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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.

“The Trend-Follower’s Test: Adapting to a Fading Trend Environment”

This week, trend-followers faced a major test as trend conditions weakened further, making it harder to capture sustained moves. While volatility remains elevated, the TTU Trend Barometer continued to decline, signalling an increasingly difficult market environment. Yet, as history has shown, periods of struggle often set the stage for future opportunity—making patience and discipline more critical than ever.

• TTU Trend Barometer:
  • This week 32% (Last week: 41%)
  • 10-day rate of change: Falling weakly

This marks a further deterioration in trend strength, confirming that trend-following strategies are struggling to find sustained momentum. Historically, such readings suggest a fragmented market, where false breakouts are common, and traders must be extra vigilant.

• SG Trend Index Performance:
• MTD: -0.98% (vs. -0.52% last week)
• YTD: -0.83% (vs. -0.52% last week)

This continued decline signals that systematic trend-followers are still in a defensive posture, adjusting to the shifting market dynamics.

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

Weekly Asset Class Snapshot

Source: Finwiz.com

As we conclude the first week of February 2025, asset classes have exhibited varied performances, reflecting shifting market dynamics. This period was characterized by mixed movements across markets, with energy and grains recovering, while soft commodities and meats struggled. The trend environment remains challenging for systematic traders, as market direction remains unclear, and volatility persists.

Below is a detailed breakdown of asset class performance compared to the previous week:

Equities: -0.40% (Previous week: -0.65%)

Equity markets continued to decline, though at a slower pace than last week. Investor sentiment remains fragile amid:

• Disappointing earnings reports from major corporations.
• Ongoing macroeconomic uncertainty, with markets assessing the impact of potential policy shifts.
• Lingering concerns over global growth, particularly in China and Europe.

Equities remain under pressure, with investors adopting a wait-and-see approach.

Energy: +1.58% (Previous week: -2.16%)

The energy sector rebounded, reversing last week’s losses. The strong recovery in crude oil prices was fuelled by:

• Geopolitical risks driving supply concerns.
• OPEC signalling tighter supply controls to support prices.
• Colder weather forecasts, increasing demand for heating fuels.

This turnaround in energy markets offered some positive momentum for trend-followers.

Metals: -0.62% (Previous week: +3.33%)

Metals saw a moderate decline, cooling off after last week’s rally. Key factors included:

• Profit-taking following a strong rebound.
• Weaker industrial demand, particularly in the auto sector, impacting palladium and platinum.
• A strengthening U.S. dollar, which pressured commodity prices.

While gold held relatively firm, palladium and platinum experienced sharper declines.

Grains: +1.02% (Previous week: -0.75%)

Grain markets bounced back, supported by:

• Improved global demand, particularly for wheat.
• Tighter supply expectations following lower production forecasts.
• Supply chain disruptions, keeping upward pressure on prices.

This marks a positive turnaround for grains, offering new trend opportunities.

Meats: -1.55% (Previous week: +0.65%)

The meats sector reversed course, posting a significant decline. This weakness was driven by:

• Concerns over declining consumer demand, especially in export markets.
• Higher feed costs, impacting producer margins.
• Increased competition from alternative protein sources.

This negative shift highlights continued uncertainty in agricultural markets.

Soft Commodities: -2.02% (Previous week: +1.15%)

Soft commodities saw broad-based weakness, led by sharp declines in cocoa and orange juice. Key drivers included:

• Profit-taking after extended rallies.
• Stabilizing supply conditions in major producing regions.
• Reduced speculative positioning, as traders locked in gains.

The volatility in this sector remains high, making it a focal point for trend-followers.

Currencies: +0.55% (Previous week: -0.70%)

The U.S. dollar strengthened this week, reversing last week’s decline. Factors supporting the dollar included:

• Hawkish central bank commentary, signalling potential rate hikes.
• Rising bond yields, increasing the dollar’s attractiveness.
• Weaker-than-expected data from Europe and Asia, boosting demand for USD as a safe-haven asset.

The strengthening dollar placed additional pressure on commodities.

Volatility Index (VIX Futures): +0.24% (Previous week: +6.52%)

After last week’s sharp spike, the VIX remained elevated, though the increase was much smaller. Key market risks persist, but investors appear to be adjusting to ongoing uncertainty.

Bonds: +0.38% (Previous week: +0.48%)

Bond markets continued their steady climb, as investors sought safe-haven assets amid equity market weakness. Government bond yields declined slightly, reflecting strong demand for defensive positions.

Conclusion

This week’s market movements underscore a continued period of uncertainty, with trend conditions remaining weak:

• Energy and grains rebounded, while soft commodities and meats declined sharply.
• Equities continued to struggle, though losses slowed.
• Volatility remains a key theme, keeping traders on edge.

As markets remain choppy and difficult to navigate, systematic traders must remain patient and disciplined. The decline in trend strength suggests a difficult trading environment, but new opportunities may emerge as volatility persists.

Trend-followers face a true test of adaptability—holding steady and waiting for market clarity will be key.

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: +8.84%

Natural Gas prices experienced a significant increase of 8.84% this week, providing a welcome reprieve for short-term trend-followers who have been riding the bullish breakout following last week's substantial gap down. Medium- to longer-term trend-followers are likely awaiting confirmation of a sustained breakout to the upside before committing further.

Causal Factors:

1. Implementation of New Tariffs: The recent imposition of a 10% tariff by the U.S. administration on Canadian energy imports has contributed to the rise in natural gas prices. This policy change has increased the cost of imported natural gas, thereby exerting upward pressure on domestic prices.
2. Anticipated Supply Shortfalls: Warnings from industry leaders, such as Woodside Energy's CEO Meg O'Neill, about potential gas supply shortfalls in regions like Victoria, Australia, have heightened concerns over future availability. These supply constraints are expected to contribute to higher prices as demand continues to outpace supply.
3. Increased Global Demand: Elevated gas-fired power generation in major economies, including Germany, the UK, the Netherlands, and Poland, has led to a surge in natural gas consumption. This heightened demand, particularly during the winter months, has been a significant driver of the recent price increase.

Trend-Following Perspective:

From a trend-following standpoint, the recent 8.84% price surge in Natural Gas offers a mixed outlook:

• Short-Term Trend-Followers: Those who entered positions during the initial bullish breakout have benefited from the recent price increase. The current momentum supports maintaining long positions, with close monitoring for any signs of reversal.
• Medium- to Long-Term Trend-Followers: Traders with a longer-term horizon may exercise caution, seeking confirmation of a sustained upward trend before increasing exposure. The recent volatility, characterized by last week's gap down followed by this week's surge, suggests the potential for continued price fluctuations.

While the recent price action in Natural Gas presents opportunities for short-term gains, medium- to long-term trend-followers should remain vigilant, awaiting clearer signals of a durable upward trend before making substantial commitments.

Coffee: +8.48%

Coffee prices surged by 8.48% this week, continuing an impressive upward trend that has been highly beneficial for trend-followers with bullish positions. This sustained rally classifies coffee as an outlier in the commodities market, though the duration of this trend remains uncertain.

Causal Factors:

1. Adverse Weather Conditions in Key Producing Regions:
   1. Brazil: The world's largest coffee producer is experiencing its worst drought in over seven decades, severely impacting coffee plantations, particularly in key regions of São Paulo state. This prolonged dry spell has led to significantly reduced yields, with many farmers expecting the 2025 crop to be compromised. The drought, coupled with above-average temperatures, threatens Brazil's status as the leading coffee producer.
   1. Vietnam: As the second-largest coffee producer globally, Vietnam is also facing production challenges due to adverse weather conditions. These difficulties have compounded the global supply shortage, contributing to rising prices.
2. Supply Chain Disruptions:
   1. Global supply chain issues, including shipping delays and increased transportation costs, have further tightened the availability of coffee beans in major consuming markets. These disruptions have exacerbated the supply-demand imbalance, leading to higher prices.
3. Increased Global Demand:
   1. Despite rising prices, global demand for coffee remains robust. Consumers continue to prioritize coffee consumption, and the reopening of economies post-pandemic has led to a resurgence in out-of-home coffee consumption, further driving demand.

Trend-Following Perspective:

From a trend-following standpoint, coffee's sustained upward momentum presents a lucrative opportunity:

• Short-Term Trend-Followers: Those who have entered long positions recently are benefiting from the sharp price increases. The current momentum supports maintaining these positions, with close monitoring for any signs of reversal.
• Medium- to Long-Term Trend-Followers: Traders with a longer-term horizon recognize coffee as a significant outlier due to its prolonged bullish trend. While the trend's duration is uncertain, the strength of the current momentum may justify maintaining or even increasing exposure, provided that risk management strategies are in place.

Coffee's recent price surge underscores its status as a standout performer in the commodities market. While the exact duration of this trend is unpredictable, the prevailing factors suggest that the bullish momentum may persist in the near term.levels. Price remains trapped in choppy action, making it challenging for breakout traders.

Copper: +7.38%

Copper prices experienced a significant increase of 7.38% this week. Despite this notable rise, the market remains within a congestion pattern, lacking a clear directional trend.

Causal Factors:

1. Supply Constraints:
   1. Chile, the world's largest copper producer, has reported a 7.5% decline in output compared to January 2021. Factors such as lower ore quality and water scarcity have contributed to this decrease, potentially tightening global supply.
2. Growing Demand:
   1. The increasing demand for copper is driven by its pivotal role in renewable energy generation, electric vehicles, and grid infrastructure crucial for achieving net-zero emissions. This surge in demand is contributing to the upward trajectory of copper prices.
3. Geopolitical Factors:
   1. Geopolitical tensions, including uncertainties about China's economic recovery and U.S. tariffs, have influenced market dynamics. These factors contribute to market volatility and can impact copper demand and pricing.

Trend-Following Perspective:

From a trend-following standpoint, the current congestion pattern in copper prices suggests caution. The market has yet to establish a definitive trend, and the recent price increase, while notable, does not confirm a sustained directional move.

• Short-Term Trend-Followers: May find limited opportunities due to the lack of clear momentum. The recent price action could be interpreted as part of a broader consolidation phase.
• Medium- to Long-Term Trend-Followers: Are likely awaiting a decisive breakout from the current congestion zone before committing to positions. Confirmation of a sustained trend, either bullish or bearish, would provide clearer signals for entry.

In summary, while copper has shown a significant price increase this week, the absence of a clear trend direction warrants a cautious approach for trend-following strategies. Traders are advised to monitor key developments and await further confirmation before making substantial commitments.

Wheat: +4.02%

Wheat prices increased by 4.02% this week, a movement that may be unfavourable for trend-followers who have been positioned short due to the persistent bearish trend.

Causal Factors:

1. Adverse Weather Conditions in Key Producing Regions:
   1. India is experiencing above-average temperatures in February, following a warmer-than-usual January. This climate change poses a significant threat to winter-sown crops, such as wheat, which rely on cold weather for ideal growth. The India Meteorological Department indicated an expected lower than normal rainfall, which, combined with higher temperatures, could adversely affect crops, leading to early maturity and potentially reduced yields. Key wheat-growing regions such as Punjab, Haryana, Uttar Pradesh, and Madhya Pradesh are particularly at risk.
2. Global Trade Dynamics:
   1. The imposition of new tariffs by the U.S. administration, including a 25% tariff on imports from Canada and Mexico, and a 10% tariff on Chinese goods, has heightened market uncertainty. These trade tensions have led to concerns over potential disruptions in wheat supply chains, contributing to price volatility.
3. Supply Constraints:
   1. Global wheat production is set to tighten over the 2024/25 season, with ending stocks falling 3.3% year-on-year to less than 258 million tonnes, the lowest since the 2015/16 season. Despite this expectation, U.S. wheat prices have come under pressure due to a looser domestic market, with ending stocks estimated to grow 17% year-on-year to 22 million tonnes.

Trend-Following Perspective:

For trend-followers, the recent 4.02% uptick in wheat prices presents a challenge, especially for those holding short positions aligned with the prevailing bearish trend. This upward movement may trigger reassessments of current strategies.

• Short-Term Trend-Followers: May experience drawdowns due to the unexpected price increase, potentially leading to position adjustments or stop-loss activations.
• Medium- to Long-Term Trend-Followers: Might view this rise as a temporary correction within the broader downtrend. However, sustained upward momentum could prompt a re-evaluation of trend direction and subsequent strategy modifications.

While the fundamental factors contributing to the price increase are clear, trend-followers must carefully monitor market developments to determine whether this movement signifies a short-term fluctuation or the beginning of a trend reversal.

Canola: +2.71%

Canola prices increased by 2.71% this week, a movement that may be unfavourable for trend-followers who have been positioned short due to the persistent bearish trend.

Causal Factors:

1. Easing Trade Tensions:
   1. The recent pause in the anticipated trade war between the U.S. and Canada has provided support to the canola market. The temporary halt in imposing tariffs has alleviated immediate concerns over trade disruptions, contributing to price stabilization.
2. Tightening Supplies:
   1. Projections indicate tightening canola supplies, which have underpinned the market. The need to ration demand amid these supply constraints has contributed to the upward price movement.
3. Currency Fluctuations:
   1. Weakness in the Canadian dollar has made canola more competitive in international markets, supporting increased demand and contributing to the price rise.

Trend-Following Perspective:

For trend-followers, the recent 2.71% uptick in canola prices presents a challenge, especially for those holding short positions aligned with the prevailing bearish trend. This upward movement may trigger reassessments of current strategies.

• Short-Term Trend-Followers: May experience drawdowns due to the unexpected price increase, potentially leading to position adjustments or stop-loss activations.
• Medium- to Long-Term Trend-Followers: Might view this rise as a temporary correction within the broader downtrend. However, sustained upward momentum could prompt a re-evaluation of trend direction and subsequent strategy modifications.

While the fundamental factors contributing to the price increase are clear, trend-followers must carefully monitor market developments to determine whether this movement signifies a short-term fluctuation or the beginning of a trend reversal.

What’s Moving Down

Orange Juice: -10.8%

Orange Juice experienced a significant decline of 10.8% this week, a movement that poses challenges for medium- to long-term trend-followers who have been maintaining bullish positions. The pronounced drop suggests that the prevailing upward trend may be reversing. Conversely, short-term trend-followers might view this downturn as an opportunity to initiate short positions, capitalizing on the current bearish momentum.

Causal Factors:

1. Supply Chain Adjustments:
   1. Despite ongoing challenges such as citrus greening disease and adverse weather conditions affecting orange production in key regions like Florida and Brazil, recent reports indicate that manufacturers are exploring alternative sourcing strategies. This includes blending juices from different regions and even considering substitutes like mandarin juice to maintain supply levels. These adjustments may have temporarily alleviated supply concerns, contributing to the recent price decline.
2. Consumer Demand Shifts:
   1. There is a noted decrease in consumer demand for traditional orange juice, driven by changing dietary preferences and the availability of alternative beverages. This shift in consumption patterns has led to a surplus in the market, exerting downward pressure on prices.
3. Market Speculation and Profit-Taking:
   1. Following a period of elevated prices, market participants may be engaging in profit-taking activities, selling off positions in anticipation of potential price corrections. This speculative behaviour can amplify price declines in the short term.

Trend-Following Perspective:

• Medium- to Long-Term Trend-Followers: The recent sharp decline challenges the sustained bullish outlook. The magnitude of the drop may prompt a re-evaluation of long positions, with considerations to adjust or exit to mitigate potential losses.
• Short-Term Trend-Followers: The current bearish momentum presents potential opportunities for initiating short positions. However, caution is warranted due to the inherent volatility in commodity markets and the possibility of abrupt reversals.

The 10.8% decrease in Orange Juice prices reflects a complex interplay of supply chain adaptations, evolving consumer preferences, and market dynamics. Trend-followers across different time horizons must remain vigilant, employing disciplined risk management strategies to navigate the shifting landscape of the Orange Juice market.

Cocoa: -9.42%

Cocoa prices experienced a significant decline of 9.42% this week, a movement that may signal the end of the recent bullish trend. This downturn is particularly unfavourable for medium- to long-term trend-followers who have maintained bullish positions. Conversely, short-term trend-followers might view this sharp decline as an opportunity to initiate short positions, capitalizing on the current bearish momentum.

Causal Factors:

1. Demand Destruction Due to High Prices:
   1. Elevated cocoa prices have led to reduced chocolate consumption, as consumers react to higher costs. Analysts from JPMorgan Chase & Co. have observed that rising chocolate prices are diminishing demand, resulting in a smaller-than-anticipated supply shortfall. They predict a 1.8% decline in demand for the current 2024-25 season, attributing this decrease to historically high cocoa prices.
2. Profit Warnings from Major Confectionery Companies:
   1. Leading chocolate manufacturers are adjusting their financial projections in response to escalating cocoa costs. Mondelēz International, for instance, anticipates a 10% dip in earnings per share over the next year, citing rising cocoa prices as a primary concern. This outlook reflects the broader industry's challenges in managing increased raw material expenses.
3. Market Speculation and Profit-Taking:
   1. Following a period of record-high cocoa prices, market participants may be engaging in profit-taking activities, selling off positions in anticipation of potential price corrections. This speculative behaviour can amplify price declines in the short term.

Trend-Following Perspective:

• Medium- to Long-Term Trend-Followers: The recent sharp decline challenges the sustained bullish outlook. The magnitude of the drop may prompt a re-evaluation of long positions, with considerations to adjust or exit to mitigate potential losses.
• Short-Term Trend-Followers: The current bearish momentum presents potential opportunities for initiating short positions. However, caution is warranted due to the inherent volatility in commodity markets and the possibility of abrupt reversals.

The 9.42% decrease in cocoa prices reflects a complex interplay of demand dynamics, industry responses, and market behaviours. Trend-followers across different time horizons must remain vigilant, employing disciplined risk management strategies to navigate the evolving landscape of the cocoa market.

Palladium: -8.75%

Palladium prices declined by 8.75% this week, a movement favourable for trend-followers who have maintained bearish positions.

Causal Factors:

1. Decreased Automotive Demand:
   1. The automotive industry, which accounts for approximately 84% of palladium demand due to its use in catalytic converters for gasoline engines, is experiencing a decline in palladium usage. This is attributed to the rise in electric vehicle (EV) adoption, which reduces the need for palladium-based catalytic converters. Additionally, automakers are increasingly substituting palladium with platinum, which is currently more cost-effective.
2. Supply Dynamics:
   1. Increased recycling efforts have led to a higher supply of palladium from end-of-life vehicles. Recycled supply is expected to add 1.2 million ounces, bringing the total to 3.5 million ounces. Furthermore, mining operations in Russia and South Africa are projected to return to historic production levels, contributing to an anticipated oversupply of nearly 1 million ounces in the next two years.
3. Market Outlook:
   1. Analysts forecast a bearish outlook for palladium prices, citing weak demand from the auto sector and growing supply through recycling and mining. The CPM Group predicts palladium prices will remain within the $900–$1,000 per ounce range in 2025, while Heraeus Precious Metals provides a broader forecast of $800–$1,200 per ounce, reflecting potential volatility.

Trend-Following Perspective:

• Short-Term Trend-Followers: The recent decline aligns with bearish positions, potentially validating strategies that anticipated a downturn.
• Medium- to Long-Term Trend-Followers: The sustained downward movement may reinforce confidence in maintaining or increasing short positions, given the prevailing negative sentiment and fundamental factors.

In summary, the 8.75% decrease in palladium prices reflects a combination of reduced demand from the automotive sector, increased supply from recycling and mining, and a bearish market outlook. These factors contribute to the favorable conditions for trend-followers who have adopted a bearish stance on palladium.

Feeder Cattle: -3.83%

Feeder cattle prices experienced a decline of 3.83% this week, a movement that is unfavourable for medium- to long-term trend-followers who have likely maintained long positions due to the prevailing bullish trend. Given the inherent volatility of this market, some short-term trend-followers may be exercising caution, opting to remain on the sidelines before committing to new positions.

Causal Factors:

1. Market Volatility:
   1. Despite an overall bullish outlook for cattle prices in 2025, the market remains subject to high volatility and short-term setbacks. Factors such as macroeconomic uncertainties and potential policy changes contribute to this instability, leading to fluctuations like the recent price decline.
2. Seasonal Supply Dynamics:
   1. The seasonal increase in feeder cattle supplies during certain periods can exert downward pressure on prices. As producers market their calves, the temporary boost in supply may lead to price declines, even amidst a longer-term bullish trend.
3. Feed Costs and Input Prices:
   1. Rising feed costs and other input prices can impact feeder cattle demand, as feedlot operators adjust their purchasing decisions based on profitability margins. Increases in corn and soybean meal prices, for example, can lead to reduced demand for feeder cattle, contributing to price declines.

Trend-Following Perspective:

• Medium- to Long-Term Trend-Followers: The recent price decline challenges the sustained bullish outlook. While the long-term fundamentals may still support higher prices, this downturn may prompt a re-evaluation of long positions, with considerations to adjust or implement risk management strategies to mitigate potential losses.
• Short-Term Trend-Followers: Given the market's volatility, short-term traders may exercise caution, awaiting clearer signals before committing to new positions. The recent decline could present opportunities for short positions; however, the overall bullish context necessitates careful analysis.

While the long-term outlook for feeder cattle prices remains positive due to tight supplies and strong demand, the recent 3.83% decline underscores the market's inherent volatility. Trend-followers across different time horizons should remain vigilant, employing disciplined risk management strategies to navigate the complexities of the feeder cattle market.

