunities, but the unpredictable nature of this week’s market suggests that continued caution will be paramount in the weeks to come.

List of Resources used in the Week in Review

Important Disclaimers

This document is directly solely to Accredited Investors, Qualified Eligible Participants, Qualified Clients and Qualified Purchasers. No investment decision should be made until prospective investors have read the detailed information in the fund offering documents of any manager mentioned in this document. This document is furnished on a confidential basis only for the use of the recipient and only for discussion purposes and is subject to amendment This document is neither advice nor a recommendation to enter into any transaction. This document is not an offer to buy or sell, nor a solicitation of an offer to buy or sell, any security or other financial instrument. This presentation is based on information obtained from sources that TopTradersUnplugged (“TTU”) (“considers to be reliable however, TTU makes no representation as to, and accepts no responsibility or liability for, the accuracy or completeness of the information. TTU has not independently verified third party manager or benchmark information, does not represent it as accurate, true or complete, makes no warranty, express or implied regarding it and shall not be liable for any losses, damages, costs or expenses relating to its adequacy, accuracy, truth, completeness or use.

All projections, valuations, and statistical analyses are provided to assist the recipient in the evaluation of the matters described herein. Such projections, valuations and analyses may be based on subjective assessments and assumptions and may use one among many alternative methodologies that produce different results accordingly, such projections, valuations and statistical analyses should not be viewed as facts and should not be relied upon as an accurate prediction of future events. There is no guarantee that any targeted performance will be achieved Commodity trading involves substantial risk of loss and may not be suitable for everyone

TTU is not and does not purport to be an advisor as to legal, taxation, accounting, financial or regulatory matters in any jurisdiction. The recipient should independently evaluate and judge the matters referred to herein. TTU does not provide advice or recommendations regarding an investor’s decision to allocate to funds or accounts managed by any manager (“or to maintain or sell investments in funds or accounts managed by any manager, and no fiduciary relationship under ERISA is created by the investor investing in funds or accounts managed by any manager, or through any communication between TTU and the investor

In reviewing this document, it should be understood that the past performance results of any asset class, or any investment or trading program set forth herein, are not necessarily indicative of any future results that may be achieved in connection with any transaction. Any persons subscribing for an investment must be able to bear the risks involved and must meet the suitability requirements relating to such investment. Some or all alternative investment programs discussed herein may not be suitable for certain investors This document is directed only to persons having professional experience in matters relating to investments. Any investment or investment activity to which this document relates is available only to such investment professionals. Persons who do not have professional experience in matters relating to investments should not rely upon this document.

This document and its contents are proprietary information of TTU and may not be reproduced or otherwise disseminated in whole or in part without TTU’s prior written consent.

This document contains simulated or hypothetical performance results that have certain inherent limitations AND SHOULD BE VIEWED FOR ILLUSTRATIVE PURPOSES. Unlike the results shown in an actual performance record, these results do not represent actual trading. HYPOTHETICAL PERFORMANCE RESULTS HAVE MANY INHERENT LIMITATIONS, SOME OF WHICH ARE DESCRIBED BELOW. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN IN FACT, THERE ARE FREQUENTLY SHARP DIFFERENCES BETWEEN HYPOTHETICAL PERFORMANCE RESULTS AND THE ACTUAL RESULTS SUBSEQUENTLY ACHIEVED BY ANY PARTICULAR INVESTMENT ACCOUNT.

ONE OF THE LIMITATIONS OF HYPOTHETICAL PERFORMANCE RESULTS IS THAT THEY ARE GENERALLY PREPARED WITH THE BENEFIT OF HINDSIGHT IN ADDITION, HYPOTHETICAL TRADING DOES NOT INVOLVE FINANCIAL RISK, AND NO HYPOTHETICAL TRADING RECORD CAN COMPLETELY ACCOUNT FOR THE IMPACT OF FINANCIAL RISK IN ACTUAL TRADING FOR EXAMPLE, THE ABILITY TO WITHSTAND LOSSES OR TO ADHERE TO A PARTICULAR TRADING PROGRAM OR OTHER ASSET.

There are numerous other factors related to the markets in general or to the implementation of any specific trading program which cannot be fully accounted for in the preparation of hypothetical performance results and all of which can adversely affect actual trading results. No representation is being made that any investment will or is likely to achieve profits or losses similar to those being shown.

Welcome to “This Week in Trend”, where each week, we cover key movements and trends in the futures markets, offering insights on commodities and indices shaping the economy. From price surges to notable declines, we provide an overview of the factors driving these changes. Stay informed about the latest developments and navigate the market with confidence. Join us weekly to explore the dynamic world of futures trading and the trends that matter most.

“Trend Followers Stumble as October Brings a Rough Start”

This week has proven particularly challenging for trend followers, as geopolitical tensions and macroeconomic factors converged to unsettle the markets. The ongoing conflict in the Middle East has raised fears of energy supply disruptions, driving oil prices higher and increasing volatility across various asset classes. The VIX, widely known as the “fear gauge,” surged in response, reflecting heightened nervousness among investors as uncertainty looms over global markets.

Further complicating the outlook is the ongoing ambiguity surrounding Federal Reserve policy. Recent comments from the Fed indicated that they are not following a “preset course” regarding interest rates, leaving traders wary about future monetary decisions. Additionally, stronger-than-expected U.S. jobs data added pressure, pushing bond yields higher and weighing on broader markets.

These forces have culminated in a difficult start to October. The SG Trend Index is down -2.53% month-to-date (MTD) as of October 3, 2024, with year-to-date (YTD) performance slipping into negative territory at -0.31%. In contrast to last week’s promising end-of-September performance, this downturn highlights the volatile and unpredictable nature of the markets as the new month begins.

The TTU Trend Barometer has plunged to 16, down from last week’s reading of 55. This significant drop signals an extremely poor trending environment, one of the worst readings possible. Such a sharp decline highlights the broader challenges trend followers are currently facing across multiple asset classes. As market conditions have cooled and volatility rises, traders are finding fewer clear trend signals to capitalize on, making it increasingly difficult to identify profitable opportunities.

The Top Traders Unplugged (TTU) Trend Barometer is a proprietary tool that measures the percentage of markets with medium to strong trends. Just as a thermometer reading of 0 degrees Celsius equates to freezing, when the TTU Trend Barometer reads a value that is less than 40%, market trendiness begins to get “colder” or weaken. Likewise, when the TTU Trend Barometer gets above 55%, the environment gets “hotter” (better).

Weekly Asset Class Snapshot

This week’s market landscape proved especially difficult for trend followers, as a surge in volatility and significant reversals across key asset classes made identifying clear trends challenging. VIX futures climbed by 5.95%, indicating heightened uncertainty in the markets. The sharp rise was driven by geopolitical tensions in the Middle East and ongoing ambiguity around U.S. interest rate policy. While volatility traders may have found opportunities, the sharp rise injected additional risk into other asset classes, making systematic trend-following strategies harder to navigate.

The energy sector experienced notable gains, with the sector rising 5.09%, largely due to a 9.23% jump in Brent crude and a 9.20% rise in WTI crude. The surge was fuelled by supply concerns linked to geopolitical risks in the Middle East. This sharp reversal in oil markets would have been particularly challenging for trend followers, many of whom had positioned short, anticipating further declines. Gasoline and heating oil also posted strong gains, further complicating energy market trends for those betting on continued weakness.

