How about that Friday jump?
Unemployment numbers coming up this week, FOMC next week.
Quick summary:
The Q2 competition is up & running - click here. 4 weeks left!
May ended up being a sideways-up month, just as we anticipated after FOMC on May 1st. The best example came last Friday. Did you catch that last one hour push up?
Despite experiencing our first downturn in May after nine months of gains, the ORCA BASON Fund remains strong, up 12.4% year-to-date and outperforming most of its benchmarks.
This week, we get the new jobs report on Friday. In April is showed a slowdown with only 175,000 jobs added and an unemployment rate that increased to 3.9%. So it’s an important data indicator ahead of both CPI and FOMC next week. Brace for more volatility on Friday.
In the paid section on Saturday we’ll go through our expectations for the upcoming June Fed meeting (June 12th), when we get the updated dot-plot chart.
The competition
Excellent showing on this week's leaderboard, with notable results in SPX and QQQ sectors. Cheers to our top 10 for making it through this market week. As we enter the final month of Q2, let's aim to maintain this momentum!
Consistency is key to staying in the top. And good predictions, obviously.
NOTE: For all those new to the whole thing, read more about it here or watch a video of Scott and myself guiding you through the survey, showing you all its features, and briefly explaining how the competition works.
Last week’s performance
Did you catch the SPX move in the final hours of Friday? We got a powerful combo of end of month flows 🌊 + gamma flip around 5,200 🟢 (most likely) + vanna & charm options flows => squeeze up 📈
A 1.5% up move in such a short time can do miracles for call option holders.
For example, in an ideal scenario, buying $2,000 worth of SPX 5245 call options at about 10 cents per contract (so about 200 contracts) just as the rally was catching on (about 1pm ET) by the end of the day was worth $42.56 per contract. Or about $851,200 total. (source: Unusual Whales).
Would you have held the whole time? :) I seriously doubt it! But still, nice convexity there.
We didn’t hold our long positions until the end there, and even if we did, it wouldn’t have made a difference since we need a close above Wednesday’s highs to come to breakeven for the week. So we wrapped a jumpy month with our first loss in over 9 months. We are now up 12.4% year-to-date, and are still outperforming most benchmarks. Barely, but still doing better. Our strategy is simple; we know our statistical edge over time, and there is always a probability of staying flat for 2 to 3 months. But there is also the probability of making several high performing weeks in a row, and this is what we are patiently waiting for.
With that, we are looking forward to June! We might still be in pretty much the same market regime, but with the upcoming FOMC meeting, there should be some decent volatility for us to exploit.
This week the most important data indicator is the U.S. jobs report, due this Friday. April's payroll data revealed a slowdown in hiring, with only 175,000 positions added—lower than expected—and the unemployment rate ticking up to 3.9%. Further slowdown could significantly impact the Federal Reserve's policy discussions, especially with rising concerns about balancing inflation with employment, the central bank's dual mandate.
Moreover, other crucial economic indicators this week include the ISM and S&P flash U.S. manufacturing Purchasing Managers Index (PMI) on Monday, and the service-sector PMI on Wednesday. These indicators will offer deeper insights into inflation trends and general economic conditions. As the Fed enters a blackout period before its upcoming June meeting, these reports will be particularly scrutinized for signals that could sway the Fed's interest rate decisions, echoing the sentiments traders have towards market volatility and the upcoming Federal Reserve meeting.
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DISCLAIMER: Neither the survey nor any of the contents of this website can act as investment advice of any kind. The results of the survey need not correspond to actual market preferences or trends, so they should be interpreted with caution. Oraclum Capital, LLC (Henceforth ORCA) is a management company responsible for running the ORCA BASON Fund, LP, and for organizing a survey competition each week, where it invites the subscribers to its newsletter (this website) to participate in an ongoing prediction competition. The information presented on this website and through the survey competition should under no circumstances be used to solicit any investment advice, nor is it allowed to be of commercial use to any of its readers. The survey and this website contain no information that a user may use as financial or investment advice. All rights reserved. Oraclum Capital LLC.
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