Predictions for Friday, July 8th 2022
Quick summary:
Markets expected to finish lower this week
Trading SPY condors* at 372/373 to 386/387 and SPY put at 386
Trading DIA condors* at 304/305 to 313/314 and DIA put at 310
Watch this tutorial video to see how we trade this and how to
interpret our predictions:
*NOTE: We changed the way we buy the condors - one leg at a time, instead of all together. In the video, this simply means we first trade the call spread, and then the put spread, with individual stop-losses on each.
See the explanation in the final section of the post as to what this means.
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Our weekly predictions are here, available exclusively to our subscribers (competition participants get it a day and a half earlier if they leave their email), for Friday, July 8th 2022 (4pm EST; at market close). Keep in mind that our accuracy is much better for low volatility assets, so interpret the predictions with caution. For an overview of our accuracy thus far, see here.
Our estimate for the Friday close for our 5 major indicators and 2 stocks this week is the following:
Last week we were lucky to see the markets rebound in the last few hours on Friday to move us to a positive return.
Yesterday, the markets again moved against us initially after the Fed minutes, so we’ll have to see whether they turn lower by the end of today and how this will impact our condor and put positions and their corresponding stop-losses.
But overall, a decline is expected across the board, except for the Vix and bonds (yields expected to end up lower, meaning that bond prices are expected to be up). Next week is the inflation read (+ earnings week for banks), so this week could just be a sideways lull before the storm.
How did we trade this?
We traded 372/373 to 386/387 SPY 08/07 as-if iron condor (10 contracts) for $480 immediate gain. But as emphasized, we bought separately the bull put spread (372/373), and the bear call spread (386/387), placing a 50% stop-loss on each strategy.
This means we further limit our overall losses where only one of these two is eliminated if the price breaks the bounderies.
We also bought an ITM put for downside protection, 1 SPY 386p 08/07 for $6.69.
Same thing for DIA, 304/305 to 313/314 DIA 08/07 (10 contracts) for $420 immediate gain, with separate put (304/305) and call legs (313/314).
And one ITM put, DIA 08/07 313p for $4.5.
The puts have 70% stop-losses today, and 50% tomorrow (if they survive).
If the market continues to rise today and on Friday, we will cut the losses quickly. If it goes under, we will have another profitable week.
DISCLAIMER: This prediction survey is still in its testing phase. Neither the survey nor its results act as investment advice of any kind, nor should they be considered as such. The results of the survey need not correspond to actual market preferences or trends, so they should be interpreted with caution. Oraclum bears no responsibility for your investment choices based on these predictions.
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