In contrast, the soft commodities sector saw steep declines, led by Cocoa, which plunged by -14.68% due to improved weather conditions and easing supply concerns in key production regions. Coffee and soybean meal also posted notable losses, further dampening the outlook for trend-followers in these markets. While some sectors, such as meats and grains, saw modest gains, up 2.30% and 0.67% respectively, the broader landscape posed significant challenges.

Bond markets also struggled, with rising yields driven by stronger-than-expected U.S. jobs data and fears of prolonged interest rate hikes. Bonds fell -1.46%, reflecting growing caution among investors, adding further strain on trend-following models positioned for more stable rates.

In the metals sector, movements were mixed. While the sector as a whole dipped -0.32%, palladium saw a sharp decline of -5.76% due to weakening demand from the automotive sector, while industrial metals like aluminium and copper held relatively steady on the back of sustained demand in the construction and manufacturing sectors.

Overall, this week posed significant challenges for trend followers. While volatility-based strategies may have found pockets of opportunity, the rapid reversals in energy markets and the broader mixed performance across asset classes made it increasingly difficult to capitalize on clear trends. With the TTU Trend Barometer plunging to 16, one of its lowest readings, the environment is proving as difficult as it gets for systematic traders.

The key takeaway for trend followers is the importance of managing risk in these volatile conditions while staying agile to seize emerging opportunities as they arise across asset classes.

Top 10 Bear and Bull Price Moves

Here's a detailed analysis of the key market movers for the week.

What’s Moving Up

• Crude Oil Brent: +9.23%

Brent Crude oil surged by 9.23% this week, driven primarily by escalating geopolitical tensions in the Middle East. Fears of supply disruptions, particularly around key chokepoints like the Strait of Hormuz, have rattled global energy markets. With Iran playing a central role in these tensions, any potential disruption to oil exports from the region could significantly tighten the supply side, pushing prices higher. Additionally, Saudi Arabia’s extension of production cuts has added further upward pressure, with the market already leaning towards tighter supply.

From a macroeconomic perspective, these developments have exacerbated the already fragile supply-demand balance. Despite global demand forecasts remaining relatively stable, the uncertainty around Middle Eastern supply has caused prices to spike in anticipation of potential shortages. This upward move comes after months of a bearish sentiment, where demand concerns and higher inventories had kept prices suppressed​ (Barchart.com)​(Investopedia).

For medium- to long-term trend followers, this sudden price surge was likely unfavourable. Brent Crude has been in a bearish trend since April 2024, and many traders were likely positioned short, anticipating continued downward movement. This sharp reversal would have triggered unexpected losses for those holding short positions, as the bullish move broke through key resistance levels. The rapid change in sentiment highlights the challenges trend followers face when geopolitical events abruptly alter market dynamics.

At the moment, the market is poised for a potential shift, and systematic traders will likely be watching closely for confirmation of sustained upside movement. A clear breakout could signal the end of the congestion phase, providing new opportunities for medium- to long-term trend-followers.

• Crude Oil WTI: +9.20%

For Crude Oil WTI, which rose 9.20% this week, the reasons for the price surge were aligned with those for Brent Crude. Geopolitical tensions in the Middle East, particularly concerns about supply disruptions, and ongoing production cuts by Saudi Arabia were the primary drivers behind the bullish move​. As with Brent, the risk of supply chain interruptions in critical areas like the Strait of Hormuz further fuelled the upward momentum in WTI prices.

For trend followers, the dynamics mirrored those of Brent Crude. Many medium- to long-term trend followers were likely positioned short on WTI since its peak in June 2022, as the market exhibited a persistent bearish trend due to oversupply and demand concerns. However, since June 2023, WTI has been stuck in a congestion pattern, with prices fluctuating within a range without a clear breakout. This week’s upward move, while significant, is likely seen by trend followers as a reversion to the mean within this congestion phase rather than the start of a new trend. As a result, this movement may not have significantly altered the overall bearish positioning of systematic traders.

• Gasoline RBOB: +8.66%

For Gasoline RBOB, which increased 8.66% this week, the underlying reasons for the price move are largely tied to the same factors driving crude oil prices higher—namely, the geopolitical tensions in the Middle East and supply concerns in key global regions​. The ongoing risks surrounding supply disruptions and elevated seasonal demand for energy products have pushed gasoline prices up in tandem with crude.

For medium- to long-term trend followers, this move was likely unfavourable. Like crude oil, Gasoline RBOB has been in a bearish trend since its peak in June 2022, reflecting global demand concerns and an oversupply environment. Trend followers were probably short this asset, anticipating continued weakness in the energy markets. The sharp reversal this week, driven by external geopolitical shocks, likely resulted in losses for those traders still positioned short​. The unexpected nature of this spike underscores the challenges for trend followers when macro factors disrupt established trends.

• Heating Oil: +7.82%

For Heating Oil, which increased 7.82% this week, the price move can also be attributed to the same factors driving the broader energy complex higher. Geopolitical instability in the Middle East, coupled with seasonal demand as colder weather approaches, have both contributed to this upward pressure on prices​. These external shocks are adding to the tight supply situation, which has been a key driver for energy commodities like heating oil.

For trend followers, this price surge would have been unfavourable. Like the other assets in the energy complex, trend followers were likely positioned short in heating oil, particularly since its peak in September 2023, as the market had been reflecting a bearish trend due to softer demand expectations and higher inventories.

This week’s sharp reversal, spurred by geopolitical risks, would have been a surprise, likely leading to losses for systematic traders maintaining short positions. The move underscores the unpredictability trend followers face when external events disrupt the expected market trajectory.

VIX: +5.95%

For VIX Futures, which rose 5.95% this week, the price movement reflects the heightened volatility in the markets due to geopolitical tensions and macroeconomic uncertainty. VIX Futures, which track expectations of future volatility, saw an increase driven by concerns over geopolitical risks in the Middle East and the ambiguity around U.S. monetary policy​. Unlike the spot VIX index, VIX Futures allow traders to speculate on or hedge against volatility in the future, amplifying moves when market conditions are uncertain.

The uncertainty around the Federal Reserve’s stance on interest rates, combined with geopolitical shocks, heightened caution among investors, leading to increased hedging activity and speculation in volatility markets​.

For trend followers, this surge in VIX Futures may have been favourable. Many volatility-based trend-following strategies are designed to capitalize on periods of rising uncertainty. The sharp increase in VIX Futures would have provided an opportunity for these strategies to profit as volatility climbed. However, for those following more traditional asset trends, this heightened volatility could introduce challenges, making other asset classes more unpredictable and harder to navigate. As always, managing risk in such an environment remains crucial for all types of systematic traders.

What’s Moving Down

• Cocoa: -14.68%

For Cocoa, which dropped -14.68% this week, the significant decline can be attributed to easing supply concerns. After months of tight supply driven by adverse weather conditions in key growing regions like West Africa, recent improvements in weather have bolstered crop prospects, alleviating fears of shortages​. This shift in the supply outlook led to a sharp reversal in cocoa prices, as markets began to price in the improved conditions.

Despite earlier optimism for a potential resurgence in the long-term bullish trend, this week’s steep drop was a significant move against trend followers who had positioned themselves for a continuation of the upward momentum. Many trend followers, likely long in cocoa, were expecting the price to rise further as global demand remained strong. However, the improved supply conditions have temporarily stalled the bullish trend, leading to losses for systematic traders who were caught off guard by the rapid decline​.

