Trend Following - Week in Review - July 19, 2024

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.
Steady the Ship, Bosun, we’re in for a Lashing!”
Trend Barometer
This week, our trusty Trend Barometer has retreated from 36 to a moderately weak 30, indicating challenging conditions for trend followers. The SG Trend Index reflects this difficulty, showing a month-to-date (MTD) gain of just 0.28% and a year-to-date (YTD) performance of 8.99%, down from 1.87% MTD last week.
This week has been characterized by significant volatility, driven by a combination of factors including the shift in sector leadership, a sharp rally in small-cap stocks due to confidence in a potential Fed rate cut, and a retreat in tech shares.
Additionally, the market responded to lower 10-year Treasury yields and evolving economic data.
As evidenced by the spike in the VIX Index and the impact on global equity markets, "Steady the ship, bosun, we’re in for some rough seas!"

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

This week, the movements in asset classes are as follows:
- Volatility Index surged by 13.51%, highlighting the week's turbulent nature.
- Grains experienced a modest increase of 2.07%, reflecting market reactions to changing supply and demand dynamics.
- Meats saw a slight increase of 0.60%, influenced by fluctuations in market conditions.
- Bonds had a minor decrease of 0.34%, amid varying economic data and interest rate expectations.
- Energy sector prices fell by 3.99%, driven by supply and demand shifts.
- Metals saw a significant decrease of 4.99%, influenced by industrial sector demands and market sentiment.
- Soft Commodities decreased by 2.56%, driven by movements in key commodities.
- Equity Indices posted a modest decrease of 2.19%, influenced by economic data and market volatility.
- Currency Markets showed a minor decrease of 0.49%, with fluctuations in major currency pairs.
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 Surges by 13.51%
The VIX, often referred to as the "fear gauge" of the market, surged by 13.51% this week, reflecting increased volatility and uncertainty in the equity markets. While some trend followers trade the VIX, it is primarily used as a guide to assess market volatility in terms of fear and greed.
Reasons for the Long-Term Downtrend in Volatility:
- Decreasing Market Uncertainty:
- Stable Economic Recovery: The global economic recovery from the COVID-19 pandemic has been relatively stable, reducing the overall market uncertainty. Consistent economic growth and recovery efforts have contributed to lower volatility.
- Central Bank Policies: Central banks, including the Federal Reserve, have provided clear guidance on monetary policies, reducing uncertainty. Low interest rates and quantitative easing measures have supported market stability.
- Reduced Market Shocks:
- Absence of Major Crises: Since the height of the pandemic, there have been fewer major economic shocks or geopolitical crises that significantly impact market stability. This has contributed to a more predictable and stable market environment.
- Improved Corporate Earnings: Strong corporate earnings and positive financial performance by major companies have also helped reduce market volatility.
- Investor Confidence:
- Increased Liquidity: High levels of liquidity in the financial markets have contributed to lower volatility. Investors have had more confidence in market conditions, leading to steadier investment flows.
- Diversification Strategies: Investors have increasingly adopted diversification strategies to manage risk, reducing the impact of any single market event on overall market volatility.
This Week's Price Surge Within the Existing Uptrend:
This week's 13.51% surge in the VIX highlights the significant volatility and uncertainty in the equity markets. The primary drivers for this week's surge include:
- Economic Data Reactions: The mixed economic data and expectations of central bank policies caused increased market uncertainty, pushing up the VIX.
- Sector Shifts: The retreat in tech shares and the rally in small-cap stocks created significant price fluctuations, contributing to the rise in the VIX.
- Global Concerns: Geopolitical tensions and global economic concerns added to the market volatility, driving investors to seek protection against potential risks.
Additionally, as shown in the weekly chart of the VIX, since early 2020, volatility has been decreasing over time, reaching its lowest point last week. This week's up move represents a significant increase off a very low base. While still early days, this raises the question: is this the commencement of increased volatility in the days ahead, or will we quickly revert back to the trend of low volatility conditions?
Reception by Trend Followers:
- Market Volatility Assessment: Trend followers use the VIX to gauge market volatility. The spike in the VIX indicates increased market uncertainty and potential new trending opportunities for trend followers.
- Strategic Adjustments: The surge in the VIX may prompt trend followers to reassess their positions in equity markets. Increased volatility could lead to adjustments in their trading strategies to capitalize on the changing market conditions.
- Risk Management: Generally, increased market volatility tends to mean an initial unfavourable hit to trend followers as their strategies need to adjust to these new volatile conditions. However, once adjusted to increased volatility and new emerging trends substantial improvement in results often follows. Staying vigilant and adaptable is crucial in navigating the turbulent market environment.

