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

This week, trend-followers found themselves navigating an increasingly fragmented market as trend conditions weakened further. While volatility remains elevated, the TTU Trend Barometer dropped to 32% (from 41% last week), confirming a more challenging trading environment for systematic strategies.

SG Trend Index Performance

  • MTD: -0.98% (vs. -0.52% last week)
  • YTD: -0.83% (vs. -0.52% last week)

Key Market Highlights: This week, trend-followers found themselves navigating an increasingly fragmented market as trend conditions weakened further. While volatility remains elevated, the TTU Trend Barometer dropped to 32% (from 41% last week), confirming a more challenging trading environment for systematic strategies.

SG Trend Index Performance

  • MTD: -0.98% (vs. -0.52% last week)
  • YTD: -0.83% (vs. -0.52% last week)

Key Market Highlights:

  • Natural Gas (+8.84%) – Rebounding after last week’s gap down, supply concerns and energy tariffs fuel the rally.
  • Coffee (+8.48%) – Continues its powerful outlier trend, with supply disruptions in Brazil and Vietnam driving prices.
  • Copper (+7.38%) – Supply constraints from Chile and strong EV demand provide support, though trend confirmation is needed.
  • Wheat (+4.02%) – Rising temperatures in India and tightening global stocks push prices higher.
  • Orange Juice (-10.8%) – A significant reversal after months of bullish momentum—supply chain shifts and demand concerns emerge.
  • Cocoa (-9.42%) – Demand destruction sets in as historically high prices force adjustments in the chocolate industry.

Navigating a Tougher Trend Environment

The decline in trend strength signals that systematic traders must remain patient and adaptable. While breakouts in commodities like Natural Gas and Coffee provided opportunities, false breakouts and reversals in soft commodities tested discipline.

With uncertainty mounting, capital preservation and strategic positioning are key. Markets are setting up for fresh opportunities, but in the meantime, avoiding whipsaws and staying systematic will be the name of the game.

Full Report Available!
For a deep dive into this week’s market shifts, causal factors, and their impact on trend-following strategies, explore the full report.
Click here to read the full report!

 

You must be logged in to post a comment.