This reversal highlights the inherent risk for trend followers in commodity markets, where external factors like weather can drastically shift the supply-demand balance and reverse well-established trends. For now, trend followers will likely need to reassess their positions as cocoa enters a phase of price correction.

• Coffee: -5.26%

For Coffee, which declined -5.26% this week, the price drop can largely be attributed to improved weather conditions in key coffee-growing regions, such as Brazil and Vietnam. After months of adverse weather that had supported coffee’s significant rally, better-than-expected conditions have now eased concerns over supply, leading to a sharp price correction. This week's move reflects a reassessment of supply prospects, as the market begins to price in the potential for increased output from major producers.

For trend followers, this move was unfavourable. Coffee has been in a strong bullish trend since its low in October 2023, driven by tight supplies and strong global demand, particularly from Europe and North America. Many systematic traders who had been enjoying this bullish momentum were likely long in coffee, expecting the trend to continue. However, the improved supply outlook triggered this week’s reversal, catching trend followers off guard and resulting in potential losses.

This serves as a reminder of how quickly commodity markets can shift when external factors like weather change the fundamental dynamics. Trend followers may need to reassess their positions in the short term, but if demand remains strong, the longer-term trend could still present opportunities down the line.

• Japanese Yen (JPY): -4.48%

For the Japanese Yen, which fell -4.48% this week, the decline marked a significant move in favour of medium- to long-term trend followers who have maintained short positions since the yen’s peak in January 2021. After a prolonged period of weakness driven by Japan’s ultra-loose monetary policy and its divergence from global central banks, the yen had recently experienced a short-term bullish correction, linked to the unwinding of the carry trade and speculative buying.

This week’s sharp drop, however, likely provided a welcome reprieve for trend followers still positioned short. The yen’s continued weakness, compounded by rising U.S. interest rates and a strengthening dollar, reinforced the longer-term bearish outlook. Despite temporary corrections, the yen's decline aligns with the overall downward trend, boosting systematic strategies that have maintained short positions through the volatile swings of recent months.

For those trend followers still riding the yen’s long-term decline, this week’s movement would have reaffirmed their strategy, potentially adding to profits after a period of consolidation.

However, for shorter-term models, the -4.48% decline would likely have been unfavourable. Many shorter-term trend followers may have started repositioning to the long side, anticipating a continuation of the short-term bullish correction that emerged following the carry trade unwind. This correction led some traders to see the yen as potentially oversold, prompting speculative positioning for a rebound.

The swift resumption of the yen’s long-term downtrend caught those repositioning to the long side off guard, resulting in losses. This abrupt reversal highlights the risks shorter-term models face when markets quickly reverse after a temporary correction, reinforcing the challenge of navigating through sudden shifts in sentiment.

• Soybean Meal: -4.01%

For Soybean Meal, which declined -4.01% this week, the move is likely to have been favourable for trend followers, given the ongoing bearish but volatile trend since its peak in February 2023.

The decline in prices was largely driven by improved weather conditions in key producing regions, such as Brazil and Argentina, where better-than-expected rainfall helped boost crop yields. This alleviated earlier supply concerns that had driven prices higher during periods of drought.

Additionally, weaker demand from key importers like China, amidst broader global economic uncertainty, added to the pressure on prices. These factors combined to reinforce the bearish momentum that has persisted throughout 2023.

This week’s decline aligns with the broader downward trend, reinforcing the momentum that systematic traders, who have likely positioned short during the price decline, could capitalize on. The move provides a confirmation of the prevailing market conditions, allowing trend followers to potentially profit from the continuation of the weakening trend, despite occasional volatility that has characterized the soybean meal market.

For those following the longer-term downtrend, this week’s price action further supports their strategies, providing a timely opportunity to benefit from the continued weakness in soybean meal prices.

• New Zealand Dollar (NZD): -3.03%

For the New Zealand Dollar (NZD), which declined -3.03% this week, the move was primarily driven by expectations of a significant rate cut from the Reserve Bank of New Zealand (RBNZ). Analysts are anticipating a 50-basis point rate cut, reflecting concerns over the country's weak economic growth and rising unemployment. These factors have contributed to bearish sentiment surrounding the NZD, pushing it lower against the stronger U.S. dollar, which is benefiting from solid U.S. economic data​.

For trend followers, this move likely wouldn’t have been of much interest, as the NZD has been stuck in a protracted congestion phase since early 2023. This latest decline is more of a reversion to the mean within that congestion period, lacking the clear directional momentum trend-followers typically seek. As a result, many traders have likely remained on the sidelines, avoiding this asset until stronger trends develop.

Conclusion

This week brought a diverse array of challenges and limited opportunities for trend followers. Energy markets surged, driven by geopolitical tensions in the Middle East, with both Crude Oil and Gasoline experiencing sharp gains. These unexpected price spikes due to supply concerns caught many medium- to long-term trend followers off guard, as many had positioned short, anticipating continued bearish trends in these assets. The sudden reversal highlights the difficulties of navigating markets heavily influenced by external macro events.

In contrast, VIX Futures provided some relief for volatility-focused strategies, allowing traders to capitalize on rising uncertainty. However, softer commodities like Cocoa and Coffee saw notable declines due to improved supply conditions, impacting trend followers who had bet on continued bullish momentum.

Currencies, particularly the Japanese Yen and New Zealand Dollar, saw sharp declines, with long-term trend followers benefiting from the yen’s continued weakness. However, shorter-term traders likely faced challenges as temporary bullish corrections reversed. Meanwhile, Soybean Meal continued its downward trajectory, benefiting trend followers as it reinforced the ongoing bearish trend since early 2023.

Overall, this week’s market dynamics demonstrate the significant risks and volatility that trend followers must contend with. Geopolitical shocks, coupled with shifting macroeconomic data, created an unpredictable environment where established trends were abruptly disrupted. The SG Trend Index's decline to -2.53% month-to-date and the TTU Trend Barometer's plunge to 16 reflect an especially challenging trading landscape, where clear trend signals are scarce, and the trending environment is near rock bottom.

Systematic traders will need to carefully manage risk, stay alert for potential trend breakouts, and be ready to adapt as conditions evolve. This week underscored the importance of maintaining flexibility in strategy while navigating the volatile and often unpredictable terrain of global markets.

List of Resources used in the Week in Review

Important Disclaimers

This document is directly solely to Accredited Investors, Qualified Eligible Participants, Qualified Clients and Qualified Purchasers. No investment decision should be made until prospective investors have read the detailed information in the fund offering documents of any manager mentioned in this document. This document is furnished on a confidential basis only for the use of the recipient and only for discussion purposes and is subject to amendment This document is neither advice nor a recommendation to enter into any transaction. This document is not an offer to buy or sell, nor a solicitation of an offer to buy or sell, any security or other financial instrument. This presentation is based on information obtained from sources that TopTradersUnplugged (“TTU”) (“considers to be reliable however, TTU makes no representation as to, and accepts no responsibility or liability for, the accuracy or completeness of the information. TTU has not independently verified third party manager or benchmark information, does not represent it as accurate, true or complete, makes no warranty, express or implied regarding it and shall not be liable for any losses, damages, costs or expenses relating to its adequacy, accuracy, truth, completeness or use.

