“An improving environment and a paying one are not the same thing.“
Trend Following Weekly Report
Global futures markets turned upward almost everywhere in the week to Friday 7 August. Metals led at plus 6.52 percent with all five contracts higher, Silver adding 9.89 percent and Gold 7.13 percent. The Equity Indices followed at plus 3.61 percent, all seven rising and most at or near new highs. Sugar climbed 12.21 percent, the largest single move on the board. Energy fell furthest at minus 3.95 percent as crude extended its decline. Breadth widened to 34 of 49 contracts higher, up from 24.
The TTU Trend Barometer recovered to 34 percent from 30, lifting the classification to Moderately Weak and easing the ten day rate of change to Falling Moderately. The five week sequence now reads 39, 50, 52, 30, 34. That retraces four of the twenty-two points surrendered a week earlier, though the reading stays below the 40 percent Neutral floor for a second consecutive week. For the first time in three weeks, breadth and trend strength moved together.
The returns did not follow. The SG Trend Index eased to plus 7.10 percent year to date from plus 7.49, a second consecutive negative week, with August month to date at minus 0.75 percent covering the first week of the month. An improving environment and a paying one are not the same thing. Portfolio returns depend less on how many markets trend than on whether the trends already held survive, and the moves that lifted the barometer were almost all new: Metals rising off declines running since February, Sugar breaking a range held for months, Bonds turning after two weeks of falling.
Only the Equity Indices extended something already in place. Soft Commodities placed two contracts on each Top Movers list while its sector average shifted barely two tenths of a point, which is what a sector average conceals at its most extreme. Whether the Metals sweep and the Sugar breakout survive into second and third weeks, or give way before either is old enough to pay, is what the coming weeks will decide. For trend followers, the signal to watch is persistence, not direction.
TTU Trend Barometer: 34 percent, up from 30 (Falling Moderately)
SG Trend Index: minus 0.75 percent MTD for August | plus 7.10 percent YTD as of 7 August
Top Movers (Up): Sugar (Soft Commodities) plus 12.21 percent, Silver (Metals) plus 9.89 percent, Palladium (Metals) plus 7.56 percent, Gold (Metals) plus 7.13 percent, Cocoa (Soft Commodities) plus 6.83 percent
Top Movers (Down): Orange Juice (Soft Commodities) minus 8.00 percent, Crude Oil WTI (Energy) minus 7.67 percent, VIX (Volatility Index) minus 6.15 percent, Lumber (Soft Commodities) minus 5.70 percent, Crude Oil Brent (Energy) minus 4.98 percent
Richard Brennan writes on systematic trading, complex adaptive markets, and the philosophical foundations of trend following at atstradingsolutions.com. His books include The Fractals of Finance, Complex Adaptive Markets, Carved by Impossibility and The Aussie Turtles Trend Following Guide.
Want to explore why structure exists at all?
Carved by Impossibility: What Remains When Everything Else Is Eliminated
The book explores the architecture of constraint, emergence, and reality itself, and what it means for how we understand markets, life, and the universe.
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Want the theoretical foundation for why trend following works?
The Fractals of Finance: Determinism, Adaptation and the Geometry of Markets bridges complexity science with practical trading implementation. With a foreword by Jerry Parker, original Turtle Trader.
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Want a practical field manual for trading trends and capturing outliers?
The Aussie Turtles Trend Following Guide: A Field Manual for Hunting Outliers adapts the timeless principles of the original Turtle traders into a systematic, rules-based approach for modern markets. Co-authored with Adam Havryliv.
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