trend following

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

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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 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

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.

“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.

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

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

Important Disclaimers

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

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

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

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

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

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

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

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

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

“Momentum Builds: Trend Followers Ride Strong November Gains”

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

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

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

Weekly Asset Class Snapshot

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

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

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

Top 10 Bear and Bull Price Moves

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

What’s Moving Up

• Cocoa: +22.26%

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

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

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

• Coffee: +12.80%

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

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

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

• Natural Gas: +6.29%

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

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

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

• VIX Futures: +5.18%

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

Rough Rice: +4.49%

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

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

What’s Moving Down

• Soybean Oil: -6.79%

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

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

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

• Cotton: -6.20%

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

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

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

• Wheat: -6.20%

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

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

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

• Copper: -5.63%

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

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

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

• Crude Oil WTI: -3.84%

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

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

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

Conclusion

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

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

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

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

List of Resources used in the Week in Review

Important Disclaimers

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Weekly Asset Class Snapshot

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

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

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

Top 10 Bear and Bull Price Moves

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

What’s Moving Up

• Russell 2000: +8.61%

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

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

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

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

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

• Nasdaq 100: +5.33%

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

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

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

• Soybean Oil: +5.29%

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

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

• Coffee: +4.73%

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

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

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

S&P500: +4.61%

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

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

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

What’s Moving Down

• VIX Futures: -24.35%

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

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

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

• Palladium: -10.49%

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

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

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

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

• Oats: -9.08%

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

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

• Lean Hogs: -4.13%

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

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

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

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

• Silver: -3.84%

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

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

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

Conclusion

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

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

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

List of Resources used in the Week in Review

Important Disclaimers

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

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.