All projections, valuations, and statistical analyses are provided to assist the recipient in the evaluation of the matters described herein. Such projections, valuations and analyses may be based on subjective assessments and assumptions and may use one among many alternative methodologies that produce different results accordingly, such projections, valuations and statistical analyses should not be viewed as facts and should not be relied upon as an accurate prediction of future events. There is no guarantee that any targeted performance will be achieved Commodity trading involves substantial risk of loss and may not be suitable for everyone

TTU is not and does not purport to be an advisor as to legal, taxation, accounting, financial or regulatory matters in any jurisdiction. The recipient should independently evaluate and judge the matters referred to herein. TTU does not provide advice or recommendations regarding an investor’s decision to allocate to funds or accounts managed by any manager (“or to maintain or sell investments in funds or accounts managed by any manager, and no fiduciary relationship under ERISA is created by the investor investing in funds or accounts managed by any manager, or through any communication between TTU and the investor

In reviewing this document, it should be understood that the past performance results of any asset class, or any investment or trading program set forth herein, are not necessarily indicative of any future results that may be achieved in connection with any transaction. Any persons subscribing for an investment must be able to bear the risks involved and must meet the suitability requirements relating to such investment. Some or all alternative investment programs discussed herein may not be suitable for certain investors This document is directed only to persons having professional experience in matters relating to investments. Any investment or investment activity to which this document relates is available only to such investment professionals. Persons who do not have professional experience in matters relating to investments should not rely upon this document.

This document and its contents are proprietary information of TTU and may not be reproduced or otherwise disseminated in whole or in part without TTU’s prior written consent.

This document contains simulated or hypothetical performance results that have certain inherent limitations AND SHOULD BE VIEWED FOR ILLUSTRATIVE PURPOSES. Unlike the results shown in an actual performance record, these results do not represent actual trading. HYPOTHETICAL PERFORMANCE RESULTS HAVE MANY INHERENT LIMITATIONS, SOME OF WHICH ARE DESCRIBED BELOW. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN IN FACT, THERE ARE FREQUENTLY SHARP DIFFERENCES BETWEEN HYPOTHETICAL PERFORMANCE RESULTS AND THE ACTUAL RESULTS SUBSEQUENTLY ACHIEVED BY ANY PARTICULAR INVESTMENT ACCOUNT.

ONE OF THE LIMITATIONS OF HYPOTHETICAL PERFORMANCE RESULTS IS THAT THEY ARE GENERALLY PREPARED WITH THE BENEFIT OF HINDSIGHT IN ADDITION, HYPOTHETICAL TRADING DOES NOT INVOLVE FINANCIAL RISK, AND NO HYPOTHETICAL TRADING RECORD CAN COMPLETELY ACCOUNT FOR THE IMPACT OF FINANCIAL RISK IN ACTUAL TRADING FOR EXAMPLE, THE ABILITY TO WITHSTAND LOSSES OR TO ADHERE TO A PARTICULAR TRADING PROGRAM OR OTHER ASSET.

There are numerous other factors related to the markets in general or to the implementation of any specific trading program which cannot be fully accounted for in the preparation of hypothetical performance results and all of which can adversely affect actual trading results. No representation is being made that any investment will or is likely to achieve profits or losses similar to those being shown.

Welcome to “This Week in Trend”, where each week, we cover key movements and trends in the futures markets, offering insights on commodities and indices shaping the economy. From price surges to notable declines, we provide an overview of the factors driving these changes. Stay informed about the latest developments and navigate the market with confidence. Join us weekly to explore the dynamic world of futures trading and the trends that matter most.

“Natural Gas Ignites While Palladium Cools”

This week saw strong upward movement in natural gas and cocoa, while palladium and energy markets struggled. The SG Trend Index reported a positive month-to-date (MTD) gain of +1.96% as of September 26, 2024, bringing the year-to-date (YTD) performance to +3.27%. This marks an improvement from last week’s MTD result of +1.51%. Trend followers are benefiting from these improving market conditions.

The TTU Trend Barometer has climbed to 55, up significantly from last week’s reading of 39, signalling a positive trending environment. This increase, along with the positive SG Trend Index, indicates favourable conditions for trend-followers.

The Top Traders Unplugged (TTU) Trend Barometer is a proprietary tool that measures the percentage of markets with medium to strong trends. Just as a thermometer reading of 0 degrees Celsius equates to freezing, when the TTU Trend Barometer reads a value that is less than 40%, market trendiness begins to get “colder” or weaken. Likewise, when the TTU Trend Barometer gets above 55%, the environment gets “hotter” (better).

Weekly Asset Class Snapshot

This week’s market landscape was marked by a surge in volatility, with the VIX futures climbing 7.50%, reflecting increased uncertainty over interest rates and geopolitical concerns. Grains also saw solid gains (+3.27%) as tightening supplies continued to support prices, while soft commodities like cocoa and soybean meal experienced notable increases due to supply constraints and heightened demand.

Meanwhile, the energy sector remained mostly flat, with a slight decline in crude oil prices driven by demand concerns, especially from China, and increasing inventories in the U.S. The metals market was mixed, with palladium experiencing a sharp -5.76% decline as demand from the automotive sector weakened.

Bonds and energy experienced minor declines, signalling investor caution amid rising interest rate expectations and softer demand for crude.

Here's how different asset classes moved this week:

• Volatility Index: +7.50%
  The VIX futures surged this week, reflecting heightened market volatility. Concerns over interest rates and geopolitical tensions continue to drive uncertainty.
• Grains: +3.27%
  Grain prices saw solid gains, supported by tightening global supplies and strong demand in key markets.
• Meats: +0.46%
  Meats showed modest growth, with stable demand keeping the market balanced.
• Bonds: -0.15%
  Bonds edged down slightly as rising interest rate expectations put pressure on fixed-income assets.
• Energy: -0.06%
  Energy prices were mostly flat, with minor declines driven by ongoing concerns over global demand, particularly in crude oil.
• Metals: +0.95%
  Metals posted slight gains, reflecting industrial demand, though palladium saw notable weakness.
• Soft Commodities: +2.47%
  Soft commodities rose, led by strong gains in cocoa and soybean meal, driven by tightening global supplies.
• Equity Index: +0.99%
  Equities saw moderate gains, with tech stocks continuing to support the broader market.
• Currency: +0.68%
  Currency markets were relatively stable, with central bank policy shifts continuing to dominate investor sentiment.

Overall, this week presented a complex mix of opportunities and challenges for trend-followers, with energy and volatility leading the way in providing potential trading opportunities, while caution prevailed in bonds and select commodities. The key takeaway is that while certain sectors like grains and volatility showed strong trends, traders should remain vigilant in navigating these ever-changing market conditions.

Top 10 Bear and Bull Price Moves

Here's a detailed analysis of the key market movers for the week.

What’s Moving Up

• Natural Gas: +9.20%

Natural gas surged by 9.20% this week, primarily driven by an early onset of colder-than-expected weather across key regions in the Northern Hemisphere. This increase in heating demand, alongside tighter-than-expected supply conditions, particularly in Europe, pushed prices higher. In the U.S., storage levels were also reported lower than anticipated for this time of year, adding further pressure on supply and contributing to the bullish move. Moreover, concerns over potential supply disruptions from key exporting countries like Russia and geopolitical tensions in the Middle East have stoked fears of a future supply crunch.

