This Week in Trend: A Shifting Market Tone: Rising Volatility and Trend Challenges

“A Shifting Market Tone: Rising Volatility and Trend Challenges”

The final week of January 2025 marked a shift in market sentiment, with many trend-following strategies facing a tougher environment as volatility surged and previous bullish momentum in equities faded. However not all trend followers experienced difficulty. Those with less exposure to bonds have experienced a positive week.

The TTU Trend Barometer dropped to 41% from 48% last week, signaling a weakening trend environment, while the SG Trend Index declined to -0.52% MTD and YTD, reflecting the difficulties systematic strategies encountered in sustaining positions.

Key Market Highlights:

  • Coffee (+8.73%) – A standout outlier, continuing its bullish breakout as supply constraints and strong global demand propel prices higher.
  • Platinum (+7.39%) – A strong move within its ongoing congestion range, keeping trend-followers on watch for a potential breakout.
  • VIX Futures (+6.52%) – A sharp spike in volatility as market uncertainty increases, signaling a potential shift in sentiment.
  • Palladium (+5.97%) – A counter-trend move against its broader bearish trend, possibly driven by short-covering activity.
  • Natural Gas (-10.96%) – A significant reversal after recent bullish momentum, with warmer weather and oversupply pressuring prices lower.

Navigating Market Uncertainty

This week highlights the importance of adaptability as volatility resurfaces and market conditions become more fragmented. While strong trends persisted in select commodities like Coffee and Platinum, choppiness in equities, energy, and soft commodities tested the patience of trend-followers. The rise in the VIX suggests growing caution, reinforcing the need for risk management and selective positioning.

Full Report Available!

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

Staying Ahead in 2025

With uncertainty mounting, systematic traders must remain disciplined and reactive to shifting conditions. While trends may be harder to capture in the short term, the evolving market landscape is setting the stage for fresh opportunities. Stay patient, stay systematic, and stay ready!

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