Predictions for Friday, May 13th 2022

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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, May 13th 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:

Yesterday, the new CPI inflation numbers came out, beating expectations, sending markets down. The predictions were given before these numbers (survey closes at 8am Wed), also anticipating a lower close by Friday. The initial market reaction is already lower than our targets. If this continues it would be wise to hold on to the puts (see below), and cash in just before the close on Friday. Very similar to what happened over the past two weeks.

The BASON is reluctant in predicting sharp weekly moves (remember that it tends to be sensitive to high volatility), so this time the direction will be important. And for most indicators, we predict the direction will be a move downward.

How did we trade this?

We traded 10 SPY 13/05 iron condors, ranging from 387/388 to 406/407 (10 contracts) for $490 immediate gain. We bought downside protection, one SPY 406 13/05 put for $10.68 per contract.

This time we didn’t trade the DIA iron condors since they offered a very narrow range for potential profitability. A +1% to -1% would not be enough, we would have to be right within 0.5% of the target to get less than $100, and risk losing over $900 if we’re wrong, which is an asymmetric trade we simply did not want to take. In general the DIA is a much more risky trade for us than the SPY, so we are thinking about adjusting our trading around something else.

But we did buy DIA puts, on the clear sign of lower direction. We bought 1 DIA 13/05 put at 327 strike for $7.8 per contract.

If the direction is right, it will be another week with $1000+ profits. If markets go up, we limit our losses on Friday and endure our first losing week in Q2.

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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