Oats Prices Increase by 5.89%
Oats prices increased by 5.89% this week, marking a significant move within its broader bearish trend since the most recent peak in September 2023. This up move represents a rise off a lower base but is not considered material enough to change the overall medium to long-term downward trend.
Reasons for the Downtrend Since September 2023:
- Increased Global Supply:
- High Production Levels: Major oat-producing countries, including Canada and the United States, have seen increased production levels. Favorable weather conditions over the past few years contributed to bumper harvests, resulting in an oversupply in the market.
- Inventory Build-Up: The increased production has led to higher inventory levels, exerting downward pressure on prices.
- Weak Demand:
- Economic Slowdown: The global economic slowdown has reduced demand for oats. Lower consumer spending and reduced industrial activity have impacted the market.
- Substitution Effects: The rise in prices of alternative grains and cereals led some consumers and industries to switch from oats to other options, decreasing demand.
- Market Sentiment:
- Speculative Activities: Speculative trading activities have also played a role in the downtrend. Traders betting on continued high yields and oversupply have kept prices suppressed.
This Week's Price Surge Within the Existing Downtrend:
This week's 5.89% increase in oats prices is a notable move but is not sufficient to alter the broader bearish trend observed since September 2023. The primary drivers for this week's surge include:
- Weather-Related Supply Concerns: Ongoing adverse weather conditions have raised concerns about supply, pushing prices higher.
- Demand Increases: Growing demand for healthier food options and strong export demand have contributed to the price increase.
Reception by Trend Followers:
- Impact on Short Positions: Trend followers who have been short on oats since the peak in September 2023 would see this week's increase as a setback. The upmove takes the shine off the short trade trend.
- Assessment of Trend Direction: Despite this week's rise, the move is not considered material enough to change the overall trend direction. The medium to long-term trend remains bearish.
- Strategic Adjustments: Trend followers may need to reassess their short positions and remain vigilant for any signs of sustained upward movement that could alter the trend dynamics. However, the current increase is viewed as a temporary fluctuation within the broader downtrend.

Soybean Meal Prices Increase by 6.25%
Soybean meal prices increased by 6.25% this week, marking a notable move within its broader bearish trend since May 2024. This upmove represents a minor retracement in an overall strong downtrend and is not considered material enough to affect trend-following positions significantly but does reduce the shine on this quite powerful downtrend.
Reasons for the Downtrend Since May 2024:
- Increased Global Supply:
- High Production Levels: Major soybean-producing countries, including the United States, Brazil, and Argentina, have reported high production levels, leading to an oversupply in the market. Favourable weather conditions and advancements in agricultural practices have contributed to these high yields.
- Inventory Build-Up: The increased production has led to higher inventory levels, exerting downward pressure on prices.
- Weak Demand:
- Economic Slowdown: The global economic slowdown has reduced demand for soybean meal. Lower consumer spending and reduced industrial activity have impacted the market.
- Substitution Effects: The rise in prices of alternative feedstocks has led some consumers and industries to switch from soybean meal to other options, decreasing demand.
- Market Sentiment:
- Speculative Activities: Speculative trading activities have also played a role in the downtrend. Traders betting on continued high yields and oversupply have kept prices suppressed.
This Week's Price Surge Within the Existing Downtrend:
This week's 6.25% increase in soybean meal prices is a notable move but is not sufficient to alter the broader bearish trend observed since May 2024. The primary drivers for this week's surge include:
- Supply Concerns:
- Adverse Weather Conditions: Ongoing adverse weather conditions in key soybean-producing regions have raised concerns about future supply, pushing prices higher.
- Planting Delays: Delays in planting due to unfavorable weather conditions earlier in the season have also contributed to supply concerns.
- Demand Factors:
- Increased Demand: There has been a surge in demand for soybean meal due to its use in animal feed. This increased demand has exerted upward pressure on prices.
- Export Demand: Strong export demand from countries with lower production levels has also contributed to the price increase.
- Market Sentiment:
- Speculative Activities: Speculative trading and market sentiment around potential supply disruptions have driven prices upward. Traders reacting to news of adverse weather and its impact on future supply have pushed prices higher.
Reception by Trend Followers:
- Impact on Short Positions: Trend followers who have been short on soybean meal since the downtrend began would see this week's increase as a minor setback. The up-move takes the shine off the short trade trend but does not significantly alter their positions.
- Assessment of Trend Direction: Despite this week's rise, the move is not considered material enough to change the overall trend direction. The medium to long-term trend remains bearish.
- Strategic Adjustments: Trend followers may need to reassess their short positions and remain vigilant for any signs of sustained upward movement that could alter the trend dynamics. However, the current increase is viewed as a temporary fluctuation within the broader downtrend.

