Market analysis for week of September 13, 2021. The analysis focuses on major market indexes, ETFs, commodities and forex. Access to full article requires Premium Articles subscription or All in One subscription.
- Weekly summary and recap.
- Analysis of major indexes.
- Popular ETFs.
- Asset ETFs
- Commodity ETFs.
- Country ETFs
- Spot currency pairs.
- Markets to Watch.
1. Weekly summary and recap
- U.S. stocks were lower on the week.
- Profit taking in high beta large caps continued.
- Low volatility large caps reversed to the downside.
- Bond prices were lower and yields rose.
- Commodities gained amid rising volatility.
- Gold fell but crude oil gained on the week.
- The U.S. dollar index was higher.
Recap (September 7, 2021 – September 10, 2021)
Large caps (S&P 500) ended the week down 1.7%. Tech stocks (NASDAQ-100) fell 1.4% erasing previous week’s gains. Small caps (Russell 2000) were down 2.8%. The Dow 30 fell 2.2%. Profit taking in high beta large caps continued for a second week in a row. The CRB was up 0.1% amid rising volatility. Bonds ended the week with losses and yields rose. Year-to-date crude oil is up 44.5% followed by CRB index with 31.4% gain. Gold has year-to-date losses of 5.1% followed by Bonds Total Return at -1.3%.
2. Analysis of major indexes
VIX gained 27.7% to close at 20.95 for the week.
Last week I wrote:
In my opinion, VIX could drop towards 15 after the holiday but then could rebound towards 20 or even higher.
The profit taking in equities was expected after the holiday and there was a VIX spike of 27.7% for a close near 21. Continuation towards 25 is possible in the first part of the week but after June 2020 VIX has demonstrated a strong mean-reversion dynamic. I don’t think this dynamic has changed and we may see a reversal towards the end of the week. However, risks are increasing as indicated by the spike in implied volatility. Our VOLZ strategy is up 48.7% year-to-date (backtest) with September down 1%. The strategy is long equities and short UVXY. The strategy without the equities part is up 74.7% year-to-date (backtest.) There may be some reversion to mean but overall the volatility mean-reversion dynamic appears strong at the moment.
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Specific disclaimer: This report includes charts that may reference price target levels determined by technical and/or quantitative analysis. No updates to charts will be provided if market condition changes occur that affect the levels on the charts and/or any analysis based on them. All charts in this report are for informational purposes only. See the disclaimer for more information.
Disclaimer: No part of the analysis in this blog constitutes a trade recommendation. The past performance of any trading system or methodology is not necessarily indicative of future results. Read the full disclaimer here.
Charting and backtesting program: Amibroker. Data provider: Norgate Data
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