From a trend-following perspective, despite this strong up-move, natural gas has been trapped in a congestion pattern since early 2023. This extended sideways movement has made it difficult for systematic traders to capture consistent profits, as there has been no clear breakout. However, with this recent price surge, traders might now be eyeing a potential long-side breakout. Should the price continue to rise and break past key resistance levels, trend-followers could see this as a signal to enter long positions, betting on continued upward momentum.

At the moment, the market is poised for a potential shift, and systematic traders will likely be watching closely for confirmation of sustained upside movement. A clear breakout could signal the end of the congestion phase, providing new opportunities for medium- to long-term trend-followers.

• Cocoa: +8.37%

Cocoa surged by 8.37% this week, driven largely by tight global supplies and continued strong demand. The ongoing supply constraints stem primarily from adverse weather conditions in West Africa, particularly in Côte d'Ivoire and Ghana, the world’s two largest cocoa producers. Unfavourable growing conditions, such as droughts and poor rainfall, have impacted crop yields, reducing the availability of cocoa beans for global export. Additionally, logistical issues and political instability in some producing regions have exacerbated the supply crunch.

Demand for cocoa, particularly from the confectionery industry, has remained robust, further supporting prices. The surge in demand from Europe and North America for chocolate products has added upward pressure on prices, particularly as we head into peak seasonal demand periods.

From a trend-following perspective, cocoa is showing signs of another bullish breakout. Prices are moving back towards their previous highs from April 2024, when the market reached its highest point of the year. This rally could be an early signal for traders to consider long-side breakouts as the commodity climbs back toward those previous levels. For systematic traders, this type of price action—approaching a key resistance level—often presents an attractive opportunity to position for a potential upside breakout.

If cocoa continues to break past resistance and holds above these levels, we could see further confirmation of a longer-term bullish trend. Early entries into this market by trend-followers could offer strong profit potential, particularly if global supply issues persist and demand remains elevated.

• Soybean Meal: +7.83%

Soybean meal prices rose by 7.83% this week, fuelled by tightening global supplies and increasing demand in the livestock feed sector. One of the key drivers behind this surge has been adverse weather conditions in major soybean-producing regions, particularly in South America. Argentina, one of the world’s largest exporters of soybean products, has faced significant production challenges due to prolonged drought conditions. This has reduced the global supply of soybeans and, consequently, soybean meal, creating upward pressure on prices.

In addition to supply issues, demand for soybean meal has remained robust, particularly from the livestock industry, where soybean meal is a critical component of animal feed. The rising demand for meat production globally, especially in regions like China and Southeast Asia, has further bolstered the need for this commodity. This combination of shrinking supply and rising demand has contributed to the bullish momentum we are now witnessing.

From a trend-following perspective, soybean meal has been in a prolonged bearish trend since early 2023. However, this week’s sharp price rise is testing the resilience of that downtrend. For long-term trend followers, this rally may seem unfavourable, as it goes against the established downward momentum. However, for shorter-term trend followers, this price movement may signal the potential for a bullish breakout. If prices continue to push higher and break through key resistance levels, it could mark the beginning of a new upward trend, creating opportunities for systematic traders to enter long positions.

The current situation may offer a key inflection point for trend-followers: while long-term strategies may still favour the bearish outlook, shorter-term models are likely preparing for the possibility of a breakout. Traders will be closely watching for confirmation signals that this rally is more than a temporary correction, and if sustained, could shift the market back into a bullish phase.

• VIX Futures: +7.50%

Volatility, as measured by the VIX, surged by 7.50% this week, signalling growing uncertainty across global markets. The VIX, often referred to as the “fear gauge,” reflects expectations of near-term volatility in equity markets, particularly in the S&P 500. This recent increase is largely driven by a combination of factors, including renewed concerns over central bank policy, rising interest rates, and lingering geopolitical tensions.

One of the key drivers behind this volatility is the ongoing uncertainty surrounding the Federal Reserve's next moves on interest rates. With inflation still above target in many regions and economic data offering mixed signals, markets remain on edge, unsure whether the Fed will maintain its tightening stance or pivot to a more dovish approach. This uncertainty has led to more cautious positioning from investors, as they anticipate potential shocks in equity and bond markets.

Geopolitical risks, including tensions in the Middle East and ongoing conflicts in Eastern Europe, have also contributed to the rise in volatility. Investors are increasingly concerned about how these global flashpoints could disrupt energy supplies and broader economic stability. The risk of escalation in these regions has injected additional fear into the markets, driving volatility higher.

For trend-followers, the recent expansion in volatility presents both opportunities and challenges. The VIX tends to exhibit strong momentum during periods of market stress, making it an attractive vehicle for volatility-focused trend-following strategies. However, the challenge lies in the unpredictable nature of volatility spikes, which can be short-lived and lead to sharp reversals. Traders operating on shorter timeframes may be able to capitalize on this increase in volatility, while longer-term trend-followers may approach with caution, as volatility can ebb just as quickly as it rises.

Given the current market backdrop, systematic traders will be monitoring volatility closely, looking for confirmation of whether this spike signals a sustained period of market stress or simply a temporary reaction to recent economic data and geopolitical developments. If volatility continues to rise, it could present further opportunities for volatility-based strategies.

Coffee: +5.68%

Coffee prices surged by 5.68% this week, continuing the strong upward momentum that has been in place since October 2023. This sustained uptrend is largely driven by supply shortages from key producing countries like Brazil and Vietnam. Brazil, the world's largest coffee producer, has faced unfavourable weather conditions, including droughts and frosts, which have reduced coffee yields over the past year. Similarly, Vietnam, another major exporter, has reported lower-than-expected crop sizes due to unpredictable weather patterns and logistical issues. These supply constraints have supported the bullish trend in coffee prices.

In addition to weather-related issues, strong demand for coffee, particularly from Europe and North America, has helped to sustain this uptrend. Consumer demand for coffee remains robust, and any further disruptions in supply are likely to exacerbate the upward pressure on prices. As a result, the combination of constrained supply and solid demand has continued to drive coffee higher.

From a trend-following perspective, this week's price rise would have been greeted positively by traders who have been capitalizing on the sustained uptrend since late 2023. Coffee’s long-term bullish momentum has provided trend followers with consistent opportunities to ride the trend, as the commodity continues to push higher. Traders positioned long in the market are benefiting from these conditions, as there are few signs that the fundamental supply constraints will ease in the near future.

Given the strength of this trend, systematic traders are likely holding long positions and may even consider adding to them as the market continues to demonstrate bullish behaviour. With the global supply-demand imbalance showing no signs of immediate resolution, trend-followers will likely remain engaged in this market, looking to capture further upside.

What’s Moving Down

• Palladium: -5.76%

Palladium saw a sharp decline of 5.76% this week, continuing the bearish trend that has been in place since March 2022. This downturn is largely driven by weakening demand from the automotive sector, which is the largest consumer of palladium for catalytic converters. As global car production has slowed, particularly in Europe and Asia, the demand for palladium has waned. The rise in electric vehicles, which do not use palladium, has also contributed to the declining demand for the metal. Additionally, a stronger U.S. dollar has put further downward pressure on dollar-denominated commodities like palladium, making it more expensive for foreign buyers.