Soybean Prices Increase by 5.59%
Soybean prices increased by 5.59% this week, marking a notable move within its broader bearish trend since its peak in June 2022. This upmove represents a minor retracement in an overall strong downtrend and is not considered material enough to affect trend-following positions significantly. It simply reduces the strong unrealized profits arising from the medium to long-term downtrend.
Reasons for the Downtrend Since June 2022:
- Increased Global Supply:
- High Production Levels: Major soybean-producing countries, including the United States, Brazil, and Argentina, have reported high production levels, leading to an oversupply in the market. Favorable weather conditions and advancements in agricultural practices have contributed to these high yields.
- Inventory Build-Up: The increased production has led to higher inventory levels, exerting downward pressure on prices.
- Weak Demand:
- Economic Slowdown: The global economic slowdown has reduced demand for soybeans. Lower consumer spending and reduced industrial activity have impacted the market.
- Substitution Effects: The rise in prices of alternative feedstocks has led some consumers and industries to switch from soybeans to other options, decreasing demand.
- Market Sentiment:
- Speculative Activities: Speculative trading activities have also played a role in the downtrend. Traders betting on continued high yields and oversupply have kept prices suppressed.
This Week's Price Surge Within the Existing Downtrend:
This week's 5.59% increase in soybean prices is a notable move but is not sufficient to alter the broader bearish trend observed since June 2022. The primary drivers for this week's surge include:
- Supply Concerns:
- Adverse Weather Conditions: Ongoing adverse weather conditions in key soybean-producing regions have raised concerns about future supply, pushing prices higher.
- Planting Delays: Delays in planting due to unfavorable weather conditions earlier in the season have also contributed to supply concerns.
- Demand Factors:
- Increased Demand: There has been a surge in demand for soybeans due to its use in various food products and animal feed. This increased demand has exerted upward pressure on prices.
- Export Demand: Strong export demand from countries with lower production levels has also contributed to the price increase.
- Market Sentiment:
- Speculative Activities: Speculative trading and market sentiment around potential supply disruptions have driven prices upward. Traders reacting to news of adverse weather and its impact on future supply have pushed prices higher.
Reception by Trend Followers:
- Impact on Short Positions: Trend followers who have been short on soybeans since the peak in June 2022 would see this week's increase as a minor setback. The upmove takes the shine off the short trade trend but does not significantly alter their positions.
- Assessment of Trend Direction: Despite this week's rise, the move is not considered material enough to change the overall trend direction. The medium to long-term trend remains bearish.
- Strategic Adjustments: Trend followers may need to reassess their short positions and remain vigilant for any signs of sustained upward movement that could alter the trend dynamics. However, the current increase is viewed as a temporary fluctuation within the broader downtrend.

