Trend Following - Week in Review - April 4, 2025

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.

"Into the Tempest: Trend Meets the Turning"

This week brought a sudden shakeout across global futures markets, hitting nearly every asset class outside of volatility. Equities cratered, metals reversed hard, and even the recent strength in energy collapsed under pressure. The SG Trend Index fell again, dropping to -0.34% MTD and extending its YTD decline to -4.98%. Systematic strategies remain under pressure, caught between false breakouts and violent reversals.

At first glance, the TTU Trend Barometer surged to 68%, marking a strong trend environment. But there’s an important caveat: this jump reflects shorter-term trend dynamics, which kicked in late in the week following large moves across the board. For most longer-term trend followers, those same moves were more likely experienced as sharp reversals than entry signals. The barometer’s rapid ascent reveals the reactive nature of price-based systems, but also the lag that diversified, long-term models must manage through.

In short: the environment is shifting—but the pain came first.

We’re also making a subtle structure change this week. Instead of presenting the top 5 bull and bear price moves in isolation, we’re offering a broader commentary from a trend-following portfolio perspective. Major movers will still feature within our asset class breakdowns, but now with added insight into how correlation shocks and cross-asset dynamics affect the real-world performance of diversified systems.

In a world where everything moves together—or nothing does—context matters more than ever.

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 April begins, the market narrative has flipped violently. A fresh wave of fear has taken hold—driven by the shock of Trump’s “Liberation Day” tariff announcements, surging inflation expectations, and growing belief that the U.S. and global economy could be heading toward a hard landing. The resulting moves weren’t subtle. Major equity indexes plunged over 10%, metals were crushed, and energy collapsed under liquidation pressure.

Trend-followers, already bruised by Q1’s erratic market behaviour, faced another existential test. The TTU Trend Barometer rose to 48% midweek and surged further to 68% by the end of the week—reflecting a short-term momentum burst driven by sharp price moves. But these final days told a different story for most diversified portfolios. Correlation shocks took hold, with long equity, long metals, and long energy positions all reversing in unison. This week wasn’t just about specific markets—it was a systemic shakeout.

Let’s unpack the damage.

Equities: -9.83% (Previous week: -2.21%)

Equity markets tumbled into freefall, with the Nasdaq 100 dropping over 10%, closely followed by the S&P 500, Russell 2000, and DAX. Markets reacted sharply to a hawkish repricing of Fed expectations, Trump's aggressive tariff proposals, and worsening earnings guidance from leading firms. The combined effect triggered a violent unwind of risk-on positioning.

For trend-followers, any remaining long exposure in equities likely hit trailing stops or was forcefully exited, marking a complete reversal from earlier Q1 momentum setups. This was a full correlation event with few places to hide.

Energy: -8.71% (Previous week: +1.13%)

The energy complex collapsed, with WTI crude, Brent, gasoline, and heating oil all down sharply. The magnitude of the decline suggests broad liquidation, not just supply/demand shifts. Natural gas and ethanol also joined the decline, highlighting how the broader commodity complex succumbed to macro-driven deleveraging.

Trend-followers with long positions in energy—a sector that had shown strength through March—were likely whipsawed hard as key support levels gave way under pressure.

Metals: -12.78% (Previous week: +1.72%)

Metals were hammered, led by a dramatic 15% drop in silver and a 14% fall in copper. Even gold, typically a haven in market stress, declined under pressure from a rising U.S. dollar and real yields. This appears to be a classic case of “sell what you can,” with industrial and precious metals both caught in the firestorm.

Medium- to long-term trend-followers holding long metals positions were hit hard as one of the few trending sectors from Q1 broke down decisively.

Grains: -1.99% (Previous week: -0.15%)

Grains saw mixed performance. Corn and soybean oil eked out gains, supported by global biofuel policy signals and some planting delays. However, soybeans, oats, and rough rice dragged the group lower. USDA reports and global weather narratives added noise without direction.

The trend environment in grains remains highly fragmented, with few clear setups—leaving systems underexposed or prone to whipsaws.

Meats: -3.76% (Previous week: -0.25%)

Meats continued to slide, with lean hogs, live cattle, and feeder cattle all posting notable losses. Demand concerns—especially around exports—joined forces with weak consumer sentiment and continued pressure on margins to drive prices lower.

Trend-followers likely remain sidelined or holding tactical short exposure in a market that continues to chop without building momentum.

Soft Commodities: -2.99% (Previous week: -2.54%)

Softs extended last week’s declines. Orange juice continued its steep reversal after last year’s parabolic rise, while cotton, coffee, and sugar weakened amid easing supply constraints and concerns over global demand. Cocoa was the lone standout, rising over 5% on tight West African supplies.

Despite cocoa’s strength, the broader softs complex remains hostile to trend systems, with wide price swings and little follow-through.

Currencies: +0.55% (Previous week: -0.02%)

Safe-haven flows returned to the Swiss franc and Japanese yen, while the U.S. dollar weakened amid rising risk aversion. Overall, currency movements were more directional this week, but broad-based trend strength remains elusive. Most major FX pairs are still rangebound from a medium-term perspective.

Trend-following systems remain lightly exposed in FX, with low-conviction signals and tight volatility clustering dominating the space.

