“Bonds Rise and Grains Hold as Equities Falter and Risk Sentiment Shifts”
Trend Following Weekly Report
Risk off. Bonds rising. Equities faltering. The trend environment breaks lower.
The second week of February delivered a clear shift in market character. Defensive assets led. Cyclical assets lagged. And the barometer broke through a critical threshold.
US equities weakened across the board. The S&P 500 fell 1.47 percent. Nasdaq dropped 1.43 percent. The DJIA lost 1.27 percent. The VIX surged nearly 10 percent. Risk sentiment shifted decisively.
But bonds rallied.
The 30-year bond gained nearly 2 percent. The 10-year note rose almost 1 percent. A fourth consecutive week of gains. The flight-to-quality trade is becoming a trend. For systematic followers, bonds are transitioning from consolidation to opportunity.
The Japanese yen surged 2.79 percent. Safe-haven demand returned. Gold extended to fresh all-time highs above $5,063. The defensive rotation was broad and coherent.
Grains held their ground for a second straight week. Wheat led at 3.59 percent. Soybean oil and oats followed. Seven of eight components positive. The agricultural complex continues to build.
Soft commodities were wildly divergent. Orange juice bounced 15.83 percent after last week’s 24.75 percent collapse. Cocoa crashed 14.30 percent, extending its brutal bear market. The sector remains untradeable as a whole.
The TTU Trend Barometer fell from 55 percent to 43 percent. Neutral. Falling Moderately. The critical 55 percent threshold that was flagged as the key risk last week has now been breached. The January recovery from 45 percent to 68 percent has been entirely erased. Trend breakdowns are outpacing new trend formation.
The SG Trend Index improved to +1.09 percent MTD. Year-to-date performance advanced to +5.85 percent. Diversified portfolios are capturing the rotation. But the divergence between positive fund performance and a deteriorating trend environment rarely persists. Something has to give.
This was not a quiet week. And it was not a comfortable one.
For systematic trend followers, the message is sobering. New opportunities are emerging in bonds, currencies, and gold. But they are not replacing broken trends fast enough. The environment demands selectivity, disciplined position sizing, and respect for the signal the barometer is sending.
TTU Trend Barometer: 43 percent, down from 55 (Falling Moderately) SG Trend Index: +1.09 percent MTD | +5.85 percent YTD
Standouts: 30-year bond, yen, gold, wheat, orange juice Setbacks: Cocoa, lean hogs, natural gas, US equities
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