Predictions for Friday, June 3rd 2022
Quick summary:
markets expected to go up this week
going back to buying calls for upside protection
trading SPY condors at 411/412 to 426/427 and SPY call at 411
trading DIA condors at 326/327 to 335/336 and DIA call at 322
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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, June 3rd 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:
We’re expecting to see a continuation from last week’s trend, a continued bear rally, where all the indicators (except the VIX obviously) should finish higher.
Yesterday the Fed started its quantitative tightening (QT) program (the reversal of QE - reducing positions in its $9tn balance sheet and effectively “destroying” money), but its first effects are unlikely to be felt until mid June, when $15bn of Treasuries are maturing and will not be replaced on the Fed’s balance sheet.
Therefore, our BASON survey suggests that investors will not engage in major sell-offs this week, but will instead keep pushing the rally, with lower volatility.
How did we trade this?
We traded 10 SPY 03/06 iron condors, ranging from 411/412 to 426/427 for $460 immediate gain.
In addition, we bought one SPY 411 03/06 call for $6.77 per contract.
Similar play for DIA 03/06, where we traded the following iron condor: 326/327 to 335/336 (10 contracts) for $330 immediate gain, and one DIA 03/06 call at 326 bought for $7.25.
If the market continues to rally, to finish within our condor C.I.s, we stand to make a hefty profit once again. If it continues to go down today, our calls will be triggered and sold at a loss. If we have another major sell-off than we lose money on the condors as well, and have a similar week to last one.
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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