Volatility Index (VIX Futures): +55.37% (Previous week: +9.44%)

Volatility erupted, with VIX futures surging more than 55%—the largest weekly gain since early COVID. The shift was not merely a spike in sentiment, but a regime change in market structure. Assets that had previously been uncorrelated snapped back into tight alignment, causing losses to multiply.

While the VIX itself isn’t typically traded in trend systems, its behaviour this week was central to the widespread breakdown in diversified portfolios.

Bonds: +1.75% (Previous week: +0.03%)

Bonds rallied across the curve as investors sought safety and yields fell. The long bond led the way, rising nearly 3%, helping to offset losses elsewhere. This was one of the few asset classes to provide consistent positive trend movement during the week.

For trend-followers, long fixed-income exposure likely helped—though limited allocation sizing in many models means the relief was modest relative to the damage elsewhere.

Key Takeaways

• Systemic Liquidation Took Hold: This was not a rotation—it was a broad-based liquidation. Equities, metals, and energy all broke down simultaneously, overwhelming most trend-following systems with correlated reversals.
• False Stability Unmasked: The brief improvement in trend metrics earlier in the week proved misleading. The TTU Trend Barometer's midweek rise masked a fragile and fleeting trend environment, which collapsed under macro stress.
• Safe-Haven Assets Offered Limited Shelter: Bonds and select currencies (CHF, JPY) delivered modest gains, but their contribution to portfolio resilience was limited by sizing constraints. Even gold, typically a defensive stalwart, was caught in the downdraft.
• Volatility Regime Shift: The explosion in the VIX wasn’t just noise—it signalled a regime change. Correlation across asset classes surged, undermining diversification and amplifying risk.
• Trend Conditions Have Deteriorated Again: Despite early signs of life, trend conditions are retreating once more. Momentum structures broke down across nearly every sector, with softs, grains, and FX offering no meaningful refuge.
• Portfolio Impact: Broad-Based Pain: Diversified trend portfolios likely saw sharp drawdowns, with long positions in energy, equities, and metals reversing in tandem. Defensive trades were too few, and short setups too late, to significantly counterbalance the move.

A Trend Follower’s Perspective

Above is a detailed look at key market movements for the week:

Standouts included a 55% surge in VIX Futures, as fear overtook any lingering hope of market stability. Cocoa and the 30-year bond were the rare bright spots, but beyond that, there was very little joy on the long side. Most major futures contracts posted significant declines, particularly in equities, metals, and energy.

For diversified trend-following portfolios, this wasn’t just another tough week—it was a week of dispersion. The correlations typically assumed to provide balance broke down under the weight of equity uncertainty. As a result, portfolios built on diversification experienced material stress, with positive contributions from safe havens like bonds and CHF too small to offset the cross-asset risk unwind.

While the broader industry saw significant drawdowns this week, it’s worth noting that not all managers experienced the same pain profile. Some programs—especially those with lower equity exposure or more defensive structures—fared relatively better, even squeezing out small profits in the final session. Sector dispersion showed up on both sides: Energy, Short Term Interest Rates, and Grains were winners for some; Equities, Precious Metals, and Non-US Bonds dragged down most. It’s a reminder that systematic doesn’t mean identical—and edge still lives in the details of model design and portfolio architecture.

When Process Meets Pressure

This was a week where process met pressure. For trend-followers, it wasn’t just about one bad trade—it was the simultaneous reversal of many. Long equities, long metals, long energy—all areas that had shown prior strength—broke down in unison. Correlations spiked, volatility surged, and diversification, for a moment, stopped working.

The image above of market performance for the week captures the market's mood better than numbers alone—a futures heatmap lit in red, with only a handful of contracts surviving the storm. Cocoa, bonds, the Swiss franc, and the VIX were standouts. But in a typical diversified CTA portfolio, their impact was too muted to meaningfully offset the heavy bleeding elsewhere.

This week marked a stress test for discipline. The models will do what they do—trail stops were hit, reversals triggered, and many positions likely exited or flipped. But from a broader perspective, this is where trend-following earns its long-term edge—not by avoiding pain entirely, but by surviving dislocation without breaking process.

What this week also highlights is the invisible fragility of the trend environment. A rising trend barometer midweek didn’t mean a shift to stability—it meant rising dispersion, setting the stage for correlated unwinds. The violent reversal into Friday erased much of that signal and reminded us that timing lag is a feature, not a flaw of price-based systems.

Portfolio Observations

• Long Equities: Most trend-followers were likely stopped out of long positions, with sharp reversals breaking momentum structures.

• Long Energy & Metals: Reversals here came swiftly and with force. Many systems would have been caught mid-trend, unable to react before stops were hit.

• Fixed Income Longs: A rare bright spot. While bond positions likely contributed positively, sizing limitations would’ve kept this from being a full offset.

• Softs, Grains, and FX: Largely unhelpful—still stuck in noisy, rangebound behaviour offering no meaningful signal.

• Volatility Spike: The VIX move signalled the real story—this wasn’t rotation, this was correlation shock. And correlation shocks hurt.ain vigilant, considering both technical signals and fundamental developments in the market.

Final Reflection

Weeks like this are where trend-following proves its philosophy, not just its mechanics. We don't predict—we respond. The storm has broken, and while the damage is real, so is the clarity that follows.

The next opportunity begins with survival. The next trend begins with an exit. Stay process-aligned, stay patient—and let the markets lead the next move.ish positions. Traders should remain vigilant, considering both technical signals and fundamental developments in the market.

List of Resources used in the Week in Review

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