Canola Prices Increase by 4.56%
Canola prices increased by 4.56% this week, marking a notable move within its broader bearish trend since its peak in May 2022. This upmove represents a significant rise that trend followers might be watching closely, as it may signal the end of this medium to long-term downtrend. While it's unlikely to alter trend-following positions at this stage, there are possible signs that canola prices may be about to break out to the long side.
Reasons for the Downtrend Since May 2022:
- Increased Global Supply:
- High Production Levels: Major canola-producing countries, including Canada and Australia, have seen high production levels, contributing to an oversupply in the market. Favorable weather conditions and advancements in farming technology have led to bumper harvests.
- Inventory Build-Up: The increased production has led to higher inventory levels, exerting downward pressure on prices.
- Weak Demand:
- Economic Slowdown: The global economic slowdown has reduced demand for canola. Lower consumer spending and reduced industrial activity have impacted the market.
- Alternative Oils: The rise in prices of alternative vegetable oils has led some consumers and industries to switch from canola oil to other options, decreasing demand.
- Market Sentiment:
- Speculative Activities: Speculative trading activities have also played a role in the downtrend. Traders betting on continued high yields and oversupply have kept prices suppressed.
This Week's Price Surge Within the Existing Downtrend:
This week's 4.56% increase in canola prices is a notable move but is not sufficient to alter the broader bearish trend observed since May 2022. The primary drivers for this week's surge include:
- Supply Concerns:
- Adverse Weather Conditions: Ongoing adverse weather conditions in key canola-producing regions have raised concerns about future supply, pushing prices higher.
- Planting Delays: Delays in planting due to unfavorable weather conditions earlier in the season have also contributed to supply concerns.
- Demand Factors:
- Increased Demand: There has been a surge in demand for canola due to its use in cooking oils and biodiesel. This increased demand has exerted upward pressure on prices.
- Export Demand: Strong export demand from countries with lower production levels has also contributed to the price increase.
- Market Sentiment:
- Speculative Activities: Speculative trading and market sentiment around potential supply disruptions have driven prices upward. Traders reacting to news of adverse weather and its impact on future supply have pushed prices higher.
Reception by Trend Followers:
Strategic Adjustments: Trend followers may need to reassess their short positions and remain vigilant for any signs of sustained upward movement that could alter the trend dynamics. The current increase suggests a need for close monitoring and potential adjustments to their trading strategies.uge the future direction of the yen.
Impact on Short Positions: Trend followers who have been short on canola since the peak in May 2022 would see this week's increase as a sign to watch closely. The upmove might indicate a potential shift in market dynamics.
Assessment of Trend Direction: While the current increase is notable, it is not yet material enough to change the overall trend direction. However, there are possible signs that canola prices may be about to break out to the long side.

What’s Moving Down
Natural Gas Prices Decline by 8.8%
Natural gas prices declined by 8.8% this week, continuing the congestion phase that has been in place since early 2023. This week's move is likely part of a mean-reverting price action within this congestion phase. It is unlikely that trend followers would be capitalizing on this move as there is no clear medium to long-term trend direction at the present time.
Reasons for the Congestion Phase Since Early 2023:
- Supply Factors:
- High Production Levels: Major natural gas-producing regions, including the United States and Russia, have maintained high production levels, contributing to a stable supply. Technological advancements in extraction, such as hydraulic fracturing, have also increased output.
- Inventory Build-Up: The mild winter season in the northern hemisphere led to lower-than-expected consumption, resulting in higher storage levels and preventing significant price increases.
- Demand Factors:
- Economic Uncertainty: The global economic slowdown has led to reduced industrial activity and lower energy consumption. This uncertainty has kept demand for natural gas relatively stable but not strong enough to drive a clear trend.
- Transition to Renewables: The ongoing shift towards renewable energy sources has decreased the demand for fossil fuels, including natural gas.
- Market Sentiment:
- Speculative Activities: Speculative trading has contributed to the congestion phase, with traders reacting to short-term news and market developments without driving a sustained trend.
This Week's Price Decline Within the Congestion Phase:
This week's 8.8% decline in natural gas prices is a notable move within the existing congestion phase. The primary drivers for this week's decline include:
- Supply Surplus:
- Continued High Production: Ongoing high production levels have ensured a stable supply, exerting downward pressure on prices.
- Lower Seasonal Demand: As the summer season progresses, demand for natural gas typically decreases, contributing to the price decline.
- Weak Export Demand:
- Economic Slowdown: The global economic slowdown has affected export demand, with major importing countries reducing their purchases due to sufficient stockpiles and economic challenges.
- Market Sentiment:
- Speculative Trading: Market sentiment and speculative trading activities have likely played a role in the price decline, with traders reacting to short-term supply and demand dynamics.
Reception by Trend Followers:
- Impact on Trading Strategies: Trend followers are unlikely to be significantly affected by this week's move, as the natural gas market has been in a congestion phase with no clear medium to long-term trend direction.
- Assessment of Market Conditions: Trend followers may continue to monitor natural gas prices for any signs of a breakout from the congestion phase. However, the current environment suggests a mean-reverting price action rather than a sustained trend.
- Strategic Adjustments: Without a clear trend, trend followers are likely to remain cautious and avoid making significant adjustments to their positions based on this week's price movement.