Platinum: -3.28%

Platinum prices declined by 3.28% this week, with the market currently exhibiting a congestion pattern lacking clear directional momentum. Trend-following traders are likely awaiting more definitive signals before committing to positions.

Causal Factors:

1. Automotive Industry Dynamics:
   1. Platinum demand in the automotive sector is influenced by its use in catalytic converters. The rise of electric vehicles, which do not require such converters, may impact demand. However, ongoing substitution of palladium with platinum in catalytic converters could offset this effect.
2. Supply Constraints:
   1. Platinum supply is projected to increase marginally by 0.76% in 2025, reaching 7.32 million ounces. Despite this slight uptick, the market is expected to experience a supply shortfall of 539,000 ounces, marking the third consecutive year of deficit.
3. Investment Demand:
   1. Investment demand for platinum is anticipated to rise by 7% in 2025, driven by growth in exchange-held stocks and an 8% increase in bar and coin demand. This heightened investment interest may contribute to price stabilization.

Trend-Following Perspective:

• Short-Term Trend-Followers: The current congestion pattern suggests a lack of clear trading signals. Short-term traders may prefer to remain on the sidelines until a definitive breakout or breakdown occurs, indicating a potential trend direction.
• Medium- to Long-Term Trend-Followers: The absence of a clear trend necessitates patience. Traders in this category are likely monitoring key support and resistance levels, awaiting a sustained move beyond these thresholds before committing to positions.

The platinum market's current congestion reflects a balance of supply constraints, evolving demand dynamics, and investment activities. Trend-following traders are advised to exercise caution and await clearer market signals before establishing positions.

Conclusion

This week served as a stark reminder of the adaptive challenges faced by trend-followers in a weakening trend environment. With the TTU Trend Barometer falling further to 32%, trend strength remains subdued, and systematic strategies are struggling to extract meaningful returns. The SG Trend Index‘s continued decline underscores the fragmented market conditions, reinforcing the need for patience and discipline.

Despite the challenging backdrop, this week’s market movements provided a glimpse into the constant push and pull of supply, demand, and sentiment:

• Rebounds in energy and grains provided opportunities, but broad softness in soft commodities and meats created headwinds.
• Currencies and bonds showed resilience, while volatility remained elevated, keeping traders on edge.
• The top price movers highlighted extreme dispersion, with Natural Gas and Coffee surging while Cocoa and Orange Juice plummeted, testing trend-followers across multiple asset classes.

As trend-followers, the core principle remains unchanged: stay the course, trust the process, and let the market dictate positioning. Choppy conditions may frustrate short-term expectations, but history has shown that sustained trends often emerge after periods of market noise.

For now, preserving capital and avoiding false breakouts is just as important as capturing the next major outlier. The road ahead may be foggy, but for systematic traders, uncertainty is part of the game.

Until next week, stay focused and stay adaptive!

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.

“A Shifting Market Tone”

The final week of January 2025 saw a shift in market sentiment, as volatility surged and the bullish momentum in equities faded. While some trend-following strategies faced challenges, others—particularly those with limited bond exposure—managed to capitalize on key market moves. The TTU Trend Barometer declined to 41%, signalling a weakening trend environment overall, yet strong outliers in commodities provided opportunities for systematic traders who remained adaptive.

The SG Trend Index, as of January 30, 2025, registered -0.52% MTD and YTD, down from -0.21% last week. The continued negative performance reflects the difficulty trend-followers are facing in capturing sustained moves amid market transitions.

The contrast between last week’s bullish sentiment and this week’s trend deterioration highlights the choppy conditions, requiring traders to remain adaptive in their approaches.

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

Weekly Asset Class Snapshot

Source: Finwiz.com

As we conclude the final week of January 2025, asset classes have exhibited varied performances, reflecting shifting market dynamics. This period was characterized by a notable increase in volatility, a pullback in equities, and significant movements in commodities. Below is a detailed breakdown of asset class performance compared to the previous week:

Equities: -0.65% (Previous week: +2.01%)

Equity markets experienced a decline, halting the upward momentum observed in prior weeks. This downturn was influenced by investor concerns over newly announced tariffs by the U.S. administration, including a 25% tariff on imports from Canada and Mexico, and a 10% tariff on Chinese goods. These trade tensions have heightened market uncertainty, leading to a reassessment of risk.

Energy: -2.16% (Previous week: +0.66%)

The energy sector saw a significant decline, with crude oil prices retreating. Factors contributing to this decrease include concerns over global economic growth due to escalating trade tensions and a buildup in crude inventories. Additionally, warmer winter weather patterns have reduced demand for heating oil, further pressuring prices.

Metals: +3.33% (Previous week: -0.44%)

Metals experienced a robust rebound, with precious metals like gold and silver leading the gains. The rise in gold prices, reaching around $2,846 an ounce, was driven by investors seeking safe-haven assets amid market volatility and concerns over potential economic slowdowns resulting from new tariffs.

Grains: -0.75% (Previous week: +2.69%)

Grain markets faced a modest decline after prior gains. Improved weather conditions in key agricultural regions alleviated some supply concerns, leading to a stabilization of prices. However, ongoing global trade uncertainties continue to pose risks to this sector.

Meats: +0.65% (Previous week: +0.86%)

The meats sector maintained its positive trajectory, supported by steady consumer demand and easing concerns over feed costs. The resilience in this sector reflects stable market fundamentals despite broader economic uncertainties.

Soft Commodities: +1.15% (Previous week: +1.49%)

Soft commodities continued their upward trend, with notable gains in coffee and sugar prices. Supply chain disruptions and adverse weather conditions in major producing regions have sustained these price increases.

Currencies: -0.70% (Previous week: +1.21%)

The U.S. dollar weakened against a basket of major currencies. This depreciation is attributed to market reactions to the newly imposed tariffs and the potential for slower economic growth. Investors are closely monitoring central bank responses to these developments.

Volatility Index (VIX Futures): +6.52% (Previous week: -5.86%)

The VIX, a measure of market volatility, spiked significantly, reflecting increased investor anxiety. The resurgence in volatility is primarily due to uncertainties surrounding international trade policies and their potential impact on global economic stability.

Bonds: +0.48% (Previous week: 0.00%)

Bond markets experienced modest gains as investors sought refuge from equity market volatility. Yields on government bonds declined slightly, indicating increased demand for safer assets amid the prevailing economic uncertainties.

This week's market movements underscore a shift towards risk aversion, with investors gravitating towards safe-haven assets such as precious metals and government bonds. The imposition of new tariffs has introduced fresh uncertainties, leading to heightened volatility and a re-evaluation of risk across various asset classes.end-followers navigating these evolving 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

Coffee: +8.73%

Coffee surged 8.73% this week, maintaining its strong bullish trend and solidifying its position as a strong outlier for trend-followers.

Causal Factors:

1. Supply Constraints: Ongoing weather disruptions in Brazil and Colombia, two of the largest coffee-producing countries, have tightened supply. Drought conditions and unseasonal rains have impacted harvests, reducing expected yields.
2. Rising Global Demand: Coffee consumption remains strong, with increasing demand from emerging markets and sustained post-pandemic recovery in retail and hospitality sectors.
3. Speculative Buying & Momentum: Hedge funds and institutional traders continue to pile into coffee futures, capitalizing on the strong uptrend and pushing prices to new highs.
4. Brazil’s Currency Strength: The Brazilian real (BRL) has strengthened, making exports more expensive and further supporting higher coffee prices.
5. Breakout Confirmation: Coffee has broken out of prior resistance zones, triggering additional technical buying and reinforcing its position as an outlier.

Trend-Following Perspective:

For trend-followers, coffee continues to be a prime outlier, displaying strong upward momentum and minimal pullbacks. The chart reflects a long-term uptrend with a series of higher highs and higher lows, reinforcing trend continuity.

Those already positioned long have benefited significantly, while traders not yet in the move may be looking for entry points on any minor retracements. Given coffee's volatile history, risk management remains key as prices extend into new highs.

If this momentum sustains, coffee could remain a standout performer for systematic strategies in the coming weeks.

Platinum: +7.39%

Platinum surged 7.39% this week, showing a strong move within its ongoing congestion range. While still lacking a decisive breakout, trend-followers are closely monitoring for signs of trend emergence.

Causal Factors:

1. Industrial Demand Rebound: Demand for platinum in automobile catalytic converters has increased, supported by recovering auto production after supply chain constraints eased.
2. Precious Metal Rotation: As gold and silver prices climbed, platinum followed suit, benefitting from safe haven buying.
3. Supply Concerns: Reports of mine supply disruptions in South Africa, the world's largest platinum producer, have raised concerns over availability, lending support to prices.
4. Speculative Positioning: Hedge funds and institutional traders have increased their net long positions, anticipating further upside if platinum breaks resistance.
5. Weaker U.S. Dollar: The dollar's recent pullback has bolstered commodity prices, providing a tailwind for platinum.

Trend-Following Perspective:

Platinum remains in a congestion phase, oscillating between support and resistance levels for an extended period. Despite this week’s strong gain, the chart does not yet confirm a sustained breakout, but it’s inching closer to critical resistance levels. Price remains trapped in choppy action, making it challenging for breakout traders.

VIX Futures: +6.52%

The Volatility Index (VIX) climbed 6.52% this week, marking a notable uptick in market uncertainty. While not typically traded by trend-followers, the VIX serves as an important sentiment gauge for broader market conditions.

Causal Factors:

1. Increased Market Uncertainty: The rise in volatility aligns with escalating geopolitical tensions and concerns over the new U.S. tariffs, which have introduced fresh risks into global markets.
2. Equity Market Pullback: A -0.65% decline in equities this week has contributed to the VIX's rise, as investors hedge against potential downside risks.
3. Shifts in Monetary Policy Expectations: Concerns over a less accommodative stance from central banks have fueled cautious positioning.
4. Institutional Hedging Activity: Large funds and institutions have increased option protection, reflecting growing concerns over market fragility.
5. Reversal from Multi-Year Lows: The VIX has been historically low, and this spike could indicate a potential trend change in sentiment rather than just a short-term move.

Trend-Following Perspective:

While the VIX is not a typical market for trend-followers, its movement informs positioning across equity and risk assets. A continued rise in volatility could signal broader market stress, potentially leading to new trending opportunities in other assets.

From a systematic standpoint, if the VIX maintains this upward momentum, it could mean greater dispersion across asset classes, which may benefit trend strategies. Conversely, if volatility fades, it suggests that the market is digesting risks without major dislocations.

Palladium: +5.97%

Palladium surged 5.97% this week, marking a notable counter-trend move within its long-term bearish trend. This rally likely posed challenges for trend-followers, who have been positioned short in line with the dominant downtrend.

Causal Factors:

1. Supply Chain Disruptions: Reports of potential production cuts from key mining regions, particularly Russia and South Africa, have raised concerns over future supply availability.
2. Short Covering Rally: Given Palladium's extended bear trend, this move may partially be fueled by short-covering activity, where traders close out existing bearish positions.
3. Industrial Demand Speculation: The automotive sector, a key consumer of Palladium for catalytic converters, is showing signs of marginal demand recovery despite long-term shifts toward electric vehicles (EVs).
4. Weaker U.S. Dollar Support: A modest pullback in the U.S. dollar has given commodity markets a short-term boost.
5. Technical Bounce from Oversold Levels: The attached chart shows Palladium rebounding from a multi-month base, which could indicate short-term consolidation rather than a full-fledged trend reversal.

Trend-Following Perspective:

For trend-followers, this week’s sharp rally is an adverse move, as Palladium has been in a well-defined downtrend for over two years. Those positioned short may have seen a drawdown, but unless momentum shifts meaningfully, this move may still be classified as a bear market rally rather than a full reversal.follow-through, this move is likely to be viewed as noise rather than a change in direction.

Lumber: +4.69%

Lumber gained 4.69% this week, but trend-followers are sitting on the sidelines for now. The current market environment is too choppy and unpredictable to establish a clear trend.

Causal Factors:

• Housing Market Dynamics: Despite high mortgage rates, new home construction and infrastructure projects have kept demand stable.
• Supply Chain Variability: Mill closures, and production shifts have created imbalances, leading to price swings.
• Seasonal Effects: Winter typically reduces construction activity, limiting immediate demand.
• Speculative Influence: Short-term traders have likely fueled volatile price action without sustaining a long-term direction.

Trend-Following Perspective:

Trend-followers are likely on the sidelines, waiting for a clear directional breakout. The current range-bound movement and frequent reversals make false breakouts more likely, reducing the tradability of this market.

Lumber remains a market to watch, not trade.ard trajectory, providing favourable conditions for trend-followers.

What’s Moving Down

Natural Gas: -10.96%

Natural Gas tumbled 10.96% this week, experiencing a strong gap down that may have adversely impacted shorter-term trend-following models that recently capitalized on the bullish breakout.

Causal Factors:

1. Warmer-Than-Expected Weather: Forecasts for milder winter temperatures in key demand regions, particularly North America and Europe, have weakened heating demand.
2. Supply Surplus: Storage levels remain above seasonal averages, easing concerns over shortages and pressuring prices lower.
3. Profit-Taking After Breakout: The recent bullish momentum attracted speculative longs, and the abrupt reversal suggests profit-taking and possible forced liquidations.
4. Increased LNG Exports Uncertainty: Uncertainty surrounding U.S. LNG export demand has added further downside pressure, with some reports of reduced European import activity.
5. Technical Breakdown: The attached chart shows a decisive failure at key resistance levels, leading to a sharp downside move.

Trend-Following Perspective:

For shorter-term trend-followers, this reversal may have been adverse, as many were positioned long following the breakout. The sharp gap down increases the likelihood of stopouts or position unwinding.

For longer-term trend-followers, Natural Gas remains a volatile market prone to sharp trend shifts.

Rough Rice: -5.42%

Rough Rice declined 5.42% this week, reinforcing its ongoing bearish trend. This move is likely favourable for trend-followers, who have been positioned short amid continued downside momentum.

Causal Factors:

1. Improved Global Supply: Reports indicate strong harvests and better-than-expected production in key rice-producing countries, particularly India and Thailand.
2. Weaker Export Demand: Global demand for U.S. rough rice exports has softened, with increased competition from Asian producers.
3. Strength in the U.S. Dollar: A stronger dollar has made U.S. agricultural exports less competitive, putting additional pressure on prices.
4. Bearish Technical Structure: The attached chart shows a clear downtrend, with price breaking below key support levels.
5. Speculative Liquidation: Trend-following funds and other traders have likely added to short positions, further amplifying the move lower.

Trend-Following Perspective:

For systematic trend-followers, this move aligns with the broader bearish trend, making it a profitable trade for those positioned short. The sustained breakdown suggests further downside potential, though traders will be watching for oversold conditions or short-covering rallies.

Cocoa: -5.19%

Cocoa declined 5.19% this week, as it remains in a short-term congestion phase following an explosive bullish trend. The pullback comes after an extended parabolic move, which had been one of the strongest outliers for trend-followers in recent months.

Causal Factors:

1. Profit-Taking After a Massive Rally: With cocoa prices reaching historic highs, traders and funds appear to be locking in gains, leading to short-term selling pressure.
2. Supply Chain Adjustments: Some relief in logistical constraints and export flow improvements from major producing regions has eased near-term supply concerns.
3. Market Absorption Phase: The rally has entered a consolidation stage, where buyers and sellers are establishing a new equilibrium before the next directional move.
4. Speculative Positioning Shift: Given the sharp prior uptrend, some short-term traders may be fading the move, while trend-followers remain positioned for potential continuation.
5. Technical Consolidation: The attached chart shows a congestion zone forming, a common behaviour after extended trends.

Trend-Following Perspective:

Cocoa remains a highly relevant market for trend-followers, despite the current short-term pause. The broader uptrend structure remains intact, and systematic traders will likely be watching for a resumption of momentum.

If price compression persists, trend-followers will assess whether a new breakout emerges or if further rotation signals a more prolonged cooling-off period. The recent pullback may also serve as a natural phase of digestion before trend continuation.

Oats: -3.12%

Oats declined 3.12% this week, reinforcing its long-term bearish trend. This move is likely beneficial for medium- to long-term trend-followers, who have been positioned short in alignment with the broader downward trajectory.

Causal Factors:

1. Weak Demand Outlook: Consumption levels have remained subdued, with shifting consumer preferences and alternative grain substitutes reducing overall demand.
2. Stable Supply Conditions: Favourable weather patterns and consistent crop yields have kept supply steady, limiting upward price pressures.
3. Lack of Speculative Interest: Unlike more volatile grain markets, oats have remained off the radar for speculative positioning, leading to a more gradual downtrend.
4. Stronger Competition from Wheat and Corn: Larger global grain markets continue to outcompete oats, further reducing its relative demand in agricultural trade.
5. Technical Continuation: The attached chart illustrates a well-defined bearish structure, with this week's move adding to the broader downward momentum.

Trend-Following Perspective:

For medium- to long-term trend-followers, oats continue to provide an orderly bearish trend, with this week's decline further confirming the downside momentum. Systematic strategies are likely holding short positions, as there are no significant reversal signals present.

If the current trend persists, traders will likely maintain their positions until a structural shift or market catalyst emerges.

Nikkei 225: -2.92%

The Nikkei 225 declined 2.92% this week, remaining in a congestion phase following a strong prior uptrend. This consolidation reflects indecision in market direction, with traders awaiting clearer signals.

Causal Factors:

1. Profit-Taking After Strong Gains: The Nikkei has been in a steady uptrend, and this pullback likely represents a natural consolidation phase rather than a trend reversal.
2. Global Market Uncertainty: Increased volatility in global equities has contributed to caution among investors, leading to more sideways price action in Japanese stocks.
3. Monetary Policy Speculation: Traders are closely watching Bank of Japan policy developments, as any shift in interest rate guidance could impact equity valuations.
4. Earnings Season Impact: Mixed corporate earnings results have contributed to short-term uncertainty, preventing a decisive breakout in either direction.
5. Technical Pause: The attached chart shows a congestion zone, indicating that the market is in a holding pattern rather than a directional move.

Trend-Following Perspective:

For trend-followers, Nikkei remains a wait-and-see market until momentum re-emerges. While the broader long-term trend is still intact, the current congestion phase increases the risk of false breakouts.

Systematic traders will likely wait for a strong directional move before positioning further. If congestion persists, some models may reduce exposure until a clearer breakout occurs.ne in adhering to trend-following rules, particularly during transitional market phases.

Conclusion

This week underscored the dynamic and often unpredictable nature of trend-following, as shifting sentiment and increased volatility created both challenges and opportunities. The decline in the TTU Trend Barometer and SG Trend Index highlights a more fragmented market environment, where fewer sustained trends make systematic strategies work harder to extract returns.

Equities, which had enjoyed a strong rally, lost momentum, while volatility surged, signalling heightened investor caution. Commodities remained a mixed bag—Coffee and Platinum surged, benefiting trend-followers, while Natural Gas and Rough Rice declined, aligning with bearish models. Meanwhile, the Nikkei 225 and Cocoa entered congestion phases, requiring patience from systematic traders waiting for clearer signals.

As trade tensions rise, monetary expectations shift, and geopolitical risks unfold, market conditions remain highly fluid, presenting both threats and opportunities for trend-followers. The increased volatility suggests that significant breakouts may be on the horizon, but false signals will be prevalent.

For trend-followers, patience and process discipline are paramount. With markets in transition, false breakouts remain a risk, but new trends could emerge as volatility reshapes market structures.

Next week will be key in determining whether recent moves signal deeper reversals or fleeting noise. Systematic traders must stay agile yet unwavering in their core principles—cut losses, let profits run, and stay in sync with the market’s unfolding narrative.

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.

“Riding the Bullish Wave”

This week, markets surged with renewed optimism, highlighted by strong equity gains and a notable -5.86% drop in the Volatility Index (VIX), signalling a shift toward risk-on sentiment. Investors appear to be riding the bullish wave, as asset classes broadly trended upward.
Despite these favourable conditions, the SG Trend Index, as of January 23, 2025, posted -0.21% MTD and YTD, suggesting trend-following strategies are still navigating challenges in capturing sustained momentum during market transitions.

The TTU Trend Barometer, updated on January 23, 2025, read 48%, pointing to a neutral trend environment. This divergence between the bullish asset movements and the SG Trend Index performance highlights the nuanced and transitional nature of this market phase.