From a supply perspective, the easing of earlier supply constraints from Russia, a key palladium producer, has also played a role in this week's decline. With supply more stable and demand declining, palladium prices have struggled to find upward momentum. This week's price drop continues the broader downtrend in the market.

For long-term trend-followers, this week's decline would likely have been a welcome continuation of the established bearish trend. Since March 2022, palladium has been steadily losing value, and traders who have been positioned short in this market have likely benefited from the sustained downtrend. However, it’s important to note that in recent months, palladium has entered a congestion pattern, with prices moving sideways rather than in a clear downward trend. This lack of direction has made the market less attractive for short- to medium-term trend-followers, who may prefer more pronounced trends to capitalize on.

While long-term systematic traders may still be holding short positions, short- to medium-term trend-followers are less likely to have engaged with palladium in recent months, given the lack of clear directional movement. The congestion pattern, combined with the overall weakness in industrial demand, may keep this market in a prolonged state of low activity until clearer trends emerge.

• Orange Juice: -4.00%

Orange juice prices dropped by 4.00% this week, a move that would have been unfavourable for trend-followers who have been bullish on this market since early 2022.

The sharp decline comes after a prolonged rally driven by a combination of weather-related disruptions and supply chain constraints. Earlier in the year, orange juice saw significant price increases due to crop damage caused by hurricanes and droughts in key production areas like Florida and Brazil. These supply shocks helped drive a sustained upward trend, making orange juice one of the top-performing commodities for trend-following portfolios.

However, this week’s price drop can be attributed to improving weather conditions and a recovery in supply from major growing regions. Reports from Brazil, in particular, indicate that favourable weather has led to stronger-than-expected harvests, easing some of the previous supply concerns. Additionally, the market has seen a stabilization in production levels after the initial shocks of the past year, which has tempered the bullish momentum in recent weeks.

For trend-followers, this week’s decline likely resulted in some portfolio losses, particularly for those holding long positions in orange juice. Given that orange juice has been a major contributor to trend-following performance over the past year, this pullback may have come as a surprise, highlighting the inherent risks in commodity markets.

While the overall long-term trend remains intact, this week’s reversal shows how quickly market dynamics can shift, even in strongly trending markets.

The key question for trend-followers now is whether this move represents a short-term correction within the broader bullish trend or the beginning of a more prolonged reversal. Traders will be watching closely to see if prices stabilize or continue to decline, as further downside could challenge the long-standing uptrend in this market.

• Gasoline RBOB: -3.87%

Gasoline RBOB prices declined by 3.87% this week, continuing the downtrend that has been in place since late August 2024 when the market broke down from a prolonged congestion pattern. This latest move reflects growing concerns over demand, particularly from China, where the economy is showing signs of slowing down. Reduced industrial activity and softer consumer demand in key markets have weighed heavily on gasoline prices, as global oil demand has not recovered as strongly as expected following the pandemic. Additionally, U.S. inventory levels have been higher than anticipated, further pressuring gasoline prices lower.

In terms of supply, OPEC+ production cuts have not been sufficient to offset the ongoing weakness in demand, leaving gasoline markets oversupplied. Despite the cartel’s efforts to stabilize prices, the combination of high inventories and weakening demand has resulted in downward pressure on gasoline, extending the bearish trend into this week.

From a trend-following perspective, gasoline's break down from its congestion pattern in late August 2024 has confirmed the start of a new downtrend. Trend-followers are likely to have entered short positions in the market in anticipation of a continued bearish move. The clear breakdown of key support levels has provided systematic traders with strong signals to position for further downside, particularly as demand remains weak and supply continues to outpace consumption.

As the bearish momentum builds, traders are watching for signs that this downtrend will continue into the coming months. With few signs of a demand recovery and continued pressure from rising inventories, the outlook remains negative. Short positions are expected to be profitable in the near term as long as the market remains in this oversupplied state. However, as always, traders will need to remain vigilant for any sudden shifts in demand or unexpected supply disruptions that could reverse the current trend.

• Crude Oil WTI: -3.32%

Crude Oil (WTI) prices fell by 3.32% this week, signalling the potential start of a bearish trend following a prolonged period of congestion since early 2023. The move comes amid growing concerns over weakening global demand, particularly from China, whose economic slowdown continues to weigh on energy consumption. This decline in demand has been compounded by rising U.S. crude inventories, which have consistently exceeded forecasts in recent weeks, further pressuring prices downward.

On the supply side, despite efforts from OPEC+ to stabilize prices through production cuts, the market remains oversupplied. OPEC+ cuts have failed to fully counterbalance the softness in demand, especially as global economic growth has slowed. Additionally, geopolitical tensions in major oil-producing regions have led to periods of volatility, but the overall supply picture remains robust enough to prevent any significant price rallies.

From a trend-following perspective, crude oil appears to be entering a bearish trend after being trapped in a congestion pattern for much of 2023. This week’s price decline could mark the beginning of a more sustained downtrend, and while it’s still early, systematic traders are likely starting to monitor this market closely for potential short entries. As the downside momentum builds, interest is growing among traders for a possible bearish continuation, especially if prices break key support levels in the coming weeks.

If this bearish trend persists, trend-followers could capitalize on further downside, especially as the fundamental backdrop of weak demand and high supply continues to exert pressure on prices. However, as with any market, it’s essential to remain cautious, as unforeseen supply disruptions or shifts in demand could lead to reversals. For now, traders appear poised to enter short positions in crude oil, anticipating that the recent weakness will continue.

• Rough Rice: -2.80%

Rough rice prices declined by 2.80% this week, continuing the bearish downturn that began after the commodity peaked in May 2024. This move is primarily driven by improved weather conditions and stronger-than-expected harvests in key rice-producing regions, particularly in Southeast Asia. As supply levels have rebounded, the market has moved away from the tight conditions seen earlier in the year. Additionally, stable demand for rice, combined with increased production, has contributed to the downward pressure on prices.

Since July 2024, however, price movements in rough rice have become increasingly congested, with no clear directional bias. This period of congestion has made it difficult for traders, especially those operating on shorter timeframes, to capitalize on any meaningful trends. The lack of consistent momentum has led to sideways price action, creating uncertainty for trend-followers looking for sustained market moves.

For long-term trend-followers, this week’s move likely aligns with the broader bearish trend that has been in place since May. Traders positioned short in the market would have greeted the continued weakness, as the overall downtrend remains intact. However, for short- to medium-term trend-followers, the current congestion phase has likely limited participation. Without a clear breakout from this pattern, shorter-term traders may be staying on the sidelines, waiting for stronger signals that the congestion phase has ended and that a more decisive trend is taking shape.

Until there is a clear resolution to this congestion, long-term systematic traders are likely maintaining their bearish positions, while shorter-term trend followers may be reluctant to engage without confirmation of a new directional move.

Conclusion

This week presented a diverse array of market movements, with notable opportunities and risks for trend-followers. The surge in natural gas and cocoa provided strong bullish signals for those already positioned long, while palladium and energy markets saw declines, reinforcing bearish trends. The SG Trend Index’s rise to a month-to-date gain of +1.96% indicates that market conditions remain favourable for trend-followers, with the year-to-date performance standing at +3.27%.