Copper Prices Decline by 7.76%
Overview: Copper prices have declined by 7.76% this week, marking a significant downturn since the recent peak in May 2024. This move reinforces a recent strong downtrend, with short-term trend followers potentially capitalizing on the opportunity.
Reasons for the Downtrend Since May 2024:
1. Supply Factors:
- Increased Production: Major copper-producing countries, including Chile and Peru, have ramped up production. Advances in mining technology and investments in new mining projects have led to increased supply.
- Inventory Build-Up: The surge in production has resulted in higher inventory levels, which has exerted downward pressure on prices.
2. Weak Demand:
- Economic Slowdown: A global economic slowdown has reduced demand for copper, especially in key sectors such as construction and manufacturing. Lower industrial activity has impacted the market.
- Substitution and Recycling: Rising prices of alternative materials and increased recycling efforts have led some industries to reduce their reliance on copper, thereby decreasing demand.
3. Market Sentiment:
- Speculative Activities: Speculative trading has also contributed to the downtrend. Traders betting on continued high yields and oversupply have suppressed prices.
This Week's Price Decline Within the Existing Shirt Term Downtrend:
The 7.76% decline in copper prices this week is a notable move that reinforces the broader bearish trend observed since May 2024. Key drivers for this week's decline include:
1. Supply Surplus:
- Ongoing High Production: Continued high production levels in key copper-producing regions have ensured a stable supply, which exerts downward pressure on prices.
- Lower Seasonal Demand: As the summer season progresses, demand for copper typically decreases, contributing to the price decline.
2. Weak Export Demand:
- Economic Slowdown: The global economic slowdown has affected export demand, with major importing countries reducing their purchases due to sufficient stockpiles and economic challenges.
3. Market Sentiment:
- Speculative Trading: Market sentiment and speculative trading activities have likely played a role in the price decline, with traders reacting to short-term supply and demand dynamics.
Reception by Trend Followers:
1. Short-Term Trend Followers:
- Entering Short Positions: Short-term trend followers might be starting to enter short positions, capitalizing on the recent price decline.
2. Medium to Long-Term Trend Followers:
- Bullish Since June 2022: Medium to long-term trend followers have likely been bullish on copper since June 2022 and may not benefit from this week’s downturn.
- Assessment of Trend Direction: The significant decline this week confirms the strong downtrend, potentially prompting medium to long-term trend followers to reassess their positions.
- Strategic Adjustments: These trend followers may continue to hold their long positions while remaining vigilant for any signs of market stabilization or reversal. The current environment suggests that the bearish trend might persist, presenting further opportunities for trend-following strategies.

Palladium Prices Decline by 7.13%
Palladium prices declined by 7.13% this week, further confirming the strong downtrend that has been observed since its peak in March 2022. Trend followers may be adding further short positions into this trend, capitalizing on the bearish conditions.
Reasons for the Downtrend Since March 2022:
- Shift in Automotive Demand:
- Transition to Platinum: The automotive industry, which accounts for over 80% of palladium demand, has been increasingly shifting towards using platinum in catalytic converters due to cost efficiency. This transition has significantly reduced the demand for palladium.
- Electric Vehicles (EVs): The rise of electric vehicles, which do not use palladium in their powertrains, has also contributed to reduced demand for palladium.
- Increased Supply:
- Higher Production Levels: Major palladium-producing countries, including Russia and South Africa, have maintained stable production levels, contributing to an oversupply in the market.
- Recycling: Increased recycling of palladium from used catalytic converters has also added to the supply, further driving prices down.
- Market Sentiment:
- Speculative Activities: Speculative trading activities have played a role in the downtrend, with traders betting on continued high supply and reduced demand keeping prices suppressed.
This Week's Price Decline Within the Existing Downtrend:
This week's 7.13% decline in palladium prices reinforces the broader bearish trend observed since March 2022. The primary drivers for this week's decline include:
- Supply Surplus:
- Continued High Production: Ongoing high production levels in key palladium-producing regions have ensured a stable supply, exerting downward pressure on prices.
- Recycling Impact: The continued impact of recycling has added to the supply, contributing to the price decline.
- Weak Demand:
- Automotive Industry Shift: The ongoing shift in the automotive industry towards platinum and electric vehicles has continued to weaken demand for palladium.
- Economic Slowdown: The global economic slowdown has further reduced industrial demand for palladium, particularly in the automotive sector.
- Market Sentiment:
- Speculative Trading: Market sentiment and speculative trading activities have likely played a role in the price decline, with traders reacting to short-term supply and demand dynamics.
Reception by Trend Followers:
- Capitalizing on Short Positions: Trend followers who have been short on palladium since the peak in March 2022 are likely capitalizing on this opportunity. The continued decline reinforces their positions and validates their strategies.
- Assessment of Trend Direction: The significant decline this week confirms the strong downtrend, providing confidence in the medium to long-term bearish outlook for palladium.
- Strategic Adjustments: Trend followers may continue to hold and potentially increase their short positions, remaining vigilant for any signs of market stabilization or reversal. The current environment suggests that the bearish trend is likely to persist, providing further opportunities for trend-following strategies.

