“Iran De-escalation Reverses Energy, Equities Hit Record Eighth Week, and the Barometer Slips Back to Neutral at 45%“
Trend Following Weekly Report
The week inverted last week’s regime.
Energy reversed sharply lower, the sector averaging -3.30 percent with five of six contracts moving in unison down. Gasoline RBOB led the complex lower at -6.70 percent, Brent fell 5.24 percent, WTI 4.38 percent, Heating Oil 4.09 percent, and Natural Gas 2.49 percent, after President Trump called off imminent US strikes on Iran on Monday at the request of US Gulf Arab allies, and Secretary of State Rubio flagged “good signs” of a deal by Thursday. The petroleum complex repriced the supply-disruption premium back out, giving back roughly half of the prior week’s advance. The diplomatic walk-back simultaneously released risk appetite: equity indices averaged +2.40 percent with all seven contracts higher, the S&P 500 logged its eighth consecutive weekly gain, the DAX advanced 4.09 percent and Euro Stoxx 50 3.66 percent, and the VIX collapsed 10.25 percent, the largest single-asset move of the week. Bonds stabilised at +0.13 percent after last week’s curve sell-off, and the dollar paused at -0.02 percent against a basket that mostly recovered.
For trend followers, the week registered as a regime unwind. The TTU Trend Barometer slipped from 57 percent to 45 percent, with the classification shifting from Strong back to Neutral and the 10-day rate of change reversing from “Rising Weakly” to “Falling Moderately.” The five-week sequence now reads 50, 55, 43, 57, 45: the cycle has traced the Strong threshold four times in five weeks without consolidating either side of it. Contract-level breadth flipped to a more balanced split at 22 of 49 positive against 26 negative, but the directional cleanness that drove the prior week’s 14-point climb has thinned. Metals continued weak at -1.70 percent but with reduced magnitude, Softs split internally with Orange Juice rebounding +4.26 percent while Cocoa fell -5.15 percent, and Meats reversed to -3.17 percent with all three contracts lower in unison.
The SG Trend Index reads +1.19 percent month to date and +11.44 percent year to date as of 22 May, after closing the prior week at +2.13 percent MTD and +12.48 percent YTD. The third week of May has shaved roughly 100 basis points off the headline, with the move concentrated in the Energy reversal. The YTD figure remains comfortably above the double-digit threshold and is essentially at the same level it held two weeks ago, which frames the past fortnight as round-trip volatility rather than a directional shift. The petroleum complex has now logged two consecutive single-week moves of 5 percent or more in opposite directions, both driven by Trump-administration posture shifts on the same underlying conflict. WTI has whip-sawed from 91 to 101 to 96, Brent from 99 to 109 to 103. For trend followers, the bidirectional unwinds favour reduced single-sector concentration and reward systems with cross-sector diversification.
Top Movers (Up): Orange Juice +4.26 percent, DAX +4.09 percent, Euro Stoxx 50 +3.66 percent, Rough Rice +3.30 percent
Top Movers (Down): VIX -10.25 percent, Gasoline RBOB -6.70 percent, Crude Oil Brent -5.24 percent, Cocoa -5.15 percent
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