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

Weekly Asset Class Snapshot

Source: Finwiz.com

As we conclude the fourth week of January 2025, asset classes have exhibited distinct movements, reflecting evolving market dynamics. This week was marked by a strong recovery in equities and grains, tempered by declines in metals and soft commodities. The Volatility Index (VIX) continued its sharp decline, reinforcing a risk-on sentiment across the board. Here’s a detailed breakdown of asset class performance compared to the previous week:

• Equities: +2.01% (Up from +0.85% last week)
  Equity markets continued their upward momentum, fueled by positive corporate earnings and cooling inflation figures. Investor optimism remains strong, as reflected in the consistent gains across major indices like the S&P 500 and Nasdaq, pushing equities to higher levels.
• Energy: +0.66% (Down from +1.49% last week)
  Energy markets maintained a modest upward trajectory, with crude oil and heating oil consolidating after recent rallies. The slower pace of gains highlights the balancing act between tight supplies and easing seasonal demand.
• Metals: -0.44% (Down from +0.85% last week)
  The metals sector saw a mild pullback, with industrial metals stabilizing after a strong rally earlier in the month. Gold and silver softened, as risk-on sentiment reduced safe-haven flows, contrasting with last week’s modest gains.
• Grains: +2.69% (Up from +1.81% last week)
  Grain markets extended their rally, driven by continued concerns over global supply constraints and adverse weather conditions. Corn, soybeans, and wheat showed significant gains, reflecting heightened demand from global markets.
• Meats: +0.86% (Up from -1.03% last week)
  The meats sector rebounded this week, buoyed by stronger demand and easing concerns over higher feed costs. This recovery contrasts with last week’s decline, signaling improved sentiment in the livestock markets.
• Soft Commodities: +1.49% (Up from -0.06% last week)
  Soft commodities staged a recovery, with notable rebounds in sugar and coffee prices. Supply chain disruptions and adverse weather conditions in key producing regions continue to support these markets.
• Currencies: +1.21% (Up from +0.18% last week)
  The U.S. dollar strengthened against major peers, driven by stable monetary policy expectations and fiscal optimism. This week’s gains outpaced last week’s more modest performance, reflecting renewed interest in currency markets.
• Volatility Index (VIX Futures): -5.86% (Down from -14.26% last week)
  The VIX dropped further this week, nearing historically low levels. This sharp decline reflects reduced market anxiety and heightened risk appetite as equity markets rally. However, these levels of low volatility could signal complacency in the market.
• Bonds: 0.00% (Down from +0.80% last week)
  Bond markets were largely flat this week, as mixed signals around interest rate expectations offset the strong equity performance. The moderation in yields compa

This week was characterized by a continuation of the risk-on sentiment, with equities and grains leading the charge. Meanwhile, energy markets slowed their pace of gains, and metals experienced a mild correction. The sharp decline in the VIX underscores the market's reduced anxiety, while soft commodities and meats showed signs of recovery. The nuanced movements across asset classes reflect a market finding its footing, with traders remaining vigilant for shifts in sentiment and trend opportunities. adaptability for trend-followers navigating these evolving 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: +18.96%

Natural Gas posted a robust gain of +18.96% this week, marking a significant continuation of its recent bullish trend.

Causal Factors:

1. Colder Weather Patterns: Severe winter conditions across key demand areas in the Northern Hemisphere have driven up natural gas demand for heating purposes, contributing to the price spike.
2. Tightened Supply: Ongoing supply constraints, exacerbated by geopolitical tensions affecting energy exports, have reduced inventory levels, particularly in Europe and the United States.
3. Increased LNG Demand: Global demand for liquefied natural gas (LNG), especially in Asia, continues to climb as countries seek to secure energy supplies amidst uncertain geopolitical conditions.
4. Market Positioning: The price surge may also reflect technical breakouts, where natural gas prices breached key resistance levels, prompting additional buying momentum.

Trend-Following Perspective:

From a trend-following standpoint, this week’s strong performance reinforces the upward momentum that has been building over recent weeks. Medium- and long-term models likely captured this breakout move, as the bullish trend is well-aligned with systematic strategies. However, given natural gas's historically volatile nature, traders will need to remain vigilant about potential pullbacks or consolidations following such a steep rally.

The attached chart illustrates a decisive break from prior resistance levels, supporting the continuation of the bullish trend. If this momentum sustains, it could signal further opportunities for trend-followers, but risk management remains critical given the market's inherent volatility.

Coffee: +5.57%

Coffee prices climbed 5.57% this week, continuing their strong bullish trajectory and reaching fresh highs.

Causal Factors:

1. Adverse Weather in Key Growing Regions: Unfavorable weather conditions, including droughts in South America, particularly Brazil, have tightened coffee supply. The largest coffee-producing regions have faced significant production challenges, leading to reduced output.
2. Supply Chain Disruptions: Logistical issues and shipping delays have compounded the supply constraints, further supporting price increases.
3. Rising Global Demand: As global consumption of coffee continues to grow post-pandemic, the mismatch between demand and supply has created upward pressure on prices.
4. Speculative Activity: Coffee has seen increased speculative interest, with traders positioning for continued upside momentum in a constrained market environment.

Trend-Following Perspective:

From a trend-following perspective, coffee's strong price momentum and breakout to new highs align well with medium- to long-term strategies. Trend-followers who entered positions earlier in the rally have likely benefited significantly from the sustained uptrend. The attached chart reflects a steady climb, confirming the strength of the bullish trend.

For those not yet positioned, this move reinforces the importance of timing and breakout entry strategies. However, given the rapid ascent, traders should monitor for potential overbought conditions or corrections, especially if fundamental factors like weather improve or speculative buying cools.trategies to navigate the turbulent environment effectively.crude oil market.

Sugar: +4.67%

Sugar prices rose by 4.67% this week, showing a notable rebound against the prevailing bearish trend.

Causal Factors:

1. Weather Disruptions: Unfavorable weather conditions in key producing regions, particularly in Brazil and India, have raised concerns about potential production shortfalls.
2. Renewed Export Demand: Increased demand for sugar exports, especially from emerging markets, has supported prices amid tight global inventories.
3. Speculative Buying: Traders may be repositioning after the prolonged bearish trend, leading to short covering and upward momentum.
4. Energy Linkage: Higher energy prices, specifically ethanol derived from sugarcane, often bolster sugar prices due to increased production costs.

Trend-Following Perspective:

From a trend-following perspective, this upward movement is counter to the broader bearish trend seen in sugar over the past few months. The attached chart illustrates how sugar’s recent rebound may challenge systematic trend-followers who were positioned short in line with the prior downtrend.

While this move has not yet established a definitive trend reversal, it introduces the potential for short-term whipsaws in trend-following systems. Traders may need to monitor closely for follow-through momentum or a return to the prevailing downtrend. as this move may still face resistance unless it develops into a more sustained trend.

Palladium: +4.28%

Palladium prices rose by 4.28% this week, temporarily breaking higher within an otherwise well-established bearish trend.

Causal Factors:

1. Supply Chain Concerns: Recent reports of potential disruptions in palladium mining operations, particularly in Russia (a key global supplier), have contributed to upward pressure on prices.
2. Industrial Demand: A modest rebound in industrial demand, especially from the automotive sector for catalytic converters, has provided short-term support to palladium prices.
3. Technical Correction: After a prolonged decline, palladium may have experienced a short-term correction driven by bargain buying or covering of short positions.
4. Weaker Dollar: A slightly weaker U.S. dollar during the week also supported commodity prices, including palladium.

Trend-Following Perspective:

From a trend-following standpoint, this counter-trend move creates challenges for systematic strategies positioned short in line with palladium's well-developed bearish trend. The attached chart reflects the broader downtrend, with this week’s gains appearing as a retracement rather than a reversal.

While the current rally could continue in the short term, it remains critical for trend-followers to wait for clear indications of a trend shift before adjusting positions. Without sustained follow-through, this move is likely to be viewed as noise rather than a change in direction.

Nikkei: +4.27%

The Nikkei 225 posted a robust gain of 4.27% this week, potentially signalling a breakout from its previous consolidation phase.

Causal Factors:

1. Improved Macroeconomic Conditions: Positive data on Japan’s economic recovery, including better-than-expected corporate earnings and consumer spending, boosted investor confidence.
2. Central Bank Stability: The Bank of Japan's commitment to maintaining its accommodative monetary policy has supported equity markets by fostering a favourable environment for risk-taking.
3. Weaker Yen: A weaker yen has provided an additional tailwind for Japanese export-oriented companies, improving their global competitiveness and profitability.
4. Global Equity Momentum: Broader equity market optimism, driven by easing inflation and reduced recession fears, spilled over into Japanese markets, adding to the bullish sentiment.

Trend-Following Perspective:

From a trend-following perspective, this week’s strong move supports the long-term bullish trend in the Nikkei 225. The attached chart shows the index attempting to break out from a consolidation zone that has persisted for several weeks. This potential breakout is a promising signal for systematic strategies aligned with the prevailing uptrend.

For trend-followers, the sustained upward momentum suggests the possibility of further gains, provided the breakout holds. However, traders should remain mindful of potential pullbacks or false breakouts, which could temporarily disrupt the trend.tain its upward trajectory, providing favourable conditions for trend-followers.

What’s Moving Down

VIX Futures: -5.86%

The Volatility Index (VIX) dropped sharply by 5.86% this week, nearing historically low levels of market volatility.

Causal Factors:

1. Improved Market Sentiment: Strong equity market performance, fueled by easing inflation and robust corporate earnings, contributed to a significant decline in perceived risk.
2. Risk-On Behavior: Investors appear increasingly comfortable with higher-risk assets, reflecting reduced uncertainty about economic and geopolitical factors.
3. Reduced Hedging Activity: With equity markets trending upward, there has been a decline in demand for options-based hedging, further lowering the VIX.
4. Central Bank Support: Stable monetary policy outlooks, particularly from the U.S. Federal Reserve, have reassured markets, reducing fear-driven volatility spikes.

Trend-Following Perspective:

While the VIX is not a typical instrument for trend-following strategies, its behaviour serves as a vital sentiment gauge for U.S. equities. This significant drop in volatility suggests that equity markets are transitioning into a calmer, more stable environment. However, with VIX futures approaching very low levels, it is worth noting the potential for complacency, which can precede sudden volatility spikes.

For trend-followers, the VIX’s decline supports the bullish equity trend, as reduced market noise and risk aversion are generally favourable conditions for sustained upward movements. Nonetheless, sharp reversals in the VIX could signal changing dynamics, requiring vigilance in managing equity-focused positions.

Lumber: -4.79%

Lumber prices dropped by 4.79% this week, highlighting continued volatility and a lack of clear directional momentum.

Causal Factors:

1. Housing Market Weakness: The U.S. housing market remains under pressure, with higher mortgage rates and slowing construction activity reducing demand for lumber.
2. Supply Chain Stabilization: Lumber supply chains have normalized following pandemic-driven disruptions, alleviating some of the price pressures seen in previous years.
3. Seasonal Demand Fluctuations: Demand for lumber tends to slow in the winter months, contributing to the week’s price decline.
4. Speculative Selling: With no clear upward momentum, traders may be unwinding positions, further adding to the bearish sentiment.

Trend-Following Perspective:

For trend-following strategies, lumber remains a challenging market to navigate due to its heightened volatility and lack of sustained trends. As the chart illustrates, recent price movements have been choppy, with no clear long-term direction. This type of environment typically keeps systematic trend-followers on the sidelines, waiting for a definitive breakout or directional signal.

Until a more consistent trend emerges, lumber may continue to frustrate traders looking for clean, sustained price action.ective rallies that could disrupt the bearish momentum.n the upcoming sessions.

Heating Oil: -4.26%

Heating oil prices declined by 4.26% this week, following a recent bullish breakout that shifted short-term sentiment.

Causal Factors:

1. Seasonal Demand Shifts: Warmer-than-expected weather forecasts have softened demand for heating oil, contributing to the price pullback.
2. Crude Oil Correlation: Broader weakness in crude oil markets weighed on refined products like heating oil, further pressuring prices.
3. Inventory Builds: Higher-than-anticipated stockpiles in key regions have alleviated concerns over supply constraints, dampening bullish sentiment.
4. Profit-Taking: Traders who recently entered long positions may have been quick to exit, locking in gains after the breakout.

Trend-Following Perspective:

For medium- to long-term trend-followers, this week’s decline likely had limited negative impact, as many were positioned bearishly in line with the prevailing long-term downtrend before the recent rally. This pullback may even support their positions, reinforcing the overarching bearish trend.

However, the move was likely unfavourable for short-term trend-followers who may have entered positions on the bullish breakout. These traders could have been caught off guard by the sudden reversal, highlighting the challenges of navigating shorter-term market fluctuations.

The chart reflects the continued dominance of the longer-term bearish trend, with this week’s decline serving as a reminder of the volatility inherent in heating oil markets.

Crude Oil WTI: -3.61%

Crude Oil WTI experienced a decline of 3.61% this week, echoing the dynamics observed in heating oil markets.

Causal Factors:

1. Seasonal Weakness: Warmer weather forecasts have reduced demand for heating fuels, indirectly affecting crude oil.
2. Inventory Builds: Larger-than-expected crude stockpile increases in key global markets have pressured prices.
3. Macroeconomic Concerns: Continued uncertainty around global economic growth and potential rate hikes have weighed on demand expectations.
4. Profit-Taking: Traders exiting long positions after a recent rally have added selling pressure.

Trend-Following Perspective:

For medium- to long-term trend-followers, this decline likely aligns with positions established in the broader bearish trend seen in crude oil over the past year. This week’s pullback may even serve to reinforce confidence in the continuation of the trend.

However, short-term trend-followers who may have entered long positions during the recent bullish breakout could face challenges, as the decline represents a reversal that disrupts momentum-based signals. The chart indicates that while the longer-term downtrend remains intact, the recent rally’s abrupt end highlights the ongoing volatility and sensitivity of crude oil markets to external factors.

This week’s move underscores the importance of maintaining a systematic approach and risk management to navigate such fluctuations effectively.in sidelined for systematic strategies focused on capitalizing on directional moves.

Gasoline RBOB: -3.03%

Gasoline futures experienced a modest decline of 3.03% this week, reflecting similar themes observed in other energy markets.

Causal Factors:

• Seasonal Demand Weakness: A seasonal dip in gasoline demand as winter continues may have contributed to the price decline, alongside reduced consumer driving activity.
• Broader Energy Complex Pressure: Gasoline's performance mirrored the bearish sentiment across the energy complex, including declines in Heating Oil and Crude Oil WTI, as the sector took a breather from recent bullish momentum.
• Economic Factors: Concerns over economic growth and tightening financial conditions may have weighed on sentiment, offsetting supply-side constraints.

Trend-Following Perspective:

For trend-followers, the recent dip in Gasoline RBOB presents mixed signals. The chart indicates a consolidation phase after a prolonged downtrend, leaving traders cautious about taking new positions until a clearer directional signal emerges. Medium- to long-term models may remain on the sidelines or cautiously positioned bearish, while short-term models could face challenges navigating the choppy price action.

This move emphasizes the importance of discipline in adhering to trend-following rules, particularly during transitional market phases.

Conclusion

This week presented a blend of optimism and caution as markets rallied on the back of bullish equity movements and a sharp drop in the Volatility Index (VIX). Equities and grains led the charge, supported by cooling inflation and robust corporate earnings, while energy markets continued to climb at a slower pace. Metals and soft commodities displayed mixed performances, reflecting the delicate balance between supply pressures and shifting investor sentiment.

The ongoing decline in the VIX, signalling reduced market anxiety, highlights the risk-on sentiment, yet also underscores the importance of vigilance against potential complacency. While trend-followers capitalized on strong breakouts in assets like natural gas and coffee, other markets, such as lumber and energy commodities, posed challenges due to reversals and consolidations.

As markets continue to find their footing in this transitional phase, discipline, adaptability, and a systematic approach remain essential for navigating the nuanced landscape. The interplay between bullish momentum, sector-specific volatility, and emerging risks serves as a reminder of the dynamic nature of trend-following strategies in capturing opportunities while mitigating adverse moves.

Next week’s developments will further test whether the market’s newfound optimism can sustain itself or give way to new challenges, keeping traders on high alert for shifts in momentum and sentiment.

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

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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.

“The Market Breathes: Equities Rise and Volatility Subsides”

This week, markets appear to have found a moment of calm and clarity. Equities surged, reflecting renewed optimism among investors, while the Volatility Index (VIX) experienced a sharp decline, signalling a shift toward risk-on sentiment. Despite these favourable conditions for trending markets, the SG Trend Index, as of January 16, 2025, posted a modest +0.08% MTD and YTD. This suggests that some trend-following funds may be encountering challenges, likely experiencing whipsaws as markets transition back into a bullish stance.

The TTU Trend Barometer, updated on January 17, 2025, held steady at 66%, continuing to reflect a strong trending environment and providing ample opportunities for systematic trend-followers. However, the disparity between the Barometer’s strength and the SG Trend Index performance underscores the complexity of capturing emerging trends during transitional market phases.

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

Weekly Asset Class Snapshot

Source: Finwiz.com

As the third week of January 2025 concludes, asset classes have exhibited notable movements, reflecting the evolving economic and geopolitical landscape. Compared to last week, several themes have shifted, most prominently the strong equity rally and the significant decline in the Volatility Index (VIX), suggesting renewed optimism and reduced investor anxiety. Here’s an overview of the key sectors and how they compare to last week:

• Equities: +2.80% (Up from -1.18% last week) – Equity markets made a strong recovery, driven by renewed investor optimism fuelled by better-than-expected corporate earnings and a cooling inflation report. Last week's cautious sentiment, reflected in the decline of -1.18%, has now been replaced by bullish momentum, as major indices like the S&P 500 and Dow Jones Industrial Average posted significant gains. This marked a key shift from last week’s heightened concerns over economic growth and interest rate uncertainties.
• Energy: +1.79% (Down from +5.74% last week) -The energy sector maintained its bullish stance but at a slower pace than last week. Oil prices continued their climb, supported by tight supplies and speculation regarding potential policy changes under the new U.S. administration. While the momentum is still strong, the pace of gains has moderated compared to last week's sharp 5.74% rise driven by geopolitical tensions and seasonal demand.
• Metals: -0.44% (Down from +4.27% last week) – Metals experienced a slight pullback this week, with industrial metals like copper stabilizing after strong demand from infrastructure projects. Precious metals like gold faced headwinds from a strengthening equity market, contrasting last week’s robust gains driven by safe-haven investment flows during heightened volatility.
• Grains: +1.81% (Up slightly from +3.42% last week) – Grain markets continued to advance, supported by concerns over global supply constraints and adverse weather conditions in key producing regions. The steady upward trajectory reflects a persistent theme of constrained supply and robust demand from emerging markets.
• Meats: -1.03% (Down from +2.20% last week) – The meats sector saw a reversal this week, experiencing modest declines as tightening supply conditions were offset by concerns over higher feed costs. Last week’s gains, driven by steady consumer demand, have given way to caution amid changing cost dynamics.
• Currencies: +0.18% (Up from -0.61% last week) – The U.S. dollar showed mixed performance this week, slightly recovering against major peers. This reflects cautious optimism regarding fiscal stimulus and monetary policy stability, contrasting last week’s profit-taking activities that softened the dollar.
• Soft Commodities: -0.06% (Improved from -0.46% last week) – Soft commodities remained relatively stable this week, with minor declines in markets like cocoa and coffee due to continued profit-taking. The theme of consolidation persists, though the magnitude of declines has softened compared to last week.
• Volatility Index (VIX Futures): -14.26% (A sharp drop from +14.77% last week) – The most significant thematic shift was the dramatic decline in the VIX, signalling reduced market anxiety and a return to risk-on sentiment. Last week’s sharp rise, reflecting investor concerns over potential equity market corrections, has given way to calmness as equity markets surged and investor optimism returned.
• Bonds: +0.80% (Rebounded from -0.95% last week) – Bonds saw a marginal recovery after last week’s pullback, as mixed market sentiment around interest rate expectations persisted. While bond yields continued to rise, the pace has moderated compared to last week’s declines, reflecting a more balanced investor outlook.

The dominant theme this week was the recovery in equities, accompanied by a sharp decline in volatility. The cautious, risk-off tone that defined last week has given way to renewed optimism, as equities rallied and the VIX futures plummeted by over 14%. Energy markets continued to demonstrate strength, though at a more measured pace, while soft commodities and metals appeared to stabilize, marking a contrast to last week’s more pronounced momentum across commodities.

This week also highlighted a key thematic shift in market sentiment, with uncertainty easing and a clearer path emerging toward risk-on behaviour. Corporate earnings, cooling inflation, and reduced economic anxieties played pivotal roles in fostering this more optimistic outlook.

Overall, the market seems to be finding its footing, with equities breathing new life into trends and volatility receding into the background. The macroeconomic landscape, however, remains dynamic, underscoring the importance of discipline and adaptability for trend-followers navigating these evolving 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

Oats: +10.2%

Oats experienced a significant surge of +10.2% this week, marking a notable rebound in price after a prolonged period of bearish trends.

Causal Factors:

• Supply Constraints: Persistent weather disruptions in key growing regions have tightened supplies. Adverse conditions, including heavy snowfall and delayed planting, have exacerbated supply chain bottlenecks.
• Increased Demand: With heightened global focus on food security, demand for staple grains like oats has risen, as consumers and governments stockpile essential commodities.
• Market Positioning: The price spike may also be attributed to short covering by traders who had been positioned bearish amid recent declines, leading to sharp upward momentum.

Trend-Following Perspective: For medium- to long-term trend-following models, the sharp rise in oats prices presents a challenge. Many traders were likely positioned short, aligned with the prevailing downtrend, only to face a whipsaw as prices surged unexpectedly.

This move does not yet signal a clear breakout to the upside, leaving trend-followers in a precarious position. Without a decisive trend shift or follow-through in the coming sessions, this upward spike may prove temporary, demanding careful risk management to avoid further adverse impacts.

Cocoa: +5.7%

Cocoa prices surged by +5.7% this week, continuing their impressive rally and cementing their status as one of the most significant bullish outliers in recent years.

Causal Factors:

• Supply Shortages: Persistent challenges in West Africa, the largest cocoa-producing region, remain a key driver. Adverse weather conditions and disease outbreaks, particularly the cacao swollen-shoot virus, have led to significant production declines.
• Increased Demand: Global demand for cocoa products has remained strong, with key markets such as Europe and North America ramping up imports to meet holiday and seasonal consumption needs.
• Speculative Interest: Cocoa’s extended bullish trend has attracted speculative flows, further amplifying its price movements.