Cocoa Prices Decline by 6.95%
Cocoa prices declined by 6.95% this week, reflecting the ongoing volatile congestion phase since its phenomenal rise to a peak in April 2024. Currently trading around 40% lower than its peak, cocoa is in a state of uncertainty, with buyers and sellers battling to determine its next direction. Trend followers are likely to have mixed views on the outlook for cocoa, with long-term trend followers potentially still long and short-term trend followers likely short.
Reasons for the Uptrend Until April 2024:
- Adverse Weather Conditions:
- West Africa: As the world's largest cocoa-producing region, West Africa, particularly Côte d’Ivoire and Ghana, faced significant weather-related challenges. Droughts followed by heavy rains impacted cocoa crop yields, reducing supply and driving prices upward.
- Supply Chain Disruptions: Various supply chain issues, including logistical challenges and transportation delays, exacerbated the supply constraints.
- Strong Demand:
- Global Demand: Despite supply challenges, global demand for cocoa remained robust. Major markets, including Europe and the United States, saw sustained consumption of cocoa products.
- Consumer Preferences: The rising demand for premium chocolate products contributed to higher overall cocoa prices.
- Economic Factors:
- Currency Fluctuations: The depreciation of local currencies in major cocoa-producing countries against the US Dollar made exports more expensive, adding to the upward pressure on global prices.
- Inflation: Rising inflation rates impacted commodity prices, including cocoa, as production and transportation costs increased.
This Week's Price Decline Within the Congestion Phase:
This week's 6.95% decline in cocoa prices highlights the ongoing volatility and uncertainty. The primary drivers for this week's decline include:
- Supply Concerns:
- Improved Weather Conditions: Recent improvements in weather conditions in key producing regions may have alleviated some supply concerns, contributing to the price decline.
- Increased Harvest: Reports of better-than-expected harvests in certain regions could also be influencing the market.
- Market Sentiment:
- Profit-Taking: After the significant rise to its peak in April 2024, some investors and traders may be taking profits, leading to downward pressure on prices.
- Speculative Trading: The current congestion phase may be characterized by speculative trading activities, with traders reacting to short-term market developments and news.
Reception by Trend Followers:
- Mixed Outlook:
- Long-Term Trend Followers: Those who have been long on cocoa since the uptrend began may still hold their positions, viewing the current decline as a temporary retracement within a larger bullish trend.
- Short-Term Trend Followers: Those following short-term trends are likely to be short, capitalizing on the recent decline and the current volatility.
- Strategic Adjustments:
- Long-Term Positions: Long-term trend followers may need to reassess their positions, monitoring for signs of stabilization or further declines that could indicate a reversal of the bullish trend.
- Short-Term Positions: Short-term trend followers will likely continue to capitalize on the current volatility, staying vigilant for any signs of a breakout from the congestion phase.
- Market Uncertainty:
- Uncertain Direction: The battle between buyers and sellers makes the market direction uncertain. Trend followers must remain adaptable and responsive to market signals to effectively navigate this environment.