The significant jump in the TTU Trend Barometer to 55 highlights an increasingly positive environment for capturing trends across the markets. Volatility also surged this week, driven by macroeconomic uncertainties and geopolitical tensions, which offered additional trading opportunities for volatility-based strategies.

For many trend-followers, this week’s results likely led to small gains, particularly for those positioned in bullish sectors like cocoa and soybean meal, as well as those short in palladium and crude oil. While there were mixed results across sectors, the continuation of established trends suggests that the evolving market environment is generating solid potential for profit. Systematic traders, particularly those utilizing short-term models, will be watching closely for any emerging breakouts or shifts in the coming weeks.

List of Resources used in the Week in Review

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Welcome to “This Week in Trend”, where each week, we cover key movements and trends in the futures markets, offering insights on commodities and indices shaping the economy. From price surges to notable declines, we provide an overview of the factors driving these changes. Stay informed about the latest developments and navigate the market with confidence. Join us weekly to explore the dynamic world of futures trading and the trends that matter most.

“Moderate Movement as Sugar Surges, Bonds Weaken”

This week saw moderate but notable changes across most asset classes, with sugar surging by +16.99% and Canola up by +8.58%, while the bonds and grains sectors took a hit. The SG Trend Index reported a favourable trend for followers, gaining +1.51% as of September 19, 2024, improving from last week’s +0.96%. This positive performance continues to reflect strengthening conditions for trend-followers.

The TTU Trend Barometer, on the other hand, has slipped slightly, reading 39 compared to last week's 50, signalling a moderately weak environment for trend. The slight drop in the barometer, alongside the positive SG Trend Index, highlights a balanced but cautious environment for trend-followers.

Trend Barometer and SG Trend Index

Trend Barometer: The barometer now sits at 39, down from 50 last week. This indicates a deteriorating trending condition, with a slight weakening in overall trend strength, evidenced by the falling 10-day rate-of-change. Although this suggests less robust trend-following conditions compared to last week, the steady performance of key assets shows trend-following strategies can still find profitable opportunities.

SG Trend Index: The SG Trend Index shows a strong month-to-date gain of +1.51% as of September 19, compared to +0.96% the previous week. This brings the year-to-date performance to +2.82%, continuing the upward trajectory seen in recent weeks. The improving SG Trend Index points to favorable conditions for trend-followers, despite the neutral Trend Barometer.

The Top Traders Unplugged (TTU) Trend Barometer is a proprietary tool that measures the percentage of markets with medium to strong trends. Just as a thermometer reading of 0 degrees Celsius equates to freezing, when the TTU Trend Barometer reads a value that is less than 40%, market trendiness begins to get “colder” or weaken. Likewise, when the TTU Trend Barometer gets above 55%, the environment gets “hotter” (better).

Weekly Asset Class Snapshot

Here's how different asset classes moved this week:

• Volatility Index: +0.83%
  The VIX futures saw a slight increase, signalling a marginal rise in market volatility, likely driven by ongoing uncertainty surrounding interest rates and economic data.
• Grains: +0.08%
  Grain prices edged up slightly, with a near-flat performance. This stability reflects balanced supply and demand dynamics, though upcoming weather patterns could influence future movements.
• Meats: +3.31%
  The meat sector showed strong gains this week, supported by robust global demand and supply chain adjustments.
• Bonds: -0.59%
  Bonds declined by -0.59%, as rising interest rate expectations put pressure on fixed-income assets. This downtrend signals cautious investor sentiment, despite recent market calm.
• Energy: +4.15%
  Energy prices rose sharply, driven by solid demand and tighter supply conditions, particularly in crude oil markets.
• Metals: +1.46%
  Metals posted modest gains, with industrial demand supporting prices across the sector.
• Soft Commodities: +4.00%
  Soft commodities surged, led by sugar, which saw an impressive +16.99% gain. The strong performance reflects tight supply and increasing global demand.
• Equity Index: +1.66%
  Equities saw a moderate recovery, with the tech-heavy Nasdaq continuing to outperform amid positive investor sentiment.
• Currency: +0.28%
  Currencies moved only slightly, with central bank policies remaining the key influence on foreign exchange markets.

This week’s market movements reflect a diverse and dynamic market environment. While volatility ticked up slightly, driven by economic uncertainties, key sectors such as energy, soft commodities, and meats experienced robust gains, particularly with sugar and oil leading the charge. On the other hand, bonds struggled under the weight of rising interest rate expectations, and grains remained largely flat, impacted by stable supply and demand dynamics. Equities posted a moderate recovery, buoyed by tech sector strength, while currencies saw minimal movement. Overall, the week presented a balanced mix of opportunities and challenges for trend-followers, as sectors continued to adjust to evolving global conditions.

Top 10 Bear and Bull Price Moves

Here's a detailed analysis of the key market movers for the week.

What’s Moving Up

• Sugar: +16.99%

Sugar's rally this week marks a fast uptrend that started in August 2024. The market has been driven by reduced supply due to adverse weather conditions in key production regions such as Brazil and Thailand. These supply constraints have combined with rising demand, particularly from the biofuel sectors, to create the perfect conditions for a strong breakout.

For trend followers, this fast upward momentum might present an opportunity for some bullish breakouts with shorter-term models. However, it could also represent material losses for those still holding onto the previous bearish trend. Managing positions during rapid reversals like this can be challenging for systematic traders, especially those relying on longer-term models.

• Canola: +8.58%

Canola’s rise is another significant mover, with this week’s price spike linked to reduced yields in Canada due to adverse weather. For trend followers, canola has been in a prolonged bearish trend since peaking in mid-2022. This latest price jump has likely caught the attention of traders, as it could indicate the end of the bearish cycle and the beginning of a new upward trend. Many systematic traders will be closely watching for confirmation signals that this rally is more than just a short-term correction (Barchart.com).

• Natural Gas: +6.55%

Natural gas prices surged by 6.55% this week, driven primarily by colder weather patterns across the Northern Hemisphere, which boosted demand for heating fuel. However, despite this sharp rally, it is unlikely that trend followers are significantly participating in this move. Since early 2023, natural gas has been stuck in a sustained congestion pattern, characterized by sideways price action and a lack of clear direction. While the current price surge aligns with broader upward moves in the energy sector, systematic traders who rely on longer-term trends are likely to remain cautious.

This congestion phase has limited trend-following opportunities in the market, as traders wait for a more defined breakout. Without signs of a sustained directional shift, natural gas remains unattractive for medium to long-term trend-following strategies, as the recent rally may simply be part of the ongoing volatile but non-trending price behaviour​(Barchart.com)​(Barchart.com).

• Soybean Oil: +6.44%

Soybean oil prices surged by 6.44% this week, breaking from the sustained downtrend that began in August 2023. The sharp rise was primarily driven by increased demand in the biodiesel sector and tighter global supplies. Despite this week’s strong upward move, trend followers who have been bearish since the market’s peak last year are likely still cautious, as there is no clear sign that this rally signals a reversal of the longer-term bearish trend​(Barchart.com)​(Barchart.com).

Soybean oil’s sustained downtrend over the past year has been fuelled by rising production levels from key South American producers and weakening global demand, particularly for biodiesel. For medium to long-term trend followers, the recent price increase could be seen as a temporary correction rather than a definitive end to the bearish phase. Until there is confirmation of a sustained breakout from this pattern, many traders may remain on the sidelines or maintain short positions, waiting for stronger indications that the broader trend has shifted​(Investopedia)​(Barchart.com).