Trend-Following Perspective: For trend-following strategies, the continued surge in cocoa prices offers a prime opportunity to exploit this massive bullish anomaly. However, models trading this outlier must be designed to withstand significant volatility, as the price, while overall bullish, exhibits dramatic intraday and weekly swings.

Flexibility and robust risk management are essential to ride the trend without being shaken out by the sharp retracements that have occasionally punctuated this rally. Traders with “loose pants,” or models that allow for wider stops and greater tolerance for volatility, have likely fared well, capitalizing on this exceptional price movement.nt strategies to navigate the turbulent environment effectively.crude oil market.

Heating Oil: +5.22%

Heating oil prices surged by +5.22% this week, marking a significant bullish move that challenges the prevailing bearish sentiment observed in recent months.

Causal Factors:

• Seasonal Demand: The arrival of colder weather in key markets has driven up demand for heating oil, as consumers and businesses prepare for winter conditions.
• Supply Concerns: Geopolitical tensions and reduced refining capacity in certain regions have constrained supply, adding upward pressure to prices.
• Market Positioning: The recent rise may also reflect speculative positioning and short covering as traders react to changing fundamentals.

Trend-Following Perspective: For medium- to long-term trend-following models, this sharp upward movement is unfavourable, as many traders have likely been positioned short, aligning with the broader bearish trend. The sudden bullish surge represents a potential whipsaw event, forcing these models to reassess their positions.

On the other hand, shorter-term trend-following strategies may interpret this move as a potential breakout signal to the long side. The recent price action, if sustained, could pave the way for a trend reversal, offering new opportunities for traders who adapt quickly to changing market dynamics. However, caution is warranted, as this move may still face resistance unless it develops into a more sustained trend.

Russell 2000: +3.92%

The Russell 2000 index rose by +3.92% this week, providing a much-needed boost and suggesting a potential resumption of the longer-term bullish trend.

Causal Factors:

• Improved Market Sentiment: Investor optimism returned as cooling inflation data and robust corporate earnings reports alleviated concerns about a potential economic slowdown.
• Broader Risk-On Environment: With the Volatility Index (VIX) sharply declining, investors moved back into riskier assets, including small-cap equities, driving the Russell 2000 higher.
• Federal Reserve Policy Clarity: Expectations of a more predictable path for interest rates following recent Fed communications have further supported small-cap stocks, which are typically more sensitive to borrowing costs.

Trend-Following Perspective: For trend-following strategies, this week’s strong upward move is a welcome shift. Recent bearish swings had posed challenges for longer-term models, but this week’s rally suggests the potential for a return to the prevailing bullish trend. Trend-followers with long positions likely benefited from the market’s recovery, while those who were stopped out during the recent volatility may now be looking to re-enter long positions as the trend reasserts itself.

This move provides confidence in the broader upward trajectory of the Russell 2000, though traders will remain vigilant for further confirmations of sustained momentum in the coming sessions.await a decisive breach of the November highs before fully committing to an upward trend.

DJIA: +3.61%

The Dow Jones Industrial Average climbed by +3.61% this week, echoing the broader market recovery and reinforcing a continuation of its longer-term bullish trend.

Causal Factors:

• Earnings Season Optimism: Better-than-expected earnings from key industrial and financial sectors boosted confidence in the resilience of the U.S. economy, driving the index higher.
• Economic Stability: Cooling inflation data and improving macroeconomic conditions have reduced fears of a recession, supporting investor confidence in blue-chip stocks.
• Risk-On Sentiment: As the Volatility Index (VIX) dropped sharply, investors moved into large-cap, dividend-paying stocks, further propelling the DJIA upward.

Trend-Following Perspective: For trend-following models, the DJIA’s strong rally offers confirmation of its long-term bullish trend. After weeks of choppy movements, this consistent gain reinforces confidence in maintaining or initiating long positions. Similar to the Russell 2000, this rally provides a clear signal of renewed strength in equity markets, particularly among the largest and most stable U.S. companies.

The sustained recovery aligns well with systematic trend-following strategies, which thrive on steady, directional market movements. As long as macroeconomic stability persists and earnings remain strong, the DJIA is likely to maintain its upward trajectory, providing favourable conditions for trend-followers.

What’s Moving Down

VIX Futures: -14.26%

VIX futures plummeted by -14.26% this week, marking a sharp decline that reflects a significant easing of market uncertainty and a return to a low-volatility environment.

Causal Factors:

• Stabilizing Equity Markets: The strong rally across major equity indices, such as the Russell 2000 and DJIA, reduced fears of market instability, driving the VIX lower.
• Cooling Inflation Data: Signs of moderating inflation eased concerns about aggressive Federal Reserve policies, calming investor sentiment.
• Risk-On Sentiment: A resurgence of investor confidence in riskier asset classes has diminished the demand for volatility hedges, further pushing the VIX downward.

Trend-Following Perspective: While VIX futures are not typically traded by trend-following models, they serve as a vital gauge of market sentiment. The steep decline signals a return to very low volatility, a condition that often supports equity market trends. For trend-followers, a low VIX environment provides a smoother backdrop for capitalizing on directional market movements, reducing the likelihood of erratic price swings that can trigger premature exits.

This return to calmness reinforces the broader narrative of stabilizing macroeconomic conditions and growing investor confidence, providing a favourable setting for systematic strategies focused on capturing long-term trends.

Sugar: -5.25%

Sugar prices dropped by -5.25% this week, marking a continuation of its bearish trend and providing favorable conditions for trend-following strategies.

Causal Factors:

• Increased Global Production: Key producers, such as Brazil and India, have reported strong harvests, contributing to a global supply glut. Brazil, in particular, has ramped up sugar production due to favourable weather conditions and expanded acreage.
• Weakened Demand: Shifting consumer preferences toward alternative sweeteners and reduced demand from certain export markets have added downward pressure on prices.
• Currency Impact: A strengthening U.S. dollar has made sugar more expensive for importers, reducing international demand and exacerbating the bearish momentum.

Trend-Following Perspective: For trend-following strategies, this significant decline aligns well with the broader bearish trend in sugar prices. Traders who have been positioned short likely benefited from this move, which serves as further confirmation of the prevailing downtrend.

The consistent downward trajectory suggests that sugar remains a favourable market for trend-followers, as the fundamentals continue to point toward an oversupplied market with muted demand. However, caution is warranted in monitoring for any signs of trend exhaustion or corrective rallies that could disrupt the bearish momentum.n the upcoming sessions.

Canola: -3.82%

Canola prices declined by -3.82% this week, reinforcing the ongoing bearish trend and creating favourable conditions for trend-following strategies positioned short.

Causal Factors:

• Improved Global Supply: Higher-than-expected yields from key producing regions, including Canada and Australia, have alleviated previous concerns about supply shortages. Favourable weather during the harvest season has contributed to an oversupply in global markets.
• Weakened Demand for Biofuels: A slight cooling in demand for biofuels, partly due to fluctuations in energy markets, has reduced the need for canola oil as a feedstock. This diminished demand has added pressure to canola prices.
• Export Competition: Increased competition from alternative oilseeds, such as soybeans and palm oil, has shifted demand away from canola, further exacerbating its price decline.

Trend-Following Perspective: The consistent decline in canola prices offers a favourable environment for trend-following strategies aligned with the bearish trend. Traders holding short positions have likely capitalized on this week’s move, which strengthens the broader downward trajectory.

The market’s sustained weakness, driven by both supply-side and demand-side factors, suggests continued opportunities for trend-followers to exploit the bearish momentum. However, as with any sustained trend, vigilance is required to monitor for potential corrections or trend reversals that could emerge from unexpected changes in market fundamentals.

Platinum: -3.12%

Platinum prices declined by -3.12% this week, reflecting a pullback within its broader consolidation pattern.

Causal Factors:

• Weakened Demand: Softer demand from industrial sectors, particularly automotive manufacturers, has weighed on platinum prices. The shift towards electric vehicles, which use less platinum than traditional catalytic converters, continues to impact demand.
• Strengthened U.S. Dollar: A stronger U.S. dollar this week has put downward pressure on dollar-denominated commodities, including platinum, making it less attractive to international buyers.
• Market Sentiment: Investor appetite for precious metals as safe havens has waned amidst the risk-on sentiment dominating equity markets, reducing speculative interest in platinum.

Trend-Following Perspective: Platinum remains in a consolidation pattern, characterized by choppy price action and the absence of a clear directional trend. As such, it is unlikely to be actively traded by trend-following strategies, which typically avoid markets lacking decisive movement.

For traders, this week’s decline is unlikely to trigger any new positions unless the market breaks out of its current range. Until a clear trend emerges, platinum will likely remain sidelined for systematic strategies focused on capitalizing on directional moves.

Lumber: -2.22%

Lumber prices declined by -2.22% this week, continuing its erratic movement within a highly volatile and choppy market.

Causal Factors:

• Housing Market Dynamics: Persistent uncertainty in the U.S. housing market has weighed on lumber prices. While home construction remains steady, high mortgage rates and cautious consumer behaviour continue to suppress demand.
• Supply Adjustments: Lumber mills have been adjusting production levels to balance inventories, leading to inconsistent supply dynamics that contribute to price volatility.
• Seasonal Effects: The winter season typically reduces construction activity in North America, a key driver of lumber demand, adding further downward pressure on prices.

Trend-Following Perspective: The lumber market remains highly choppy and lacks a clear, sustained directional trend, making it unfavourable for trend-following strategies. Systematic traders generally avoid such markets due to the difficulty in capturing meaningful moves without being exposed to frequent whipsaws.

For trend-followers, lumber is currently more of a monitoring candidate, with attention focused on whether a clearer trend emerges. Until that happens, this market is likely to remain outside the scope of actively traded assets.

Conclusion

This week marked a significant shift in market sentiment, with equities breathing new life into trends and volatility retreating sharply. The rally across major indices like the Russell 2000 and DJIA, alongside the plummeting VIX, showcased a renewed risk-on environment as investor confidence was bolstered by cooling inflation, stronger-than-expected corporate earnings, and a more stable economic outlook.

While the TTU Trend Barometer maintained its strong reading of 66%, signalling a favourable environment for trend-followers, the modest performance of the SG Trend Index (+0.08% MTD and YTD) underscores the complexities of navigating transitional market phases. Trend-following funds may be grappling with whipsaws as markets pivot back to a bullish stance, highlighting the challenges of adapting to rapid shifts in momentum.

Across asset classes, energy markets displayed measured strength, grains advanced steadily, and soft commodities stabilized after recent volatility. Meanwhile, bearish trends persisted in sugar and canola, offering favourable conditions for systematic strategies. In contrast, the choppy movements in lumber and platinum reaffirmed their status as challenging markets for trend-followers.

Overall, this week reflects a market finding its footing, with optimism replacing last week's caution. However, the macroeconomic landscape remains dynamic, requiring traders to stay disciplined and responsive to emerging opportunities and risks. As we move forward, maintaining flexibility and adhering to systematic processes will be key to capitalizing on the evolving trends shaping the futures 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.

“Trends Continue to Shine: Energy Strength and Rising Volatility”

This week showcased the persistence of trending opportunities, with the TTU Trend Barometer rising to 66% as of January 10, 2025, up from last week’s reading of 61%. This increase signals a robust trending environment, highlighting the continuation of directional opportunities across key markets. The SG Trend Index posted a +0.85% MTD and YTD, suggesting a cautious yet promising start for trend-followers as markets exhibit both stabilization and volatility.

Notably, equity market uncertainty has taken centre stage, with the Volatility Index (VIX) surging 14.77%, reflecting a return to risk-off sentiment. At the same time, the energy complex has emerged as a bullish highlight, with gains across the sector reflecting geopolitical and seasonal factors driving momentum.

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

Weekly Asset Class Snapshot

Source: Finwiz.com

As the second week of 2025 concludes, asset class performance has exhibited notable shifts, with heightened volatility in equity markets and continued strength in the energy sector. Here's an overview of the key sectors:

• Volatility Index (VIX Futures): +14.77% – The significant rise in VIX futures indicates increased market anxiety, reflecting investor concerns over potential equity market corrections and global economic uncertainties.
• Energy: +5.74% – The energy sector continued its bullish trend, driven by geopolitical tensions affecting supply and sustained winter demand for heating fuels.
• Metals: +4.27% – Metals experienced robust gains, with both industrial and precious metals benefiting from strong demand and safe-haven investment flows amid market volatility.
• Grains: +3.42% – Grain markets advanced, influenced by concerns over global supply constraints and increased demand from emerging markets.
• Meats: +2.20% – The meats sector saw modest gains, supported by steady consumer demand and tightening supply conditions.
• Currencies: -0.61% – The U.S. dollar softened against major peers, reflecting cautious sentiment toward monetary policy developments and profit-taking activities.
• Soft Commodities: -0.46% – A slight decline in soft commodities, with markets like cocoa and coffee experiencing profit-taking after recent rallies.
• Equity Indices: -1.18% – Equity markets declined, as rising volatility and investor concerns over interest rates and global economic growth prompted cautious repositioning.
• Bonds: -0.95% – Bonds experienced a pullback, with yields rising amid mixed market sentiment and expectations of future Federal Reserve policy actions.

Overall, this week has highlighted increased market volatility, particularly within equity markets, as reflected by the surge in the VIX. The energy sector's continued strength underscores the influence of geopolitical factors and seasonal demand on market dynamics. These developments emphasize the dynamic nature of the macroeconomic landscape and the importance of understanding how different factors interact to shape market trends.

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: +18.69%

Natural Gas experienced a significant surge of +18.69% this week, marking a robust bullish trend.

Causal Factors:

• Severe Cold Weather: A polar vortex has led to freezing temperatures across the U.S., increasing demand for heating and, consequently, natural gas.
• Supply Constraints: Production challenges, including freeze-offs, have tightened supply, contributing to the price spike.
• Geopolitical Tensions: Ongoing conflicts, particularly the cessation of Russian gas supplies through Ukraine, have disrupted global energy markets, adding upward pressure on prices.

Trend-Following Perspective:

This substantial price increase has been favourable for trend-following strategies, especially short to medium-term models. The clear breakout to the upside aligns with trend-followers' objectives to capture sustained market movements. Those positioned long in natural gas likely benefited from this week's developments, reinforcing the effectiveness of systematic trend-following approaches in volatile markets.

VIX Futures: +14.77%

The Cboe Volatility Index (VIX) Futures rose by +14.77% this week, signalling increased market volatility and investor apprehension.

Causal Factors:

• Equity Market Declines: Major U.S. stock indices, including the Dow Jones Industrial Average and the S&P 500, experienced significant drops, marking the worst start to a year since 2016. This downturn was influenced by stronger-than-expected economic data, which led to concerns about the Federal Reserve pausing interest-rate cuts.
• Federal Reserve Policy Uncertainty: Robust economic indicators have prompted speculation that the Federal Reserve might delay anticipated interest-rate cuts, contributing to market uncertainty and increased volatility.

Trend-Following Perspective:

While trend-following strategies typically do not trade VIX futures directly, the VIX serves as a crucial barometer for market sentiment, particularly regarding U.S. equities. A rising VIX indicates heightened volatility, which can impact the performance of trend-following models. Increased volatility may lead to larger price swings, potentially triggering stop-loss orders or prompting adjustments in position sizing. Trend followers may interpret the surge in the VIX as a signal to exercise caution in equity markets, reassessing risk management strategies to navigate the turbulent environment effectively.crude oil market.

Soybean Oil: +14.55%

Soybean Oil experienced a significant surge of +14.55% this week, marking a notable deviation from its longer-term bearish trend.

Causal Factors:

• Increased Biodiesel Demand: The expansion of renewable diesel facilities in the U.S. has elevated soybean oil consumption, as it serves as a primary feedstock for biofuels. This heightened demand has contributed to the recent price surge.
• Global Supply Constraints: Adverse weather conditions and shifts in agricultural practices have impacted oilseed production in key regions, tightening supplies and exerting upward pressure on prices. For instance, Indian farmers have reduced rapeseed cultivation due to soaring temperatures, potentially increasing reliance on imports like soybean oil.

Trend-Following Perspective:

For trend-following (TF) strategies, this sharp upward movement presents challenges. Traders positioned short, aligned with the prevailing bearish trend, may face potential losses due to this counter-trend rally. The strength of this retracement could prompt TF models to reassess their positions, considering whether it signals a temporary correction or the onset of a trend reversal. While it's premature to declare an end to the bearish trend solely based on this week's performance, sustained upward momentum in subsequent sessions may lead trend followers to adjust their strategies accordingly.

Lumber: +6.85%

Lumber prices have experienced a notable increase of +6.85% this week, continuing a trend of heightened volatility in the market.

Causal Factors:

• Supply Constraints: Significant reductions in North American lumber production have tightened supply. Notably, companies like Western Forest Products Inc. curtailed production by 30 million board feet in late 2024 due to weak demand and increased U.S. tariffs on softwood lumber. Such curtailments have removed substantial capacity from the market, contributing to price increases.
• Increased Construction Demand: Despite high long-term mortgage rates, there remains strong underlying demand for housing in North America. Single-family home sales reached a 16-month high in late 2024, driven by rising wages and regional constraints, sustaining demand for lumber.

Trend-Following Perspective:

For trend-following (TF) traders, the recent price surge and volatility in lumber are significant. The market's approach toward the highs observed in November 2024 suggests a potential breakout to the upside. Trend followers may interpret a move beyond these previous highs as confirmation of a new bullish trend, prompting the initiation of long positions. However, the inherent volatility necessitates careful risk management, as false breakouts can occur. Therefore, while the current price action is promising for TF strategies, traders are likely to await a decisive breach of the November highs before fully committing to an upward trend.

Heating Oil: +6.53%

Heating Oil prices have risen by +6.53% this week, marking a significant shift from the prolonged bearish trend observed in recent months.

Causal Factors:

• Increased Demand Due to Cold Weather: A severe polar vortex is anticipated to bring the coldest January in over a decade across the U.S., leading to heightened demand for heating fuels, including heating oil.
• Supply Concerns Amid Geopolitical Tensions: The U.S. Treasury has imposed additional sanctions on Russian oil producers, raising concerns about potential supply disruptions and contributing to the rise in oil prices.

Trend-Following Perspective:

For medium to long-term trend-following (TF) strategies that have been capitalizing on the extended bearish trend in heating oil, this week's strong upward movement presents a challenge. The significant price increase may indicate a potential reversal of the bearish trend, aligning with bullish movements observed in other energy commodities like Natural Gas. Trend followers may interpret this surge as a signal to reassess their positions, considering the possibility of a new bullish trend emerging in the heating oil market.

What’s Moving Down

Cocoa: -5.86%

Cocoa prices declined by -5.86% this week, marking a pause in the strong bullish trend that has characterized the market in recent months.

Causal Factors:

• Supply Chain Adjustments: Despite previous supply constraints due to adverse weather and disease pressures in West Africa, recent reports suggest that some farmers are shifting away from cocoa cultivation. This transition is influenced by factors such as fixed farmgate prices and the spread of the cacao swollen-shoot virus, leading to changes in production dynamics.
• Market Corrections: After reaching significant highs, the cocoa market may be experiencing a natural correction or consolidation phase, as traders take profits and reassess positions, contributing to the recent price decline.

Trend-Following Perspective:

For trend-following (TF) traders who have benefited from the robust upward movement in cocoa, this week's downturn presents a challenge. Those holding long positions may face short-term losses due to the market's pullback. However, the current consolidation does not necessarily indicate the end of the bullish trend. Trend followers may interpret this period as a temporary pause, maintaining their positions while monitoring for signs of trend continuation or reversal. The strong fundamentals that supported the previous uptrend, such as supply concerns and increased demand, may still be in place, suggesting potential for the bullish trend to resume after this consolidation phase.

Russell 2000: -3.77%

The Russell 2000 index declined by -3.77% this week, extending a bearish trend that has been developing over recent weeks.

Causal Factors:

• Stronger-than-Expected Employment Data: The U.S. Labor Department reported an addition of 256,000 jobs in December, surpassing the anticipated 157,000. This robust job growth has heightened concerns about persistent inflation, leading investors to fear that the Federal Reserve may delay interest rate cuts.
• Rising Treasury Yields: The 10-year Treasury yield increased to 4.76%, reflecting investor apprehension about prolonged high interest rates. Elevated yields can negatively impact small-cap companies, which are more sensitive to borrowing costs, thereby exerting downward pressure on the Russell 2000 index.

Trend-Following Perspective:

For trend-following (TF) traders who have maintained long positions in the Russell 2000, this week's decline is unfavourable. The recent bearish movement may signal the early stages of a downward trend. Trend followers might consider this development as an indication to reassess their positions, especially if the index continues to exhibit weakness in the upcoming sessions.

Soybean Meal: -3.34%

Soybean Meal prices have declined by -3.34% this week, aligning with the broader bearish trend observed throughout 2023.

Causal Factors:

• Increased Global Production: Major soybean-producing countries, particularly in South America, have reported record harvests. Brazil, for instance, has significantly expanded its soybean planting area over the past decade, contributing to a global surplus.
• Stiff Export Competition: The abundance of soybean supplies from countries like Brazil has intensified competition in the global market, exerting downward pressure on prices.
• USDA Price Forecasts: The U.S. Department of Agriculture (USDA) has projected a nearly 20% reduction in the average price of soybean meal for the 2024/2025 crop year, anticipating prices around $320 per short ton, down from previous levels.