Silver Prices Decline by 5.64%
Silver prices declined by 5.64% this week, showing signs that the bullish trend, which has been in place since February 2024, may be coming to an end. Trend followers would be viewing this move cautiously, as it may signal a potential breakdown in the short direction.
Reasons for the Bullish Trend Since February 2024:
- Economic Uncertainty:
- Inflation Hedge: Silver has been favored as a hedge against inflation and economic uncertainty. The rising inflation rates in various economies have driven investors towards precious metals like silver.
- Safe-Haven Demand: During times of economic instability and geopolitical tensions, silver is often seen as a safe-haven asset, attracting more investment.
- Industrial Demand:
- Technological Advancements: Silver is widely used in various industrial applications, including electronics, solar panels, and medical devices. The demand for these technologies has been growing, supporting higher silver prices.
- Renewable Energy: The push towards renewable energy, particularly solar power, has increased the demand for silver, which is a critical component in solar panels.
- Market Sentiment:
- Speculative Activities: Speculative trading and positive market sentiment around precious metals have also contributed to the bullish trend. Traders have been betting on the continuation of the uptrend, further driving prices higher.
This Week's Price Decline Within the Existing Uptrend:
This week's 5.64% decline in silver prices indicates a potential shift in market dynamics. The primary drivers for this week's decline include:
- Market Corrections:
- Profit-Taking: After the significant rise in silver prices, some investors and traders may be taking profits, leading to downward pressure on prices.
- Overbought Conditions: The market may have reached overbought conditions, prompting a natural correction in prices.
- Economic Data:
- Improved Economic Indicators: Better-than-expected economic data from major economies may have reduced the safe-haven demand for silver, contributing to the price decline.
- Central Bank Policies: Speculation about future actions by central banks, particularly potential interest rate hikes, may have influenced market sentiment negatively for silver.
- Technical Factors:
- Breakdown Signals: Technical analysis may show signs of a potential breakdown in the bullish trend. The recent price action could be interpreted as a signal for a reversal, prompting traders to reassess their positions.
Reception by Trend Followers:
- Impact on Long Positions: Trend followers who have been long on silver since February 2024 would be viewing this week's decline cautiously. The move may signal an end to the bullish phase, prompting them to reassess their positions.
- Assessment of Trend Direction: The significant decline this week suggests a potential shift in market sentiment. Trend followers need to closely monitor price action for confirmation of a trend reversal.
- Strategic Adjustments: If the breakdown in the bullish trend is confirmed, trend followers may start to reduce their long positions and potentially initiate short positions to capitalize on the new trend direction. Staying vigilant and adaptable is crucial in navigating this potential market shift.

Conclusion
This week in trend has been marked by heightened volatility and significant movements across various asset classes. The Trend Barometer retreated to a moderately weak 30, reflecting challenging conditions for trend followers. The SG Trend Index mirrored this sentiment with a modest month-to-date gain of just 0.28%, down from 1.87% last week, indicating a tough week for trend-following strategies.
Key Highlights:
- Volatility Surge: The VIX surged by 13.51%, underscoring the week's turbulent nature. This spike in the "fear gauge" indicates increased market uncertainty and potential opportunities for trend followers as they adapt to the changing conditions.
- Mixed Performance in Commodities: Oats and soybean meal saw significant price increases of 5.89% and 6.25% respectively, yet these moves are still within their broader bearish trends. Canola also experienced a notable rise of 4.56%, hinting at a potential shift in trend dynamics.
- Industrial Metals: Copper and palladium continued their downtrends, declining by 7.76% and 7.13% respectively. These movements provided validation for trend followers holding short positions, although medium to long-term trend followers might still be long on copper due to the bullish trend since June 2022.
- Precious Metals: Silver declined by 5.64%, signalling a potential end to its bullish phase since February 2024. This move may prompt trend followers to reassess their positions and prepare for a possible shift to the downside.
- Energy Markets: Natural gas experienced an 8.8% decline, continuing its congestion phase. This movement highlights the ongoing uncertainty and lack of clear trend direction in the energy markets.
Strategic Implications for Trend Followers:
The increased volatility this week initially poses challenges as strategies adjust to new market conditions. However, such environments often lead to substantial opportunities as trends emerge from the heightened activity. Staying vigilant and adaptable will be crucial for navigating these turbulent times.
The mixed performance across different asset classes underscores the importance of diversification and continuous monitoring of market signals. While some assets like oats and soybean meal experienced retracements, the overall bearish trends remain intact. Conversely, the sharp declines in copper and palladium reaffirm the strength of their downtrends, offering profitable opportunities for trend followers.
As we move forward, the interplay of economic data, central bank policies, and geopolitical events will continue to shape market dynamics. Trend followers must remain agile, ready to capitalize on new trends as they develop. The current environment emphasizes the need for a robust risk management framework to navigate the potential ups and downs effectively.
Join us next week for another edition of "This Week in Trend," where we will continue to explore the dynamic world of futures trading and provide insights to help you navigate these markets with confidence. In this ever-changing sea, a strategic mindset and adaptability will be your best compass. Thank you for joining us, and we look forward to another exciting week in the futures markets!in the futures markets!

List of Resources used in the Week in Review
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