The market continues to grapple with ample supply, which may limit the longevity of this price surge unless demand picks up significantly or production constraints arise.

Gasoline RBOB: +6.03%

Gasoline RBOB prices surged by 6.03% this week, largely driven by several factors affecting the energy markets. Key contributors to this rise include tightening global supplies, especially in the U.S., where recent inventory reports indicated lower-than-expected stockpiles. This has created a bullish environment for gasoline, despite ongoing concerns over demand in major markets like China, which has kept overall energy markets volatile. Additionally, geopolitical issues, such as supply disruptions from Libya and a delay in OPEC+ adding supply, have further tightened the market, pushing prices higher.

Despite this upward movement, Gasoline RBOB has experienced a sharp sell-off since April 2024, as demand concerns have weighed on the market for months. This week’s price rise may be seen as a short-term correction, especially in the context of broader energy market dynamics, and there are no clear signs yet that the bearish trend has ended. For trend followers, this type of market volatility presents challenges, as longer-term trends remain uncertain, and systematic traders are likely waiting for stronger signals of a sustained directional move before committing to new positions.

Overall, while this week's rally in gasoline prices has captured attention, traders remain cautious about whether this signals a lasting shift in market dynamics or a temporary fluctuation before prices resume their downward trend.

What’s Moving Down

• Wheat: -4.25%

Wheat prices fell by 4.25% this week, continuing a sustained bearish trend that has been in place since May 2022. This decline is largely driven by favourable weather conditions in major wheat-producing regions such as the U.S., Russia, and Ukraine, which have resulted in better-than-expected harvests and increased global supply. The resolution of some geopolitical tensions related to wheat exports from Ukraine, combined with robust harvest forecasts in Russia, has further pressured prices lower​(Morpher)​(Barchart.com).

Additionally, as global wheat inventories remain relatively high and demand has not increased significantly, there has been little in the way of fundamental support for prices. The market remains oversupplied, and with no major disruptions expected in the near term, it appears that the bearish trend is likely to continue. For medium to long-term trend followers, this price move is in line with expectations, and there are no clear signs that the bearish phase for wheat is coming to an end​(Morpher)​(Barchart.com).

This ongoing decline reflects the broader challenges facing the agricultural sector, where excess supply and stable demand have kept downward pressure on prices. As a result, traders focused on trend-following strategies are likely maintaining short positions, capitalizing on the prolonged price weakness.

• Oats: -3.05%

Oats saw a 3.05% decline this week, driven by a combination of improved weather conditions and stronger-than-expected harvests in key growing regions like Canada and the U.S. These factors contributed to an increase in supply, adding downward pressure to an already bearish market. This bearish move aligns with the overall downtrend that has persisted since April 2022, driven by favourable crop conditions and high global inventories​(Morpher).

However, despite the long-term downward trend, the oats market has been particularly volatile, making it difficult for trend followers to capture consistent profits. Frequent price fluctuations, influenced by unpredictable weather and varying supply dynamics, have caused the bearish trend to exhibit significant choppiness. This type of volatility complicates medium to long-term trading strategies that rely on clear, sustained price movements​(Morpher)​(Barchart.com).

While the overall trend remains bearish, this week's decline is just another move in a volatile market that remains challenging for systematic traders to exploit effectively. Until there is greater stability or clearer signals of market direction, this volatility is likely to continue posing challenges for trend followers.

• Corn: -2.84%

Corn prices declined by 2.84% this week, continuing the sustained downtrend that has been in place since April 2022. This decline can be attributed to a combination of favourable growing conditions in key corn-producing regions, including the U.S., where harvest forecasts remain robust. The USDA’s most recent reports project higher corn yields despite some reductions in beginning stocks. This continued strength in supply is driving prices lower​(AgWeb)​(USDA ERS).

Additionally, weaker export demand has contributed to downward pressure on prices, with U.S. corn exports lagging behind previous years. The ongoing abundance of supply, combined with less-than-stellar demand, has allowed the bearish trend to continue. This market move offers further profitable opportunities for trend followers, who have capitalized on the extended price decline since the 2022 peak​(USDA ERS).

Overall, this week's price drop is viewed as a continuation of the long-standing bearish trend, with no clear signs of a reversal. As supplies remain high and demand struggles to pick up, traders are likely to continue benefiting from this downward trajectory.

• Coffee: -2.72%

Coffee prices declined by 2.72% this week, primarily due to an increase in global supply. Reports indicated that global coffee exports have been rising, with significant contributions from Brazil, the world’s largest coffee producer. Brazil's coffee exports saw a sharp year-over-year increase of around 41%, contributing to the downward pressure on prices. Additionally, Vietnam, another major producer, also reported higher-than-expected coffee exports​(Nasdaq)​(Nasdaq).

While this week's decline contrasts with the strong bullish trend that coffee has experienced since October 2023, it does not necessarily signal the end of this trend. The broader outlook for coffee remains positive due to factors like reduced crop yields in Vietnam and ongoing drought conditions in key coffee-growing regions, such as Brazil’s Minas Gerais. These supply constraints have underpinned the longer-term upward momentum in coffee prices​(Nasdaq).

For trend followers, this week’s dip may represent a temporary correction within a broader bullish cycle, as supply and demand factors remain largely supportive of higher coffee prices in the long term.

• Platinum: -2.65%

Platinum prices declined by 2.65% this week, driven by a reassessment of demand outlooks and broader macroeconomic factors. Investors are increasingly concerned about a slowdown in industrial demand, particularly from the automotive sector, which is a major consumer of platinum for catalytic converters. Additionally, a stronger U.S. dollar has added further downward pressure on dollar-denominated commodities like platinum, making it more expensive for foreign buyers​(Markets)​(MINING.COM).

For trend followers, it is unlikely that they would have actively participated in this price move. Platinum has been in a sustained congestion phase since September 2022, marked by a lack of clear directional movement. This choppy price action has made it difficult for systematic traders to capitalize on any meaningful trends. Until platinum breaks out of this long-standing range, trend followers are likely to remain cautious, waiting for stronger market signals​(MINING.COM).

Conclusion

This week’s trends presented a mixed landscape for trend-following strategies. The bullish surges in sugar, canola, and energy markets offered strong opportunities for systematic traders to capitalize on well-defined upward moves. However, sugar's ongoing rally also demonstrated the complexity of fast-moving markets. While shorter-term models could benefit from the bullish breakout, traders still holding onto the previous bearish trend may have faced material losses—highlighting the challenges of navigating rapid market reversals.

Meanwhile, bearish movements in markets like wheat, oats, and corn continued to follow long-standing downtrends, offering profitable short positions for those leveraging persistent supply pressures and weak demand. On the flip side, the volatility in natural gas and platinum, which remain in congestion phases, illustrates the difficulty for trend-followers in identifying clear, sustained trends within these markets.

As global conditions continue to shift, it’s clear that both opportunities and risks remain prominent across the futures markets. Traders need to stay vigilant, balancing caution in congested markets with decisive action in those presenting clearer trends. Whether it's riding the ongoing strength in energy or maintaining short positions in agricultural sectors, adaptability is key to navigating the dynamic nature of the markets. Stay tuned for next week’s insights as we continue exploring the evolving landscape of trend-following strategies.

List of Resources used in the Week in Review

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