Trend-Following Perspective:

For trend-following (TF) traders who have maintained short positions in soybean meal throughout 2023, this week's price decline is favourable. The continuation of the bearish trend suggests that current strategies remain effective. However, traders should stay vigilant for any market changes that could signal a potential trend reversal, such as shifts in global demand or unexpected supply disruptions.

Orange Juice: -2.48%

Orange Juice prices declined by -2.48% this week, marking a pause in the strong bullish trend that has been ongoing since 2022.

Causal Factors:

• Supply Constraints: Adverse weather conditions and diseases have significantly impacted orange production in major growing regions. In Brazil, the largest global exporter, drought and citrus greening disease have led to the smallest harvest in 35 years. Similarly, Florida's orange crops have suffered due to hurricanes and diseases, contributing to reduced supply.
• Increased Production Costs: The challenges in production have led to higher costs for beverage companies, which may influence market prices and demand dynamics.

Trend-Following Perspective:

For trend-following (TF) traders who have been long on Orange Juice during its bullish outlier run since 2022, this week's decline may be seen as a temporary consolidation rather than a trend reversal. The fundamental issues affecting supply are still prevalent, suggesting that the bullish trend could resume. Traders may choose to maintain their positions, monitoring for any significant changes in market conditions that could indicate a shift in the established trend.

Nasdaq 100: -2.41%

The Nasdaq 100 index declined by -2.41% this week, a movement that would have been unfavourable for trend-following (TF) traders who have been long on this significant bullish trend.

Causal Factors:

• Stronger-than-Expected Employment Data: The U.S. Labor Department reported an addition of 256,000 jobs in December, surpassing the anticipated 157,000. This robust job growth has heightened concerns about persistent inflation, leading investors to fear that the Federal Reserve may delay interest rate cuts.
• Rising Treasury Yields: The 10-year Treasury yield increased to 4.76%, reflecting investor apprehension about prolonged high interest rates. Elevated yields can negatively impact technology and growth stocks, which are sensitive to borrowing costs, thereby exerting downward pressure on the Nasdaq 100 index.

Trend-Following Perspective:

For trend-following traders who have maintained long positions in the Nasdaq 100, this week's decline is unfavourable. The recent bearish movement may signal the early stages of a downward trend. Trend followers might consider this development as an indication to reassess their positions, especially if the index continues to exhibit weakness in the upcoming sessions.

Conclusion

This week highlighted the dynamic interplay of bullish momentum and rising uncertainty across financial markets. The energy sector maintained its upward trajectory, with Natural Gas standing out as a key performer, driven by seasonal demand and geopolitical factors. Meanwhile, the surge in the Volatility Index reflected renewed caution in equity markets, where indices like the Nasdaq 100 and Russell 2000 showed signs of weakness, hinting at a potential shift in sentiment.

Key markets such as Soybean Oil and Lumber showcased diverse movements, testing trend-followers’ adaptability amid evolving trends. In contrast, Cocoa and Orange Juice entered consolidation phases, reinforcing the need for patience in managing long-term outliers that may still hold significant potential.

The TTU Trend Barometer increased to a robust 66%, underscoring an environment ripe with trending opportunities. This rise reflects the strengthening of directional movements in key sectors, providing trend-followers with a fertile landscape to capitalize on emerging trends. With sectors like energy showing continued momentum, systematic strategies remain well-positioned to capture these opportunities.

As we progress further into 2025, staying disciplined and leveraging the power of systematic strategies will be key. The ability to navigate these shifts with focus and adaptability will position trend-followers to capture the next wave of opportunities in an ever-changing market 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.

“A Strong Start to 2025: Energies Lead the Charge”

The first week of 2025 has ushered in renewed optimism for trend followers, with the TTU Trend Barometer climbing to a robust 61%, signalling a very strong trend environment. This marks a significant improvement from last week's reading of 52%, indicating an accelerated rate of change in market trends.

The SG Trend Index has already posted a gain of +1.06% month-to-date (MTD), providing early signs of positive momentum for trend-following strategies in the new year.

This positive shift is further supported by recent market analyses. The S&P 500, for instance, has entered 2025 following its best two-year performance since the late 1990s, with a 25% increase in 2024 and a 24% surge in 2023, primarily driven by the boom in artificial intelligence and interest rate cuts.

Additionally, U.S. stock index futures climbed ahead of Wall Street's initial 2025 trading session, with investors optimistic about a new political landscape and further interest rate reductions expected to boost economic and corporate performance.

These developments provide a hopeful start for trend-following strategies as we move further into 2025, reflecting a promising environment for capturing emerging market opportunities.

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

Weekly Asset Class Snapshot

Source: Finwiz.com

As the first week of 2025 unfolds, asset class performance has been varied, with notable momentum in energies and soft commodities driving significant trends. Here’s how the key sectors performed:

• Volatility Index (VIX Futures) (-0.84%): The VIX futures continued to decline, indicating reduced immediate market anxiety. This reflects cautious optimism in financial markets despite ongoing macroeconomic uncertainties.
• Grains (-0.28%): Grains markets dipped slightly this week, suggesting a softening in demand and stable global supply conditions. Seasonal factors continue to play a role in maintaining subdued activity in this sector.
• Meats (-0.29%): Meats also saw a minor decline, with consistent demand offset by slight adjustments in supply chain dynamics. The agricultural sector remains stable despite the dip.
• Bonds (+0.14%): Bonds recorded a modest uptick, reflecting a mixed response to ongoing market expectations of Federal Reserve policy. Yields remain pressured but showed minor recovery this week.
• Energy (+2.72%): Energy was the standout performer this week, driven by strong gains in crude oil and related products. Ongoing geopolitical tensions, coupled with winter demand, have bolstered market sentiment, signaling a robust start for the sector in 2025.
• Metals (+0.52%): Metals saw moderate gains, with a slight recovery in industrial and precious metals. Demand continues to show resilience despite mixed global macroeconomic signals.
• Soft Commodities (+1.42%): Soft commodities posted healthy gains, led by strong movements in cocoa and coffee. Seasonal demand and ongoing supply concerns have contributed to the positive momentum.
• Equity Indexes (-0.54%): Equity markets experienced slight declines this week, reflecting cautious repositioning by investors amid ongoing concerns over interest rates and global economic growth.
• Currencies (-0.35%): The U.S. dollar softened slightly, maintaining strength against major peers but reflecting some profit-taking and cautious sentiment toward monetary policy developments.

Overall, the first week of 2025 has demonstrated a diverse array of movements across asset classes, with energies and soft commodities driving early momentum and setting a promising tone for trend-following strategies. While equities and grains encountered minor setbacks, the broader market environment signals opportunity, supported by reduced volatility and strong sector-specific trends. The resilience in metals, bonds, and soft commodities highlights the importance of diversification and strategic adaptability as traders navigate the evolving macroeconomic landscape. Trend followers are poised to leverage these early indications of market potential.

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: +14.25%

Cocoa prices have surged by 14.25% this week, continuing a significant upward trend that has been a hallmark of trend-following success over the past two years. This substantial movement highlights the volatile ride that has characterized cocoa markets, making it particularly suited to medium- to long-term trend-following strategies that embrace significant price swings.

Causal Factors Driving the Move:

• Supply Shortages: West Africa, particularly Côte d'Ivoire and Ghana, which produce about 75% of the world’s cocoa, has faced persistent challenges. Adverse weather conditions, including dry spells and Harmattan winds, have significantly reduced crop yields. Supply chain disruptions have compounded these issues, creating a global supply-demand imbalance.
• Strong Global Demand: Robust demand for chocolate and cocoa-based products continues to strain limited supplies, contributing to sustained upward price momentum. Seasonal holiday demand, especially in developed markets, has further amplified the pressure on inventories.
• Market Speculation and Sentiment: Speculative buying activity has surged as traders anticipate prolonged supply constraints. This speculative momentum has heightened market volatility, with price spikes becoming a recurring feature of the cocoa market.

Trend-Following Perspective:

The volatile nature of cocoa’s price movements has created an ideal environment for medium- to long-term trend-following strategies. By allowing for significant volatility, these strategies have captured the consistent upward trajectory in cocoa prices, turning it into a profitable outlier.

This week’s 14.25% surge further validates the strength of the trend, rewarding those who remained committed through the price fluctuations. The ability to withstand and adapt to the volatility has been a critical factor for trend-followers riding this market over the past two years. For these investors, the sharp upward moves not only reinforce the existing trend but also highlight the potential for continued gains as supply issues and robust demand persist.

Cocoa's performance serves as a testament to the power of systematic, rules-based approaches that thrive in volatile yet directional markets.

Crude Oil WTI: +4.92%

Crude Oil WTI prices have risen by 4.92% this week, yet the market remains in a congestion pattern without a clear breakout direction.

Causal Factors:

• Geopolitical Tensions: Anticipation of stricter sanctions under President Donald Trump's administration against countries like Iran, Venezuela, and Russia has raised concerns about reduced global oil supplies, contributing to price increases.
• Economic Policy Expectations: Investors are optimistic about potential policy support for economic growth, particularly from China, which could boost oil demand. This sentiment has influenced recent price movements.
• Seasonal Demand: Colder weather forecasts in the U.S. and Europe are expected to increase heating oil demand, providing additional support to crude prices.

Trend-Following Perspective:

Despite the recent price uptick, the absence of a decisive breakout keeps trend-following traders on the sidelines. The current congestion pattern lacks the sustained directional movement necessary for trend-following strategies to engage confidently. Traders are likely awaiting clearer signals indicating a definitive trend before committing to positions in the crude oil market.

Heating Oil: +4.66%

Heating oil prices have increased by 4.66% this week, a movement that may be unfavourable for trend-following (TF) strategies, given the longer-term bearish trend in this market.

Causal Factors:

• Severe Cold Weather: The U.S. is bracing for a significant polar vortex, expected to bring the coldest January in over a decade. This anticipated deep freeze has led to a surge in demand for heating fuels, including heating oil, as households prepare for the extreme temperatures.
• Increased Demand: The forecasted drop in temperatures has prompted a rise in heating oil consumption, contributing to the recent price increase. This surge in demand is typical during severe winter conditions, as more households rely on heating oil to maintain indoor warmth.

Trend-Following Perspective:

For trend-following traders, the recent 4.66% uptick in heating oil prices may pose challenges. Given the prevailing longer-term bearish trend, this short-term price increase could be seen as a counter-trend movement, potentially leading to unfavourable positions for those adhering to the established downward trajectory. Trend followers may need to exercise caution, closely monitoring market developments to determine whether this price rise signifies a temporary fluctuation due to weather-induced demand or the beginning of a trend reversal.

Gasoline RBOB: +4.37%

Gasoline RBOB prices have risen by 4.37% this week, mirroring the movement observed in heating oil.

Causal Factors:

• Seasonal Demand Increase: The onset of colder weather typically leads to a rise in demand for heating fuels, including heating oil and gasoline, as consumers increase usage to maintain warmth.
• Supply Constraints: Any disruptions in the supply chain, whether due to geopolitical tensions or production issues, can lead to reduced availability of gasoline, thereby driving up prices.
• Market Speculation: Traders' expectations of future supply and demand dynamics can influence current prices, with anticipations of tighter supply or increased demand leading to price hikes.

Trend-Following Perspective:

For trend-following traders, the recent 4.37% increase in Gasoline RBOB prices presents a scenario similar to that of heating oil. Given the longer-term bearish trend in the gasoline market, this short-term price rise may be seen as a counter-trend movement. Trend followers might interpret this uptick as a temporary fluctuation rather than an indication of a sustained trend reversal. Consequently, they may choose to maintain their current positions, awaiting more definitive signals before adjusting their strategies.

Crude Oil Brent: +3.93%

Brent crude oil prices rose by 3.93% this week, closely mirroring the movement in West Texas Intermediate (WTI) crude. This similarity is not surprising given the highly correlated nature of these two benchmarks, which often respond similarly to global supply and demand dynamics.

Causal Factors:

• Geopolitical Tensions: Anticipation of stricter sanctions under President Donald Trump's administration against countries like Iran, Venezuela, and Russia has heightened concerns over reduced global oil supplies, contributing to the price increase.
• Economic Policy Expectations: Investors remain optimistic about potential policy support for global economic growth, particularly from China, which could significantly boost oil demand. This sentiment has played a key role in recent price movements.
• Seasonal Demand: With colder weather forecasts in the U.S. and Europe, demand for heating oil and related fuels has surged, indirectly supporting crude prices.

Trend-Following Perspective:

For trend-following traders, the 3.93% price increase in Brent crude remains challenging to act upon, much like its WTI counterpart. The market is currently in a congestion pattern, with no clear breakout direction to the upside or downside. While the movement reinforces the high correlation between Brent and WTI, trend followers are likely to remain on the sidelines, waiting for more definitive signals to indicate the start of a sustained trend.

What’s Moving Down

Lean Hogs: -3.98%

Lean hog prices declined by 3.98% this week, reflecting the market's inherent volatility and lack of a clear directional trend.

Causal Factors:

• Seasonal Trends: Historically, lean hog prices tend to experience fluctuations based on seasonal demand and supply factors. The futures market often anticipates lower hog prices towards the end of the year, followed by an increase until mid-year.
• Market Liquidation: Recent reports indicate continued long liquidation in lean hog futures, contributing to the downward pressure on prices.

Trend-Following Perspective:

Given the high volatility and absence of a clear trend direction in the lean hog market, trend-following traders are likely adopting a cautious approach. The unpredictable price movements make it challenging to identify and capitalize on sustained trends, leading many to remain on the sidelines until a more definitive market direction emerges.

Wheat: -3.29%

Wheat prices declined by 3.29% this week, continuing a steady bearish trend observed in recent months.

Causal Factors:

• Global Supply Abundance: Increased wheat production in major exporting countries has led to ample global supplies, exerting downward pressure on prices. For instance, the European Union's 2024 wheat production is projected at 4.52 billion bushels, contributing to the oversupply.
• Strong Export Competition: Countries like Russia have been exporting wheat at competitive prices, influencing global market dynamics and contributing to the price decline.
• Stable Demand: While global demand for wheat remains robust, it has not increased sufficiently to absorb the higher supply levels, leading to a supply-demand imbalance that favours lower prices.

Trend-Following Perspective: For trend-following traders, the ongoing decline in wheat prices aligns with the established bearish trend. The orderly nature of this decline provides a clearer market direction, allowing traders to maintain or initiate short positions with greater confidence. The sustained downward movement suggests that, barring any significant market disruptions, the bearish trend may continue in the near term.

Lumber: -3.22%

Lumber prices declined by 3.22% this week, reflecting the market's inherent volatility.

Causal Factors:

• Seasonal Demand Fluctuations: Lumber prices are subject to seasonal trends, with demand typically increasing during the spring construction season and tapering off during the winter months. As we approach spring 2025, increased construction and housing market demand are expected to influence lumber prices.
• Market Stabilization: After significant fluctuations in previous years, the lumber market has shown signs of stabilization, with prices returning to more predictable seasonal changes. This stabilization allows both lumber producers and end-users to approach the market with more confidence and plan into the mid-term future.

Trend-Following Perspective:

Given the volatile nature of the lumber market, trend-following traders with medium to long-term strategies may maintain long positions, provided they employ wide stop-loss measures to accommodate significant price swings. The recent price decline may be viewed as a temporary retracement within a broader trend, and traders are likely to monitor the market closely for signs of sustained movement before making strategic adjustments.

Cotton: -1.64%

Cotton prices declined by 1.64% this week, continuing a steady bearish trend.

Causal Factors:

• Global Supply and Demand Imbalance: Increased production in major cotton-producing countries, such as Brazil, has led to an oversupply in the global market. This surplus, coupled with sluggish demand, has exerted downward pressure on prices.
• Weak Export Demand: Despite recent improvements, U.S. cotton export sales remain below USDA estimates, indicating persistent demand challenges. This lack of robust demand contributes to the bearish price trend.
• High Input Costs and Low Profit Margins: Farmers are facing high input costs, and with current cotton prices, many are struggling to break even. This economic strain may lead to reduced planting in the future, potentially impacting supply dynamics.

Trend-Following Perspective:

For trend-following traders, the orderly decline in cotton prices aligns with the established bearish trend. The consistent downward movement provides a clear market direction, allowing traders to maintain or initiate short positions with greater confidence. However, they should remain vigilant for any market changes that could signal a trend reversal.

Nikkei 225: -1.49%

The Nikkei 225 index declined by 1.49% this week, posing challenges for trend-following traders who likely hold long positions in this market.

Causal Factors:

• Global Economic Concerns: Recent global economic uncertainties have led to increased market volatility, impacting investor sentiment and contributing to declines in major stock indices, including the Nikkei 225.
• Market Corrections: Following significant gains in 2024, the Nikkei 225 has experienced periodic corrections as investors reassess valuations and potential risks, leading to short-term declines.

Trend-Following Perspective:

For trend-following traders, the recent 1.49% decline in the Nikkei 225 is unfavourable, especially for those maintaining long positions. While the broader upward trend may still be intact, such short-term downturns can trigger stop-loss orders or prompt strategic reassessments. Traders may need to evaluate their risk management approaches and monitor the market closely for signs of trend continuation or further corrections.

Conclusion

As the first week of 2025 unfolds, it becomes evident that the markets are already showcasing the dynamism and complexity that define trend-following strategies. Energies have led the charge, underscoring their potential as significant drivers for early-year gains, while the steady rise in soft commodities like cocoa highlights the rewards of capturing long-term trends. However, the mixed performance across other sectors—ranging from the bearish continuations in wheat and cotton to the volatile yet directionless moves in crude oil and the Nikkei 225—emphasizes the importance of diversification and disciplined adherence to systematic trading processes.

This week’s developments reflect the essential duality of trend-following: the opportunities offered by clear, sustained trends and the challenges posed by volatility and congestion patterns. The resilience and adaptability of trend-following strategies remain crucial as traders navigate an ever-changing landscape of geopolitical tensions, seasonal demand shifts, and global economic uncertainties.

Looking ahead, the signals from the TTU Trend Barometer and the SG Trend Index suggest a promising environment for capturing emerging opportunities in 2025. For trend followers, this week serves as both a reminder of the power of systematic approaches and an encouragement to stay committed to their processes as the market reveals its potential. As always, the journey is as much about patience and discipline as it is about embracing the unexpected turns that make the financial markets so compelling.

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 Strong Finish to the Year: Trends Heat Up as 2024 Ends”

As we near the end of 2024, markets are delivering a mixed bag of opportunities and challenges for trend followers. The TTU Trend Barometer is showing marginal improvement, and while some strong idiosyncratic Outliers have reversed, diversified trend portfolios are holding steady as we close out the year.

SG Trend Index and TTU Trend Barometer Performance:

• TTU Trend Barometer: Climbed to 52%, up from last week’s 50%, signalling a slightly stronger trend environment.
• SG Trend Index (as of 26 Dec 2024):
  • MTD: +1.88%
  • YTD: +3.04%
  • A slight decline from last week's MTD (+2.17%) and YTD (+3.34%) readings.

The TTU Trend Barometer indicates improving trend conditions, akin to a warming thermometer in the middle of winter—just in time for year-end evaluations.

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.

Volatility Index (VIX Futures):

The VIX futures shed -7.18% this week, reflecting a decrease in immediate market anxiety. However, reversals in Cocoa, Orange Juice, and Coffee reminded trend followers to remain vigilant, as these Outliers have been key drivers of trend-following success in 2024.

Weekly Asset Class Snapshot

Source: Finwiz.com

As the year winds down, traders are adjusting positions with mixed signals across asset classes. Here’s how the key sectors performed:

Currencies (-0.55%): The U.S. dollar softened slightly but maintained its strength against major peers. This modest decline reflects profit-taking and a cautious stance on further monetary policy developments.

Volatility Index (-7.18%): The VIX saw a significant decline, reflecting reduced immediate market anxiety. This move comes despite continued uncertainty over macroeconomic policy, suggesting a temporary pause in hedging activity as traders adjust for the year-end.

Grains (+0.09%): Grains markets remained relatively flat, reflecting a balance between global supply improvements and muted demand expectations. Seasonal influences and stable weather conditions in key growing regions contributed to the subdued activity.

Meats (+0.40%): Modest gains in meats suggest steady demand and limited disruptions to supply chains, a reassuring sign for the agricultural sector heading into the holiday season.

Bonds (-0.51%): Bond prices edged slightly lower, with yields remaining pressured by expectations of further Federal Reserve tightening in 2025. The fixed-income market continues to grapple with hawkish sentiment, limiting gains.

Energy (+1.20%): The Energy sector posted notable gains, driven by a rebound in crude oil prices. Ongoing geopolitical tensions and supply concerns in major production hubs bolstered market sentiment, highlighting the fragility of global energy markets.

Metals (-0.72%): Metals experienced a pullback, with gold and silver leading the decline. A resilient U.S. dollar and a shift in risk appetite contributed to reduced safe-haven demand, despite ongoing macroeconomic uncertainty.

Soft Commodities (-2.83%): Soft commodities, including cocoa and coffee, declined as profit-taking and supply dynamics weighed on recent gains. These markets remain volatile but are expected to recover with seasonal demand trends.

Equity Indexes (+0.68%): Equity indexes saw modest gains, reflecting a recovery in sentiment despite broader economic concerns. This movement is likely driven by selective repositioning as investors look toward 2025.

Top 10 Bear and Bull Price Moves

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

What’s Moving Up

Lumber: +3.95%

Lumber prices have exhibited significant volatility in recent times, with a notable increase of 3.95% this week. This fluctuation is influenced by various factors, including supply constraints, demand dynamics, and broader economic conditions.

