9 Apr 2023 SPX Weekly - CPI

Accuracy: 56/62 (90.32%)

SPX above 3900 - Correct!

Last Week

SPX didn't move much, pretty much stayed tight within 4000-4200. Feels like a consolidation after a strong bullish move, taking a break. Market sentiments have been pretty good with the low vix environment we're in now. It does seems like we might expect some bigger moves in the coming week.

Economic Event

CPI once again, we even got FOMC meeting minutes release on the same day as CPI coming Wednesday. Totally a day to expect some increase in VIX.

Probably expect Wed to be the day to see some potential break of the current consolidation area.

Earnings

We're at the very start of the earnings season, starting with Citi, BlackRock. As usual, earnings always starts with finance sector. Note that it's after Wed and given the previous bank related news, these banks earnings releases might also trigger some higher volatility.

Next Week

Keeping it simple, we still see an uptrend going so potentially could expect the higher high above 4200 (Green). If we were to pull back, I'll hope the higher low hold around 3900 (Yellow).

Prediction

I kinda do expect some bigger moves with CPI, FOMC Meeting Minutes and start of bank earnings releases. In my mind now it can really go both ways, both the green resistance and yellow support line have good chances. I kinda think it will either be above 4200 or below 4000, maybe think more of that for the paper trade. For this prediction, I'll still stay with the uptrend.

SPX above 3900

Paper Trade

So this time I'm doing Inverse Iron Condor, an opposite of what I usually do. This is actually a debit play hoping SPX gives above 4145 or below 4054. Risk reward ratio is pretty neat at 575:425. This trade potentially could cut loss or take profit early but I'll let it play through expiry since its paper trade.

Bonus ChatGPT4 - Explain inverse iron condor in strictly 100 words

An inverse iron condor is an options trading strategy designed to profit from increased volatility in the underlying asset. It involves buying an out-of-the-money put and call, while simultaneously selling a further out-of-the-money put and call with the same expiration date. This results in a net debit, which the trader pays upfront. The strategy's profit potential is limited to the difference between the short and long strikes, minus the initial debit paid. Maximum profit occurs when the underlying asset's price moves significantly beyond the short call or put strikes, while maximum loss occurs if the price stays within the range of the long call and put strikes.