In the week ending December 13, 2024, the Madison's Lumber Prices Index reported a decrease to US$494 per thousand board feet, down 3% from the previous week. This decline was attributed to thinning supply as the year-end approached, with sawmills managing order files toward mid-December in anticipation of holiday closures. Despite the reduced supply, market activity remained steady, contributing to price fluctuations.

From a trend-following perspective, the lumber market's recent behaviour presents challenges. The 3.95% price increase, while notable, occurs within a context of overall volatility and lack of clear directional movement. Trend-following strategies typically seek sustained price trends to establish positions confidently. However, the current erratic price movements in the lumber market may not provide the necessary confirmation for such strategies.

As a result, many trend followers might opt to remain on the sidelines, awaiting more definitive signals of a sustained trend before committing to positions in the lumber market. This cautious approach helps mitigate the risks associated with entering a market characterized by unpredictable price swings and ensures alignment with the core principles of trend-following methodologies.

Natural Gas: +3.15%

Natural gas prices have experienced a 3.15% increase this week, continuing a nascent bullish trend that has garnered attention from market participants. This upward movement is influenced by several factors, including increased demand due to colder weather, supply constraints, and broader energy market dynamics.

Recent reports indicate that the European Union is depleting its gas storage at the fastest rate since the 2021 energy crisis, driven by colder weather and reduced seaborne imports. From the end of September to mid-December, gas storage dropped by about 19%, compared to single digit drops in the previous two years. This rapid depletion has raised concerns about supply adequacy, contributing to upward pressure on natural gas prices.

Additionally, the U.S. Energy Information Administration (EIA) has raised its Henry Hub natural gas spot price forecast for 2024 and 2025, reflecting expectations of increased demand and tighter supply conditions. The EIA now projects the Henry Hub spot price to average $2.19 per million British thermal units (MMBtu) in 2024 and $2.95 per MMBtu in 2025, up from previous forecasts.

From a trend-following perspective, the current price movement in natural gas presents a compelling opportunity. The 3.15% increase aligns with the early stages of a bullish trend, suggesting potential for further appreciation. Trend followers, who seek to capitalize on sustained market movements, are likely participating in this uptrend with increased commitment. The combination of supportive fundamental factors and positive price action provides the necessary confirmation for trend-following strategies to engage more assertively in the natural gas market.

Nikkei 225: +3.13%

The Nikkei 225 has experienced a 3.13% increase this week, continuing its upward trajectory and signalling positive momentum for trend-following investors. This rise contributes to the index's strong performance in 2024, positioning it for its highest year-end close since 1989.

Several factors have contributed to this bullish trend. Notably, corporate deals, such as the Honda and Nissan megamerger, have boosted investor confidence. Additionally, increased shareholder returns and a favourable environment for exports, supported by a weak yen, have further propelled the index. Despite foreign investors being net sellers in 2024, the Nikkei has risen by over 21% since January, indicating robust domestic investment activity.

From a trend-following perspective, the sustained upward movement of the Nikkei 225 presents a compelling opportunity. The consistent gains and positive market sentiment provide the necessary confirmation for trend-following strategies to maintain or increase their long positions in this market. The alignment of technical indicators with favourable economic developments supports continued participation in this bullish trend.

Soybean Meal: +2.88%

Soybean meal prices have experienced a 2.88% increase this week, prompting analysis on whether this movement signifies a mere retracement within an ongoing bearish trend or indicates a potential trend reversal.

Recent data from the U.S. Department of Agriculture (USDA) suggests a bearish outlook for soybean meal prices. The USDA's December 2024 World Agricultural Supply and Demand Estimates (WASDE) report forecasts the season-average soybean meal price at $300 per short ton, a reduction of $20 from the previous month. This adjustment reflects expectations of ample global supplies and competitive export markets.

Additionally, the USDA projects a nearly 20% decrease in the average price of soybean meal for the 2024/2025 crop year, attributing this decline to increased competition from Southern Hemisphere producers, despite anticipated strong usage.

From a trend-following perspective, the recent 2.88% price increase may be interpreted as a short-term retracement within the broader bearish trend. Trend-following strategies typically rely on sustained price movements to confirm trend reversals. Given the prevailing bearish fundamentals and the USDA's projections, this week's uptick is likely seen as a temporary correction rather than an indication of a trend reversal.

Therefore, trend followers may maintain their short positions in soybean meal, awaiting more substantial evidence of a sustained upward movement before considering a shift in their trading stance.

Wheat: +2.72%

Wheat prices have risen by 2.72% this week, a movement that may be unfavourable for trend-following investors currently holding short positions. However, this increase does not appear substantial enough to indicate a reversal of the prevailing bearish trend.

Recent analyses suggest that the global wheat market is expected to tighten over the 2024/25 season, with ending stocks projected to fall by 3.3% year-on-year to less than 258 million metric tons—the lowest level since the 2015/16 season. Despite this anticipated tightening, Chicago Board of Trade (CBOT) wheat prices have continued to experience downward pressure throughout the year.

Additionally, the U.S. Department of Agriculture's December 2024 Wheat Outlook reports that the all-wheat season-average farm price remains unchanged at $5.60 per bushel, based on current prices and expectations for the remainder of the marketing year.

From a trend-following perspective, the recent 2.72% uptick is likely viewed as a minor retracement within the ongoing bearish trend. Trend-following strategies typically require more significant and sustained price movements to confirm a trend reversal. Given the current market fundamentals and the relatively modest nature of this week's price increase, it is probable that trend followers will maintain their short positions, awaiting more definitive signals before adjusting their strategies.

What’s Moving Down

Cocoa: -17.38%

Cocoa prices have experienced a sharp reversal, declining by 17.38% this week. This downturn is particularly unfavourable for trend-following investors who have maintained long positions in this commodity, especially given cocoa's previous status as a strong performer in 2024.

The recent price surge in cocoa, with increases exceeding 24% earlier in December, was largely attributed to supply constraints in major producing regions like Ghana and Ivory Coast. Adverse weather conditions, including strong winds and low rainfall, disrupted harvests, leading to significant price hikes. For instance, cocoa prices surpassed $11,000 per ton amid concerns of insufficient supply to meet the festive demand from chocolatiers.

However, the subsequent steep decline suggests a market correction, possibly due to improved weather conditions or adjustments in market sentiment. Such high volatility introduces challenges for trend-following strategies, as rapid reversals can lead to potential losses and increased uncertainty.

Given the current market dynamics, trend followers may need to exercise heightened caution and consider implementing robust risk management practices to navigate the unpredictable terrain ahead.

Oats: -8.97%

Oats have experienced a significant decline of 8.97% this week, intensifying the bearish trend observed throughout 2024. This downturn is largely attributed to a combination of increased production and decreased demand.

In 2024, the oat market sought stability following a period of volatility. Record high prices and seeded acres in 2022 led to a dramatic decline in prices and production in 2023. Acres were expected to increase in 2024, with oats looking relatively profitable compared to most other crops. However, despite these expectations, prices have continued to decline, with oats decreasing 17.10% since the beginning of 2024.

From a trend-following perspective, this pronounced decline may signal a continuation of the bearish trend. Trend followers, who typically capitalize on sustained market movements, might interpret this sharp drop as an opportunity to either initiate or reinforce short positions, anticipating further price depreciation. However, the volatility inherent in the oats market necessitates cautious risk management to mitigate potential reversals or unexpected market shifts.

In summary, the substantial decrease in oats prices this week underscores the challenges within the market, with trend followers likely viewing this as a continuation of the existing bearish trend, while remaining vigilant for any signs of market stabilization or reversal.

VIX Futures: -7.18%

The VIX Futures often referred to as Wall Street's “fear gauge,” declined by 7.18% this week, indicating a reduction in market volatility expectations. While trend-following strategies typically do not trade the VIX directly, it serves as a crucial barometer for investor sentiment, particularly concerning U.S. equities.

A decreasing VIX suggests that investors anticipate a more stable market environment, which can influence the performance of trend-following models. Lower volatility often corresponds with smoother price trends, potentially enhancing the effectiveness of trend-following strategies. Conversely, a rising VIX reflects increased market uncertainty and potential disruptions in established trends, posing challenges for these models.

Therefore, monitoring the VIX provides trend followers with valuable insights into market sentiment and potential volatility, aiding in risk assessment and strategy adjustments.

Platinum: -3.39%

Platinum prices have declined by 3.39% this week, continuing a downward trend observed in recent months. This decline is attributed to a combination of factors, including a broad-based sell-off across commodities markets following the U.S. election and reduced concerns regarding potential mine supply disruptions from Russia.

Trend-following traders, who typically seek to capitalize on sustained market movements, may find the current price congestion in the platinum market challenging. The recent price decline could be interpreted as a potential breakdown to the downside, signalling the possibility of a new bearish trend. However, given the lack of clear directional movement, many trend followers might prefer to remain on the sidelines until more definitive signals emerge, indicating a sustained trend in either direction.

While the recent decline in platinum prices suggests potential for a bearish trend, the current market congestion may lead trend-following traders to exercise caution and await clearer market signals before committing to positions.

Orange Juice: -2.83%

Orange juice prices experienced a 2.83% decline this week, an unfavourable move for trend followers who have benefited from the commodity's sustained bull trend throughout 2024. This decline introduces a measure of volatility into what has been a consistently upward trajectory, leading to potential challenges for those heavily positioned on the long side.

The long-term rally in orange juice prices has been driven by persistent supply constraints, including adverse weather conditions such as hurricanes in Florida, and the ongoing impact of citrus greening disease affecting crops in both Florida and Brazil. These factors have severely limited production, creating a tight supply environment that propelled prices to record highs earlier this year.

This week's pullback, however, may suggest a temporary pause or retracement rather than a full reversal of the bullish trend. While the fundamental drivers of high prices remain intact, the sharp price movement introduces uncertainty, particularly for trend-following strategies reliant on smooth, sustained trends. For systematic traders, this correction may result in reduced confidence or forced position adjustments, highlighting the challenges of navigating such volatile conditions.

Trend followers will likely remain cautious, monitoring for further signs of either a continuation of the correction or a resumption of the bullish trend. The broader narrative for orange juice remains one of constrained supply and strong demand, but this week’s price action serves as a reminder of the inherent risks in even the strongest trending markets.

Conclusion

As 2024 comes to a close, the futures markets have delivered a fitting finale—marked by volatility, trend reversals, and resilience. This week encapsulated the year's prevailing theme: the delicate balance between opportunity and risk for trend followers. The TTU Trend Barometer’s rise to 52% reflects a favourable trend environment, but sharp reversals in key markets like cocoa, orange juice, and coffee served as stark reminders of the unpredictability inherent in financial markets.

For trend followers, 2024 has been a year defined by outliers—those rare and powerful market moves that underscore the importance of systematic approaches. The SG Trend Index's modest YTD gain of 3.04% illustrates the challenges of capturing these opportunities while navigating volatile and often contradictory signals across asset classes. Yet, the enduring strength of diversified trend-following strategies has remained evident, proving their capacity to weather turbulent markets.

This final report for 2024 is not just a summary of the week’s events but a reflection on the year as a whole. It has been a year where persistence, discipline, and an unwavering commitment to process rewarded those who stayed the course. Whether riding the meteoric rise of orange juice or navigating the challenging reversals in cocoa, trend followers have demonstrated the resilience required to thrive in an ever-changing market landscape.

As we bid farewell to 2024, we do so with gratitude for the lessons learned and excitement for the opportunities ahead. Here’s to a 2025 filled with new trends, outliers, and the enduring power of systematic trading. Thank you for joining us on this journey, and we look forward to navigating the markets together in the year to come. Happy New Year!

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 Not-So-Merry Market: No Christmas Rally in Sight”

As the holiday season approaches, the anticipated “Santa Claus Rally” seems to have taken a detour, leaving traders with stockings emptier than expected. The U.S. futures markets have experienced notable turbulence, influenced by several key events and indicators.

Federal Reserve's Policy Shift

The Federal Reserve's recent decision to cut interest rates by 0.25 percentage points to a target range of 4.25%-4.50% was accompanied by a hawkish outlook for 2025. This stance has heightened market uncertainty, contributing to increased volatility in U.S. futures markets.

Triple-Witching Event

The final triple-witching of 2024, occurring on December 20, added to market jitters. This event, where stock options, index options, and index futures expire simultaneously, typically leads to increased trading activity and volatility. The December 20 event followed a significant stock sell-off, further amplifying market fluctuations.

SG Trend Index and TTU Trend Barometer Performance

As of December 18, 2024, the SG Trend Index reported a month-to-date gain of 2.17%, bringing the year-to-date performance to 3.34%. However, with the chaos of the last two trading days, don’t expect this trend to remain favourable in the Dec 20 update.

The TTU Trend Barometer, a measure of the overall trend environment, registered a reading of 50% as of December 20, indicating a strong trend presence but like the markets, this too could be as slippery as Santa's chimney towards year end.

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.

Market Volatility Indicators

The CBOE Volatility Index (VIX), often referred to as the market's “fear gauge,” has shown significant fluctuations. On December 18, 2024, the VIX closed at 27.62, reflecting increased market anxiety.

Implications for Traders

The convergence of these factors has led to a complex trading environment. The anticipated year-end rally has been overshadowed by policy shifts and market mechanics, resulting in heightened volatility. Traders are advised to exercise caution and remain vigilant, as the usual holiday market calm appears elusive this year.

Weekly Asset Class Snapshot

Source: Finwiz.com

This week's movements highlight a highly volatile market environment driven by macroeconomic concerns and specific supply-demand factors. Traders are adjusting their positions as the end of the year approaches, with no clear signs of a “Santa Claus Rally” in sight. The volatility across asset classes signals caution for market participants heading into the holiday season.

Volatility Index (+16.38%): The Volatility Index (VIX) surged significantly this week, reflecting heightened market anxiety as traders grappled with Federal Reserve policy changes and a lack of year-end optimism. The spike in the VIX indicates a sharp increase in hedging activity and uncertainty over near-term market direction.

Grains (-2.37%): Grains markets experienced a notable decline, with bearish sentiment fuelled by improved weather conditions in major growing regions. This week's movements highlight the sensitivity of agricultural markets to supply dynamics, which saw an easing of concerns over crop shortages.

Meats (-0.55%): Meats displayed modest declines, largely stable compared to other commodities. The movement suggests minimal disruptions in supply chains and steady demand heading into the holiday season.

Bonds (-0.74%): Bond prices edged slightly lower as yields remained pressured by a hawkish Federal Reserve. The anticipation of further rate adjustments in 2025 has limited bond market gains, although the broader fixed-income space continues to draw investor interest due to its relative safety.

Energy (+1.20%): The Energy sector ticked upward, supported by a rebound in crude oil prices as geopolitical tensions and supply concerns in major producing regions bolstered market sentiment. This movement underscores the continued fragility of global energy supply chains.

Metals (-2.06%): Metals saw a pullback, with gold and silver leading the decline as the U.S. dollar remained resilient. Safe-haven demand waned slightly this week, reflecting a short-term shift in risk appetite amid fluctuating market conditions.

Soft Commodities (+1.26%): Soft commodities posted modest gains, supported by price increases in cocoa and coffee. The demand for these goods remains resilient, particularly as supply disruptions and seasonal patterns affect market dynamics.

Equity Index (-2.56%): Equity indexes suffered notable declines as investor sentiment turned sour amidst a flurry of rate policy concerns and a year-end market sell-off. The S&P 500 and Nasdaq saw sharp declines, with traders bracing for further potential downside.

• Federal Reserve Policy: The Federal Reserve's decision to cut interest rates by 0.25 percentage points to a target range of 4.25%-4.50%, coupled with a hawkish outlook for 2025, introduced uncertainty, leading to fluctuations in equity markets.

• Triple-Witching Event: The simultaneous expiration of stock options, index options, and index futures on December 20 heightened trading activity and contributed to market volatility.

Currencies (-0.83%): The U.S. dollar softened slightly but maintained its strength relative to most major currencies. The slight decline reflects profit-taking after recent highs, as well as cautious positioning ahead of further monetary policy developments.

Top 10 Bear and Bull Price Moves

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

What’s Moving Up

VIX Futures: +16.38%

The VIX futures, often dubbed the “fear gauge,” surged by 16.38% this week, reflecting a sharp increase in market uncertainty and risk aversion. This spike aligns with heightened concerns over macroeconomic developments, including the Federal Reserve's hawkish stance despite a rate cut and broader worries about liquidity as the year draws to a close. The triple-witching event this week, a phenomenon involving the simultaneous expiration of stock options, index options, and index futures, also contributed to elevated volatility, amplifying the move in the VIX.

The chart highlights a significant upward move, reminiscent of other periods where volatility spiked sharply in response to unexpected market turbulence or investor repricing of risk. While trend followers may not trade VIX futures directly, the sharp move serves as an important market sentiment gauge. For trend-following strategies, heightened volatility often coincides with expanded price ranges in other markets, creating opportunities or challenges depending on the direction and strength of existing trends.

This week's surge in the VIX underscores the fragility of market sentiment and the importance of maintaining disciplined processes. For systematic traders, such environments may require adjustments in risk exposure, particularly as heightened volatility tends to ripple across asset classes. As seen in the chart, previous spikes in the VIX often marked turning points or periods of adjustment in broader markets, signalling potential opportunities or caution ahead.

Natural Gas: +14.3%

Natural Gas experienced a robust 14.3% rally this week, signalling the emergence of a strong bull trend after a prolonged period of price consolidation. This move appears to be driven by multiple factors, including early signs of colder-than-expected winter weather forecasts across key consumption regions in the Northern Hemisphere and supply disruptions in European energy markets, where geopolitical tensions remain a concern. Additionally, the ongoing recalibration of global energy supplies following earlier sanctions on Russian exports continues to underpin bullish sentiment.

The chart illustrates a pivotal breakout from the range-bound trading that has dominated much of the year, with prices showing clear upward momentum. This rally marks a shift in sentiment for Natural Gas, which has largely been under pressure since its significant peaks in 2022. The current move could signal the early stages of a longer-term bull trend, particularly as seasonal demand increases, and supply remains constrained.

For trend followers, particularly those employing short to medium-term models, this week’s breakout represents a lucrative opportunity. Early entries into this emerging trend would have captured a significant portion of the upward move, showcasing the strength of systematic approaches in identifying and riding such trends. The rapid ascent also highlights the value of maintaining exposure across diversified markets, as the Natural Gas trend may offset potential drawdowns in less volatile or declining markets. As the trend develops, systematic strategies will likely continue to add to positions, maximizing the potential for returns as the bull run unfolds.

Lumber: +5.56%

Lumber climbed 5.56% this week, continuing its volatile streak and proving to be a challenging market for trend-followers. This recent uptick appears to be influenced by a combination of seasonal factors and supply-demand imbalances in the housing market. Demand for lumber typically rises in anticipation of building and renovation activity in the upcoming spring season, even as current inventory levels remain constrained. Additionally, recent declines in U.S. mortgage rates have provided a glimmer of hope for housing activity, lending support to lumber prices.

The chart underscores the erratic nature of lumber's price movements, with sharp reversals and limited sustained directional trends in recent months. While this week's rally may seem to suggest a potential upward trajectory, the broader picture reflects a whipsaw environment where enduring momentum has been elusive. For trend-following models, particularly those requiring consistent directional moves to capitalize on trends, lumber's behaviour poses a significant challenge. Traders who entered on earlier signals may find themselves vulnerable to abrupt reversals, resulting in stop-outs or losses.

The current conditions highlight the importance of adaptability and diversification in trend-following strategies. While lumber's volatility may disrupt models reliant on smoother trends, maintaining exposure across more predictable markets could offset the adverse effects. Until clearer momentum emerges, lumber remains a market demanding caution and disciplined risk management for systematic traders.

Cocoa: +5.03%

Cocoa surged 5.03% this week, adding to what has been an extraordinary run for one of the year’s standout performers. Continuing its climb to fresh highs, cocoa has been a trend-follower's dream market in 2024, offering exceptional profits for those seeking to ride the bucking bronco. This latest move reflects both ongoing supply constraints and robust global demand, which show no signs of abating as the year comes to a close.

The fundamentals behind cocoa's bullish trajectory remain strong. Concerns about weather-related disruptions in West Africa, the largest cocoa-producing region, have kept supply under pressure. Additionally, reports of lower-than-expected production volumes, coupled with resilient consumer demand for chocolate in key markets, have created a tight supply-demand dynamic that continues to favour higher prices. The chart showcases a textbook example of long-term trend development, with prices consistently pushing higher over the past year.

For trend-followers, cocoa exemplifies the value of adhering to systematic models that capitalize on sustained price trends. The market’s ability to consistently surprise on the upside has provided ample opportunities for strategies that allow profits to run. While the magnitude of the rally may raise questions about whether the trend is overextended, there is little evidence of a reversal at this stage. Systematic traders will likely continue to hold positions as long as the upward momentum persists, making cocoa a prime example of how patience and process can yield significant rewards in trending markets.

Orange Juice: +3.31%

Orange Juice added 3.31% this week, continuing its stellar bull run that has made it one of the most consistent and rewarding markets for trend followers over the past several years. Like cocoa, orange juice has delivered sustained gains, becoming a dominant outlier in trend-following portfolios. The market has demonstrated remarkable resilience, with its upward trajectory firmly intact, rewarding those who have maintained their positions through systematic strategies.

The fundamental drivers of orange juice's rally remain robust. Adverse weather conditions, including hurricanes and extreme heat in Florida—one of the largest orange-producing regions—have significantly impacted citrus crop yields. Compounding this, diseases like citrus greening continue to plague production, further tightening global supply. Meanwhile, demand has remained steady, driven by consumer preferences for health-conscious beverages, creating a favourable supply-demand imbalance that has fuelled prices higher.

The chart paints a picture of a classic long-term bull trend, characterized by consistent higher highs and higher lows. For trend followers, this market represents the epitome of opportunity, as models designed to capture extended trends have reaped the rewards of orange juice’s relentless rally. Despite the substantial gains, there are no clear signs of a reversal, making it likely that systematic strategies will continue to ride this trend until evidence suggests otherwise. Orange juice, alongside cocoa, stands as a shining example of the power of outliers to drive portfolio performance, reaffirming the importance of diversification and disciplined process in trend-following systems.

What’s Moving Down

Soybean Oil: -7.21%

Soybean Oil fell sharply this week, posting a 7.21% decline and continuing its well-established bear trend. For trend-followers, this move aligns perfectly with existing models that have been capturing the downside momentum in this market. The consistency of this bearish trajectory offers a textbook example of how systematic strategies can thrive when markets sustain clear directional trends.

The fundamental factors driving this decline include easing global supply concerns and weakening demand in key markets. Improved weather conditions in major soybean-producing regions, particularly in South America, have bolstered crop yields, leading to increased availability of soybean oil. Additionally, the overall decline in energy prices has lessened the pressure on biofuel demand, which often underpins soybean oil prices. These factors have collectively maintained a downward trajectory in prices, which has now extended into late December.

The chart reflects a smooth, prolonged bearish trend with few significant countertrend rallies, providing an ideal environment for trend-following strategies. Systematic traders employing medium to long-term models have likely benefited greatly from this sustained move, with the current decline further reinforcing the trend's strength. Unless supply-demand dynamics shift dramatically, the bearish trend in soybean oil appears poised to persist, making it a key contributor to trend-following profits in the soft commodities sector.

Rough Rice: -6.14%

Rough Rice dropped by 6.14% this week, marking the emergence of a potential short trend that could be favourable for trend-following models, particularly those employing short to medium-term time horizons. This recent move comes amid easing concerns about global rice supply constraints that had driven prices higher earlier in the year. Increased production output in major rice-exporting nations, including Thailand and Vietnam, coupled with stabilizing demand, has applied downward pressure on prices.

The chart highlights the initial signs of a bearish trend forming, as Rough Rice continues to trade below its recent highs. The market has shifted from the consolidation phase seen earlier in the year toward more pronounced directional movement, which creates opportunities for systematic traders to capitalize on the emerging trend.

For trend-followers, this development is a positive signal. Short to medium-term models are well-positioned to capture these early stages of the downtrend, benefiting from the sustained price pressure that could follow. However, given rice's occasional tendency for sharp countertrend rallies due to weather or geopolitical factors, disciplined risk management remains crucial. This week’s decline suggests that Rough Rice may become an increasingly significant contributor to trend-following portfolios as the short trend gains momentum.

Sugar: -5.84%

Sugar declined by 5.84% this week, continuing a volatile bear trend that presents both challenges and opportunities for trend-following strategies. The market’s recent movements reflect ongoing fluctuations in global supply and demand dynamics. Improved weather conditions in Brazil, the world's largest sugar producer, have boosted cane harvest yields, alleviating earlier fears of supply shortages. Additionally, declining energy prices have softened the demand for ethanol, a key alternative use for sugarcane, further pressuring prices.

The chart reveals a market characterized by pronounced swings, with short-term volatility making it difficult to trade for models that require tighter stop-loss thresholds or smoother trends. However, for medium to long-term trend-following systems, this environment still offers potential, provided the models are designed to “wear loose pants” — allowing them to absorb the inherent noise without being prematurely stopped out.

For systematic traders, sugar's behaviour underscores the importance of adapting models to suit the idiosyncrasies of specific markets. While the bear trend remains intact, its jagged nature necessitates looser parameters to capture the broader directional movement effectively. As the market continues to digest supply improvements and fluctuating demand, sugar may still provide profitable opportunities for trend-followers with the patience and flexibility to ride out its erratic price action.

Russell 2000: -4.57%

The Russell 2000 declined by 4.57% this week, marking a significant retracement that highlights the challenging environment for equities and, in particular, trend followers exposed to this segment of the market. The sharp downturn comes amid broader concerns about the Federal Reserve's hawkish tone on monetary policy and uncertainty surrounding economic growth heading into 2025. Small-cap stocks, represented by the Russell 2000, are especially sensitive to economic sentiment and tighter financial conditions, which added to the downside pressure.

The chart showcases a market that had been pushing higher earlier in the year, only to be met with a pronounced pullback in recent days. This week's move likely caught trend followers off guard, as the retracement disrupted what had appeared to be a developing upward trend. For systematic traders, the Russell 2000's sharp reversal highlights the inherent risks of equity markets, where sudden shifts in sentiment can result in adverse moves even within broader uptrends.

This week's performance epitomizes the headwinds faced by equities, where volatility and unpredictability have been key themes. Trend-following models with tighter stops may have been particularly vulnerable, with many likely stopped out as the retracement unfolded. For those with looser parameters, the week underscores the importance of diversified exposure across asset classes to mitigate the risks of abrupt equity drawdowns. As the Russell 2000 grapples with a volatile landscape, traders will need to rely on discipline and process to navigate these choppy waters effectively.

Palladium: -4.39%

Palladium fell 4.39% this week, extending its ongoing bearish trend and providing further opportunities for trend-followers who have been riding the downward momentum. This sustained weakness in palladium prices is reflective of changing industrial dynamics and shifting demand-supply fundamentals. The metal, heavily used in catalytic converters for automobiles, continues to face pressure as demand wanes amid slowing global auto sales and increasing adoption of electric vehicles, which do not require palladium in their production.

Additionally, easing supply concerns from Russia, a major producer of palladium, have alleviated upward price pressures that once fuelled the metal's significant rallies in previous years. As alternative materials and technologies reduce reliance on palladium, the metal has faced a consistent headwind that has kept prices trending downward.

The chart illustrates a steady decline in palladium prices, with lower highs and lower lows reinforcing the bear trend. For trend-followers, this market has been highly favourable, particularly for those employing medium to long-term models that are well-suited to capturing extended downtrends. This week’s drop further validates the effectiveness of systematic approaches in identifying and profiting from such sustained trends. As the bearish trajectory shows no clear signs of reversal, palladium remains an attractive opportunity for trend-following strategies to capitalize on further downside potential.

Conclusion

This week was undeniably defined by the sharp equities retracement in the final days, catching many off guard and highlighting the unpredictable nature of financial markets. Yet, amid this volatility, trend followers have continued to thrive, capitalizing on well-established trends, particularly in the commodities sector. Cocoa, orange juice, and soybean oil have delivered impressive opportunities, reaffirming the value of systematic strategies that focus on riding outliers.

And as for Santa, well, it seems even he has been affected by the current climate! Rumour has it he’s gone on strike this year, citing recent industrial relations reforms as the last straw. Apparently, delivering infinite gifts while adhering to new labour laws was too much to handle! So, if your stockings are empty this Christmas, blame it on Santa’s union representative.

On a lighter note, wishing all of you a very Merry Christmas and a prosperous New Year! Here’s to navigating markets with discipline, humour, and a touch of holiday cheer. See you next week!

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.

“Tug of Trends: Will Bulls or Bears Deliver the Holiday Cheer?”

As of December 12, 2024, the SG Trend Index has posted a month-to-date (MTD) gain of 1.63%, lifting its year-to-date (YTD) performance to 2.79%. This marks a notable improvement from the prior week's YTD of 1.92%, underscoring that systematic traders are continuing to capitalize on December's pockets of favourable trading opportunities, even amid challenging conditions.

The TTU Trend Barometer has edged up to 41%, rising from last week's 36%, signalling a modest improvement in the overall trend environment. This shift suggests a slightly more favourable backdrop for trend-following strategies, although the overall quality of trends across markets remains relatively subdued.

The early December rally in key markets, particularly equities and soft commodities, has softened this week, dampening the enthusiasm sparked at the month’s start. Nonetheless, strong sector-specific trends persist, offering the potential for the SG Trend Index to close the year on a positive note.

As traders navigate this seasonal tug-of-war, the ultimate question looms: will the bulls or the bears deliver the holiday cheer as we approach Christmas? The outcome of this year-end battle will hinge on the persistence of these emerging trends and whether market conditions can maintain their momentum through the holiday season.

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, market activity exhibited varied dynamics across asset classes, influenced by seasonal patterns, geopolitical developments, and economic data releases. Here's a detailed overview:

Equities:

• Major Indices: The S&P 500 experienced a slight decline of less than 0.1%, closing at 6,051.09. The Dow Jones Industrial Average (DJIA) fell by 0.2% to 43,828.06, while the Nasdaq Composite edged up 0.1% to 19,926.72.
• Market Breadth: A notable divergence was observed, with the equal-weighted S&P 500 index declining by 2.5%, despite the S&P 500's modest 0.4% gain in December. This indicates that a small number of large-cap stocks are driving the index's performance, while the broader market faces challenges.

Fixed Income:

• 30-Year Treasury Bonds: Yields on 30-year U.S. Treasury bonds rose, reflecting ongoing inflation concerns and cautious central bank policies. The yield increased to approximately 4.58%, up from 4.53% the previous week.

Commodities:

• Energy:
  • Heating Oil: Prices surged by 6.27%, driven by colder weather forecasts increasing demand for heating fuels.
  • Natural Gas: Similarly, natural gas prices rose by 6.24% due to anticipated higher consumption amid lower temperatures.
• Agricultural:
  • Cocoa: Continued its bullish trend with a remarkable gain of 14.48%, attributed to supply constraints in major producing regions.
  • Lumber: Prices declined by 5.01%, reflecting a slowdown in construction demand, possibly due to seasonal factors and higher interest rates impacting housing starts.

Currencies:

• Japanese Yen (JPY): The yen weakened by 2.49% against the U.S. dollar, pressured by the Bank of Japan's dovish monetary policy stance and the dollar's strength amid expectations of U.S. interest rate hikes.

Volatility:

• VIX Index: The Cboe Volatility Index (VIX) increased by 1.85%, signalling growing investor caution amid turbulent equity markets and mixed economic signals.

This week's market movements were shaped by a combination of seasonal demand shifts, central bank policies, and geopolitical factors. Energy commodities benefited from weather-related demand increases, while equity markets faced pressure from weak earnings guidance and concerns over potential interest rate hikes. The divergence in market breadth highlights the uneven performance across sectors, underscoring the importance of selective investment strategies in the current 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

Cocoa: +14.48%

Cocoa surged by an impressive 14.48% this week, cementing its position as one of the standout performers in the commodities market for 2024. This dramatic rise is underpinned by a combination of persistent supply constraints and robust global demand. The world’s leading cocoa producers, Côte d'Ivoire and Ghana, continue to grapple with declining yields, driven by aging tree stocks, adverse weather patterns, and the long-term impacts of the cocoa swollen shoot virus. These challenges have created a significant global supply deficit, fuelling upward pressure on prices.

On the demand side, the appetite for chocolate shows no signs of slowing down, with consumption in developed markets remaining strong and growth in emerging economies adding further strain to already tight supplies. Speculative activity has also played a role, with traders piling into cocoa in anticipation of further price increases, particularly as prices approach record highs. Currency fluctuations, including a weakening Ghanaian cedi, have further complicated export flows, adding to the bullish sentiment.

For trend followers, this week’s rally has been a clear win. Cocoa’s upward momentum throughout 2024 has consistently rewarded systematic traders who stayed disciplined and maintained long positions. The sustained trend highlights the value of systematic strategies, which are designed to capture outsized moves like this one. Traders employing breakout and momentum-based approaches are likely celebrating significant gains, as cocoa's rally continues to validate the principles of trend-following.

With prices now nearing record highs, cocoa has once again demonstrated its potential as a market that rewards those with the patience and discipline to ride persistent trends. It’s another reminder of why systematic traders view outliers like this as the cornerstone of their success.

Heating Oil: +6.27%

Heating oil posted a strong gain of 6.27% this week, fuelled by colder-than-expected weather forecasts and a seasonal uptick in demand. As winter grips the Northern Hemisphere, the need for heating fuels has increased, injecting fresh bullish sentiment into the market. This rally was further supported by tightening inventories and ongoing geopolitical uncertainties that continue to disrupt energy supply chains.

However, despite this week’s notable move, heating oil remains firmly entrenched in a broader bearish trend that has defined much of 2024. Structural factors, such as easing global energy prices and a slowdown in economic activity, continue to exert downward pressure on the commodity over the long term. This week’s surge, while eye-catching, represents more of an anomaly than a shift in the overall trend.

For trend followers, the sudden rally in heating oil likely created challenges. Many traders positioned to profit from the prevailing bearish trend may have faced losses or stop-outs as prices moved sharply against them. While moments like this are frustrating, trend-following strategies are built to withstand such counter-trend volatility, allowing traders to stay disciplined and ready to reengage with the broader trend as it reasserts itself.

This week’s price action highlights the inherent unpredictability of markets, reinforcing the importance of robust risk management and a long-term perspective in navigating temporary disruptions.capture.

Natural Gas: +6.24%

Natural gas surged by 6.24% this week, hinting at the potential beginnings of a bullish reversal after a prolonged period of bearish price action. The rally was driven by colder-than-expected winter weather forecasts, which have increased heating demand across the Northern Hemisphere. Seasonal factors played a significant role in the price movement, as tightening inventories in some regions further added to upward pressure on prices.

This week’s sharp rise also signals a possible shift in the long-term trend. The extended bear market that dominated much of 2023 and early 2024 appears to be losing momentum, with this rally breaching key resistance levels. Speculative interest has increased, as traders begin to position themselves for what could be the start of a more sustained upward move in natural gas. Given the market’s inherent volatility, further price gains are likely if temperatures continue to drop or supply chain disruptions emerge.

For trend followers, this week’s move represents a key turning point. Those who had been aligned with the bearish trend may have already scaled back or exited their short positions as signs of stabilization emerged in recent weeks. Now, with the sharp rally suggesting a potential breakout, systematic traders may begin to build long positions, anticipating a continuation of the nascent bullish momentum.

This shift in dynamics underscores the importance of adaptability in trend-following strategies. While the rally may have surprised those still positioned for a bearish market, the broader focus on aligning with emerging trends ensures that systematic traders are well-placed to capitalize if this upward trajectory gains further traction. Natural gas, with its reputation for volatility, remains a challenging yet potentially rewarding market for disciplined trend-followers.nd has propelled coffee prices upward, offering significant gains for trend-following traders attuned to these market dynamics.

Crude Oil WTI: +5.79%

Crude oil prices climbed by 5.79% this week, marking a bullish turn in line with movements across the broader energy complex. This rise was largely driven by expectations of tighter supplies, with OPEC+ reaffirming its production cut policies and signalling the possibility of further action to stabilize prices. In addition, colder seasonal temperatures in key energy-consuming regions have bolstered demand, adding to the upward pressure.

Despite this rally, crude oil remains within a broader trading range that has seen prices oscillate but not yet firmly break out into a sustained bullish trend. For the trend-following community, this week’s move is unlikely to have triggered long positions. Most systematic traders are likely still positioned short, given the broader bearish sentiment that has persisted throughout 2024. The spike, while notable, may simply be seen as a counter-trend correction rather than a definitive shift in market direction.

For trend followers, such moves emphasize the importance of maintaining discipline and waiting for clearer signals of a sustained breakout before repositioning. While the energy market’s short-term dynamics remain volatile, longer-term strategies will continue to monitor whether this rally signals the start of a more prolonged trend reversal or fades back into the existing range.

Gasoline RBOB: +4.72%

Gasoline RBOB rose by 4.72% this week, mirroring the broader recovery seen across the energy complex. The rally was fuelled by a combination of seasonal factors, such as increased demand for fuel during colder weather, and broader support from rising energy prices. Ongoing production cuts by OPEC+ have played a significant role in stabilizing the oil and refined products markets, contributing to the upward momentum observed this week.

However, despite this strong performance, gasoline remains firmly within a longer-term downtrend that has defined much of 2024. This week’s rise appears to be a short-term correction rather than a signal of a lasting bullish reversal. The movement reflects the energy market’s sensitivity to seasonal and geopolitical factors, but it stops short of marking a sustained shift in sentiment.

For trend followers, this week’s rally likely provided little cause for celebration. Most systematic traders remain aligned with the broader bearish trend and are unlikely to have transitioned to long positions based on this move alone. Gasoline’s price action underscores the need for patience and discipline in systematic trading strategies, where the focus remains on identifying and riding sustained trends rather than reacting to short-term volatility. As traders monitor the energy market, the question remains whether this rally will gather strength or fade back into the prevailing downtrend.

What’s Moving Down

Lumber: -5.01%

Lumber prices dropped by 5.01% this week, deepening the sharp bearish trend that has taken hold in recent weeks. The decline reflects ongoing challenges in the housing and construction sectors, where rising interest rates and higher borrowing costs have significantly reduced demand for new home builds. With mortgage rates remaining elevated, construction activity has slowed, leading to weaker demand for building materials like lumber.

At the same time, earlier increases in production by lumber suppliers, responding to previously high prices, have now resulted in an oversupplied market. This imbalance, coupled with the seasonal winter slowdown in construction projects, has added further downward pressure on prices, driving this week’s notable drop.

For trend followers, the continued weakness in lumber is likely a welcome development. Many systematic traders would have already positioned short as the bearish trend became more pronounced, and this week’s movement only reinforces their strategies. Lumber’s price action is a clear example of how trend-following approaches can align with long-term market dynamics, allowing traders to ride the momentum of a sustained decline. As the bear trend persists, disciplined traders remain well-placed to capitalize on further downside.

Sugar: -4.95%

Sugar prices dropped by 4.95% this week, signalling a potential return to the broader bearish trend after a period of heightened volatility. The market has been challenging to trade, with erratic price movements creating uncertainty for traders. This week’s sharp decline appears to reflect improving supply conditions in key producing regions, alongside a tapering of seasonal demand.

In Brazil, the world’s largest sugar producer, favourable weather has led to stronger-than-expected yields, boosting global supply. Additionally, India’s sugar exports, which had been restricted earlier this year, are beginning to stabilize, easing fears of a global shortage. With these supply-side improvements and reduced speculative activity, sugar’s recent upward pressure has begun to dissipate, resulting in this week’s significant pullback.

For trend followers, sugar continues to be a difficult market to navigate. The frequent reversals in price action have likely tested the resolve of systematic traders. However, this week’s move may offer some clarity, as the sharp decline aligns with the bearish trend seen earlier in the year. Systematic traders will likely view this as an opportunity to re-engage short positions if the downward momentum persists. In such a volatile environment, maintaining discipline and a long-term perspective remains crucial, as sugar’s unpredictable nature continues to demand a cautious approach.nd-following traders seeking to capitalize on significant market movements.

Russell 2000: -3.72%

The Russell 2000 experienced a sharp decline of 3.72% this week, dampening the bullish optimism that had been building following the U.S. election. As a key barometer for small-cap stocks and broader risk sentiment, the index’s pullback reflects growing concerns about the sustainability of its recent rally. With the holiday season approaching, this downturn has cast a shadow over what had been a promising year-end outlook.

Several factors contributed to the decline, including heightened uncertainty surrounding interest rate policies and mixed economic data that left investors cautious. Additionally, profit-taking after the index’s recent highs likely played a role, as market participants sought to lock in gains before the year’s end. The combination of these elements created headwinds for the Russell 2000, which had previously been buoyed by optimism around fiscal stimulus and economic recovery.

For trend followers, the abrupt drop likely disrupted positions aligned with the index’s earlier bullish momentum. While the reversal may have triggered some stop-outs, systematic traders will remain focused on the broader trend. If the bullish trajectory reestablishes itself, there remains potential for further gains.

This week’s decline highlights the inherent volatility of equity markets and the importance of maintaining discipline during periods of correction. Though the move is disappointing for those anticipating a year-end rally, it also serves as a reminder that markets often follow a winding path, requiring patience and adaptability to navigate effectively.ng strategic adjustments to align with the evolving market conditions.

Coffee: -3.66%

Coffee prices fell by 3.66% this week, marking a sharp and unwelcome reversal for trend followers who had been capitalizing on the market’s strong bullish trajectory. In recent months, coffee has been a standout performer, with prices climbing steadily due to persistent supply constraints and robust global demand. However, this week’s downturn interrupts that momentum, casting uncertainty on whether the bullish trend will reassert itself.

The decline seems to be driven in part by profit-taking, as traders lock in gains following coffee’s rapid ascent. Additionally, improved weather conditions in major producing countries like Brazil and Vietnam have eased immediate concerns about supply shortages, offering some relief to the market. While demand remains strong, particularly from emerging markets, this week’s pullback suggests that bullish sentiment has softened, at least temporarily.

For trend followers, this move has likely been a frustrating development. Many systematic traders had aligned their strategies with coffee’s sustained uptrend, and the abrupt reversal may have triggered stop-losses or eaten into profits. Despite this, the broader fundamentals supporting coffee’s price strength remain largely intact. If supply challenges resurface or demand continues to outpace expectations, the bullish trend may resume, offering renewed opportunities for trend-following strategies. For now, this pullback serves as a reminder of the volatility inherent in even the most promising markets.

30 Year Bond: -3.22%

The 30-Year Bond experienced a significant decline of 3.22% this week, signalling a potential reversion to its long-standing bearish trend. After a period of relative stagnation, this move suggests that downward momentum may be regaining strength, fuelled by lingering concerns over inflation and the trajectory of interest rates.

Market participants appear to be reacting to signals that central banks remain committed to maintaining restrictive monetary policies in the face of stubborn inflationary pressures. This has contributed to increased yields on long-duration bonds, driving prices lower. The bond market's response highlights ongoing scepticism about the prospects for an imminent pivot toward looser monetary conditions.

For trend followers, this week's decline may represent a welcome resumption of bearish momentum in a market that had shown signs of consolidation. Traders aligned with the longer-term downtrend could see this move as an opportunity to reinforce their positions or re-enter the market after a period of reduced activity. However, with continued uncertainty around inflation and monetary policy, caution remains warranted as the market’s direction could be influenced by upcoming economic data and central bank communications.

Conclusion

As we approach the close of 2024, this week's market movements serve as a vivid reminder of the unpredictability and dynamism that define financial markets. From cocoa’s meteoric rise to the ongoing tug-of-war in the energy complex, traders are grappling with both opportunities and challenges across asset classes. The holiday season has historically brought volatility, and this year is proving to be no different, with sector-specific trends defying broader market sentiment.

The SG Trend Index’s steady improvement this month highlights the resilience of systematic trend-following strategies, which thrive on capturing outsized moves like those seen in cocoa and natural gas. The rise in the TTU Trend Barometer to 41% suggests a modestly improving trend environment, providing a glimmer of optimism for traders. However, challenges remain, as markets continue to present mixed signals, testing the discipline and patience of even the most seasoned trend followers.

As the seasonal tug-of-war between bulls and bears intensifies, it’s clear that the outcome for the year will hinge on how these trends evolve in the final weeks. Will the bullish momentum in key sectors prevail, or will bearish pressures reassert themselves, forcing traders to recalibrate for the new year? Regardless of the outcome, this week underscores the importance of staying disciplined, adaptable, and focused on the long-term game—a hallmark of successful trend-following strategies.

For traders, the question remains: will the bulls deliver the holiday cheer, or will the bears leave coal in their stockings? With the TTU Trend Barometer pointing to gradually improving conditions, the coming weeks promise to keep markets—and traders—on their toes as we close out another dynamic year in financial markets.

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.

“Stocking Stuffers: December's Trends Deliver – 6 December 2024”

As of December 5, 2024, the SG Trend Index has achieved a month-to-date (MTD) gain of 0.77%, elevating its year-to-date (YTD) performance to 1.92%. This marks a notable improvement from the previous week's YTD of 0.92%, indicating a favourable environment for trend-following strategies as December commences.

However, the TTU Trend Barometer has declined to 36 from last week's 41, suggesting a softening in the overall trend environment. Despite this, certain sectors continue to present significant opportunities for systematic traders.

In the broader market, U.S. stocks have reached record highs, with the S&P 500 closing at 6,086.49, marking its 56th record high of the year. This surge is attributed to strong economic data and investor optimism.  Additionally, Bitcoin has surpassed the $100,000 mark, reaching up to $103,853 on December 4, 2024. This milestone is driven by increased mainstream adoption and a more favourable regulatory environment under the new administration. These developments underscore the dynamic nature of the current market landscape, offering both challenges and opportunities for trend-following strategies as we progress through December.

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’s market activity displayed varied dynamics across asset classes, shaped by a mix of strong economic data, shifting geopolitical conditions, and ongoing seasonal trends as the year draws to a close.

• Equities: Global equity markets continued their upward momentum, buoyed by optimism surrounding robust corporate earnings and solid economic data. Investors responded positively to signs of resilience in key economies, with developed markets showing strength and emerging markets benefiting from improving risk sentiment. Seasonal tailwinds, such as year-end portfolio adjustments and the so-called “Santa Claus rally,” added to the positive performance. However, there were pockets of vulnerability in some sectors where valuations remain a concern.
• Fixed Income: The bond market saw subdued activity, with slight gains in long-duration bonds reflecting cautious optimism around inflation stabilization and potential central bank policy pivots. Yields retreated slightly from recent highs as investors weighed mixed signals from central bank commentary on future rate adjustments. Despite this, demand for fixed-income assets remained steady, particularly among risk-averse investors seeking safe-haven opportunities amid broader market uncertainties.
• Commodities: Commodity markets experienced contrasting movements:
  • Energy: Crude oil and natural gas prices fell as supply concerns eased, following improved production levels and geopolitical tensions stabilizing. Seasonal shifts in demand also weighed on prices, particularly in natural gas, where mild weather forecasts tempered the usual winter rally.
  • Agriculture: Soft commodities like coffee and cocoa continued to benefit from weather-related supply challenges and geopolitical disruptions in key production regions. These trends provided ongoing opportunities for systematic strategies focused on capturing directional momentum.
  • Metals: Industrial metals saw mixed performance, with stronger demand in some areas offset by concerns over slowing global manufacturing activity. Precious metals remained under pressure as a stronger U.S. dollar reduced their appeal.
• Currencies: Currency markets were marked by moderate movements, with the U.S. dollar continuing to display resilience against major counterparts. This strength reflected investor confidence in the U.S. economy and a divergence in monetary policy stances between the Federal Reserve and other central banks. Meanwhile, select emerging market currencies saw gains as risk appetite improved globally.
• Volatility: Market volatility declined further, with key indicators reflecting reduced uncertainty. This drop was driven by stabilizing equity markets and improved economic conditions, though some caution remains as investors assess the sustainability of recent trends.

This week underscored the evolving interplay of economic, geopolitical, and seasonal drivers shaping asset class performance. Equity markets continued their rally, supported by robust fundamentals and year-end optimism. Fixed income markets showed resilience as inflation fears eased, while commodity markets remained a tale of two halves, with energy prices retreating and soft commodities surging on supply concerns. Currency movements mirrored diverging economic trajectories and central bank policies, while volatility levels suggested a period of relative calm.

As December progresses, the overall trend environment appears to be softening, as indicated by the Trend Barometer's dip. However, the persistence of strong trends in select asset classes, particularly in soft commodities and equities, provides fertile ground for systematic trading strategies.trading strategies.

Top 10 Bear and Bull Price Moves

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

What’s Moving Up

Canola: +6.01%

Canola prices experienced a notable increase of 6.01% this week, a movement that may have posed challenges for trend-following traders who had established bearish positions in line with the commodity's prolonged downward trend.

Causative Drivers:

• Surging Vegetable Oil Prices: In November, global food prices reached a 19-month high, significantly influenced by a 7.5% rise in the vegetable oil index. This surge was driven by lower-than-expected palm oil output due to excessive rainfall in Southeast Asia, which in turn elevated prices for related oils, including canola.
• Supply Chain Disruptions: In September, workers at six major grain terminals in Vancouver went on strike, potentially disrupting Canada's canola exports during a critical harvesting period. Although negotiations resumed, the strike highlighted vulnerabilities in the supply chain, contributing to price volatility.
• Chinese Import Reductions: Chinese buyers have reduced Canadian canola imports due to concerns over potential anti-dumping duties from Beijing, leading to a significant decline in shipments from December onward. This reduction in demand could have complex effects on prices, potentially contributing to volatility.

Chart Interpretation and Trend-Follower Perspective:

The recent 6.01% price increase represents a significant deviation from canola's long-term bearish trend. Trend-following traders, who typically capitalize on sustained price movements, may have found this abrupt upward shift unfavourable, especially if they were holding short positions. The sudden price rise could have triggered stop-loss orders or necessitated position adjustments, leading to potential losses.

In summary, the interplay of rising vegetable oil prices, supply chain disruptions, and shifts in international trade dynamics has contributed to the recent volatility in canola prices.

Cocoa: +4.90%

Cocoa prices experienced a significant surge of 4.90% this week, continuing a robust upward trend that has been advantageous for trend-following traders capitalizing on this substantial outlier.

Causative Drivers:

• Structural Supply-Demand Shortfalls: The cocoa market is confronting a notable supply deficit due to declining global production. Poor harvests in major producing countries, particularly Ivory Coast and Ghana, have exacerbated this shortfall. Factors such as aging tree stocks, the spread of the cocoa swollen shoot virus (CSSV), and adverse weather conditions linked to the El Niño phenomenon have significantly impacted yields. The International Cocoa Organization (ICCO) has reported a 14.2% drop in global cocoa production for the 2023/24 season, leading to the lowest cocoa stocks in 22 years.

Chart Interpretation and Trend-Follower Perspective:

This week’s 4.90% gain is a continuation of cocoa’s extraordinary bullish trend throughout 2024, reflecting one of the largest outliers in recent commodity market history. For trend-following traders, this surge exemplifies the power of staying aligned with strong, persistent trends. Traders who have maintained long positions have likely enjoyed exceptional returns, as cocoa has demonstrated a near-uninterrupted upward trajectory fuelled by deep market imbalances.

The chart highlights how systematic strategies, focused on capturing long-term momentum, are ideally positioned to benefit from such sustained movements. The continued strength of this rally underscores the importance of trend-followers’ discipline in holding positions during prolonged uptrends.

In summary, cocoa’s price surge this week reflects ongoing supply constraints and structural market imbalances. For systematic traders, this market remains a standout performer and a prime example of the “once-in-a-lifetime” opportunities that trend-following strategies aim to capture.

Coffee: +3.87%

Coffee prices rose by 3.87% this week, continuing a significant bullish trend that has been a major contributor to 2024 performance.

Causative Drivers:

• Adverse Weather Conditions: Poor weather in Brazil and Vietnam, the world's largest coffee producers, has led to reduced yields, contributing to the highest coffee prices in nearly 50 years.
• Supply Chain Disruptions: Global supply chain issues, including shipping disruptions, have further tightened coffee availability, impacting prices.
• Increased Demand: Growing coffee consumption among younger populations, especially in emerging markets, has bolstered demand, supporting higher prices.

Chart Interpretation and Trend-Follower Perspective:

The 3.87% price increase this week reinforces the strong bullish trend observed throughout 2024. Trend-following traders, who capitalize on sustained price movements, have likely found this favourable, as the consistent uptrend aligns with their strategies. The chart indicates a series of higher highs and higher lows, characteristic of a robust upward trend, providing profitable opportunities for those maintaining long positions.

The combination of adverse weather, supply chain disruptions, and increased demand has propelled coffee prices upward, offering significant gains for trend-following traders attuned to these market dynamics.

DAX: +3.75%

The DAX index experienced a robust increase of 3.75% this week, marking a significant milestone as it surpassed the 20,000-point threshold for the first time.

Causative Drivers:

• Optimism Surrounding U.S. Economic Policies: The re-election of President Donald Trump has generated positive sentiment in the German stock market. Investors anticipate that the administration's policies, including potential tax cuts and deregulation, will stimulate economic growth, thereby benefiting global markets.
• Monetary Policy Expectations: The European Central Bank (ECB) is expected to implement further interest rate cuts in response to declining inflation rates. Such monetary easing is generally supportive of equity markets, as lower interest rates reduce borrowing costs and encourage investment.
• Favourable Currency Movements: A stronger U.S. dollar coupled with a weaker euro has enhanced the competitiveness of European exporters, including those listed on the DAX. This currency dynamic has bolstered the earnings prospects of export-oriented companies, contributing to the index's rise.

Chart Interpretation and Trend-Follower Perspective:

The DAX's ascent past the 20,000-point mark signifies a continuation of its upward trajectory, characterized by higher highs and higher lows—a classic indicator of a strong bullish trend. For trend-following traders, this movement aligns with their strategies, as maintaining long positions in such a trending environment typically yields favourable returns. The sustained momentum suggests that the current trend remains robust, encouraging traders to uphold their positions in anticipation of further gains.

The DAX's 3.75% increase this week reflects a confluence of positive factors, including investor optimism regarding U.S. economic policies, expectations of accommodative monetary policy from the ECB, and advantageous currency movements. These elements have collectively fostered a favourable environment for trend-following traders, who have benefited from the index's persistent bullish trend.

Ethanol: +3.49%

Ethanol prices increased by 3.49% this week, a movement that may have been unfavourable for trend-following traders holding short positions in line with the commodity's prior bearish trend.

Causative Drivers:

• Government Policy Changes: The Indian government is considering raising ethanol procurement prices by ₹2-5 per liter to boost biofuel supplies, aiming for a 20% ethanol blending target by 2025-26. This policy shift is expected to increase demand for ethanol, thereby supporting higher prices.
• Supply Constraints: In Brazil, ethanol prices dipped despite elevated demand due to production costs and market dynamics. However, the global ethanol market has faced supply constraints, contributing to price volatility.
• Rising Production Costs: In the U.S., increased corn prices, the primary feedstock for ethanol, have elevated production costs, leading to higher ethanol prices. Additionally, heightened energy costs, particularly for natural gas used in ethanol production, have further contributed to escalating production expenses.

Chart Interpretation and Trend-Follower Perspective:

The 3.49% price increase this week represents a notable deviation from ethanol's recent bearish trend. Trend-following traders, who typically capitalize on sustained price movements, may have found this abrupt upward shift unfavourable, especially if they were holding short positions. The sudden price rise could have triggered stop-loss orders or necessitated position adjustments, leading to potential losses.

Government policy changes, supply constraints, and rising production costs have contributed to the recent uptick in ethanol prices. For trend-following traders, this unexpected movement underscores the importance of adaptive risk management strategies to navigate sudden market shifts.

What’s Moving Down

Natural Gas: -7.64%

Natural gas prices declined by 7.64% this week, a movement that likely resulted in unfavourable outcomes for trend-following traders who had positioned themselves to capitalize on the recent bullish momentum.

Causative Drivers:

• Mild Weather Forecasts: Recent forecasts predict milder temperatures across key regions, reducing the anticipated demand for heating and, consequently, for natural gas. This shift has led to a decrease in prices as the market adjusts to lower consumption expectations.
• Elevated Inventory Levels: Natural gas storage levels remain higher than the five-year average, indicating a well-supplied market. The ample supply has exerted downward pressure on prices, as the urgency for additional procurement diminishes.
• Volatility Due to Contract Expiry: The expiration of December contracts introduced volatility, with traders adjusting positions, leading to price fluctuations. Such periods often result in increased market activity that can drive prices down.

Chart Interpretation and Trend-Follower Perspective:

The 7.64% decline this week represents a significant reversal from the preceding bullish trend. Trend-following traders, who typically seek to profit from sustained price movements, may have experienced whipsaw effects due to this abrupt downturn. The sharp decline likely triggered stop-loss orders or necessitated rapid position adjustments, leading to potential losses.

The combination of milder weather forecasts, elevated inventory levels, and contract expiry-related volatility contributed to the sharp decline in natural gas prices. For trend-following traders, this unexpected reversal underscores the challenges of navigating volatile markets and highlights the importance of robust risk management strategies.

VIX Futures: -4.05%

The Cboe Volatility Index (VIX), commonly referred to as Wall Street's “fear gauge,” declined by 4.05% this week, reaching levels around 13.34 as of December 2, 2024. This marks a significant decrease, bringing the VIX to its lowest point since early 2023.

Causative Drivers:

• Robust U.S. Economic Performance: The U.S. economy continues to exhibit strong growth, with the Atlanta Federal Reserve's GDPNow model projecting a 3.2% growth rate for the current quarter.
• This positive economic outlook has bolstered investor confidence, contributing to reduced market volatility.
• Anticipation of Federal Reserve Rate Cuts: Market participants expect the Federal Reserve to implement another interest rate cut, which has further stabilized market sentiment and decreased demand for protective options, leading to a lower VIX.
• Post-Election Market Stability: Following the U.S. presidential election, the VIX has declined, indicating a healthy stock rally. Historically, a VIX below its long-term average of approximately 19.5 suggests favourable conditions for sustained market stability.

Trend-Follower Perspective:

While the VIX itself is not typically a direct trading instrument for trend-following strategies, its current low levels are indicative of a stable and less volatile market environment. For trend-followers, such conditions can present challenges, as reduced volatility may lead to fewer pronounced and sustained market trends, potentially impacting the performance of trend-following models.

The VIX's decline to historically low levels reflects a confluence of robust economic growth, anticipated monetary easing, and post-election stability. While this environment fosters investor confidence, it may also result in a less favourable landscape for trend-following traders seeking to capitalize on significant market movements.

Lumber: -3.31%

Lumber prices decreased by 3.31% this week, potentially signalling the end of the previous bullish trend that trend-following traders may have been capitalizing on.

Causative Drivers:

• Decline in Housing Starts: The U.S. housing market has experienced a slowdown, with a 5.5% decline in housing starts reported in May. This reduction in new construction activity has lessened demand for lumber, contributing to the recent price decline.
• Elevated Mortgage Rates: Rising mortgage rates, now at 6.84%, have dampened new construction activity, reducing demand for building materials like lumber. This decrease in demand has exerted downward pressure on lumber prices.
• Supply Chain Adjustments: In response to previous high demand and prices, lumber producers increased output. However, with the current slowdown in construction, the market is experiencing an oversupply, leading to price reductions.

Chart Interpretation and Trend-Follower Perspective:

The 3.31% price decline this week indicates a potential reversal of the prior bullish trend. Trend-following traders, who typically seek to profit from sustained price movements, may interpret this downturn as a signal to reevaluate or exit long positions. The shift suggests that the upward momentum in lumber prices is waning, prompting traders to adjust their strategies accordingly.

The recent decrease in lumber prices is influenced by a slowdown in the housing market, rising mortgage rates, and supply chain dynamics. For trend-following traders, this development may indicate the conclusion of the previous bullish trend, necessitating strategic adjustments to align with the evolving market conditions.

Palladium: -3.16%

Palladium prices declined by 3.16% this week, continuing a downward trend that has been favourable for trend-following traders holding short positions.

Causative Drivers:

• Shift in Automotive Demand: The automotive industry, a major consumer of palladium for catalytic converters, is increasingly substituting palladium with platinum due to cost considerations. This transition has reduced demand for palladium, contributing to its price decline.
• Elevated Stockpiles: High inventory levels of palladium have created an oversupplied market, exerting downward pressure on prices.
• Weakening Industrial Demand: Beyond the automotive sector, industrial demand for palladium has softened, further impacting its market value.

Chart Interpretation and Trend-Follower Perspective:

The consistent decline in palladium prices aligns with the strategies of trend-following traders who have established short positions. The sustained downtrend has provided opportunities to capitalize on the bearish movement, reinforcing the effectiveness of trend-following approaches in this context.

The ongoing decrease in palladium prices, driven by shifts in automotive demand, high stockpiles, and weakening industrial use, has created a favourable environment for trend-following traders positioned to benefit from the downtrend.

Heating Oil: -2.80%

Heating oil prices declined by 2.80% this week, continuing a downward trend that has been favourable for trend-following traders holding short positions.

Causative Drivers:

• OPEC+ Production Decisions: OPEC+ has delayed planned production increases, extending current output cuts until the end of 2026. This decision reflects concerns over weak global demand, particularly from China, and aims to stabilize prices amid potential oversupply.
• Ample Supply Levels: Despite production cuts, global oil inventories remain sufficient, contributing to downward pressure on heating oil prices. The International Energy Agency anticipates a slight surplus in the oil market in 2024, even with extended OPEC+ cuts.
• Seasonal Demand Variations: Heating oil demand is typically higher during colder months. However, warmer-than-average temperatures, partly due to El Niño, have reduced the need for heating, leading to lower demand and contributing to price declines.

Chart Interpretation and Trend-Follower Perspective:

The consistent decline in heating oil prices aligns with the strategies of trend-following traders who have established short positions. The sustained downtrend has provided opportunities to capitalize on the bearish movement, reinforcing the effectiveness of trend-following approaches in this context.

In summary, the ongoing decrease in heating oil prices, driven by OPEC+ production decisions, ample supply levels, and seasonal demand variations, has created a favourable environment for trend-following traders positioned to benefit from the downtrend.

Conclusion

As we progress through December, this week's market dynamics provided a vivid snapshot of the evolving landscape in futures trading. The SG Trend Index's MTD gain of 0.77% and YTD performance improvement to 1.92% highlight a favourable, albeit softening, trend-following environment. While the TTU Trend Barometer's dip to 36 signals a cooler market environment, pockets of strength in equities and soft commodities showcase the continued potential for systematic trading strategies.

This week, the equity markets surged to record highs, driven by robust economic data and optimism around U.S. fiscal and monetary policies. Commodities, however, told a more nuanced story, with sharp divergences across asset classes. Soft commodities like coffee and cocoa continued their bullish streak, supported by weather-induced supply constraints, while energy markets like natural gas and heating oil declined, reflecting eased geopolitical concerns and seasonal demand adjustments.

The top movers revealed the diverse opportunities and challenges faced by trend-following traders. From cocoa's extraordinary bull run to palladium and heating oil's favourable bearish trends, systematic traders have navigated both surges and reversals. However, unexpected movements, such as the abrupt rise in canola or the sharp decline in natural gas, underscored the importance of adaptive risk management and disciplined strategy execution in volatile markets.

As the year-end approaches, the interplay of macroeconomic drivers, geopolitical developments, and seasonal influences will likely shape the final trading days of 2024. For trend-followers, this environment underscores the core principles of discipline, adaptability, and a long-term perspective—key attributes that ensure resilience in navigating the ever-changing currents of the global markets.

We look forward to analysing the continued evolution of these trends in the weeks ahead as traders close the books on another eventful year.

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.

“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

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.

“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

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