2/15 SPY Plan
Things are getting spicy
—2/14 Recap—
My levels from yesterdays plan were 414 to the upside and 410 to the downside, we hit 415, and 408.50 only to close at 412.64, right in the mists of the positive gamma.
With everything that was going on I was kind of shocked that we didn’t rally harder, but at the same time, why didn’t dump hard either? Look at the VIX below, it came all the way back down and closed back inside this wedge, and SPY is down .19 on the session!? Then you have stocks like NVDA and TSLA just doing their thing. It’s wild.
—2/15 Pre Plan—
Lets look at the weekly volume profile levels. On the chart below notice how we held last weeks VAH, we dipped into that value area but the bulls brought us back out, and also notice how we closed above this weeks POC, and if we look at the monthly profile we are balanced, and we closed above the POC. I would say that the bulls are in control here but man oh man is it close. In order to go higher, the bulls need to hold the 410-411 level or else we run the risk of trending down.
Let us delve into the Volland data in order to gain a better advantage. I will emphasize the 1-day time frame charts, as the aggregate remained largely consistent. However, I will also present a chart displaying the levels that I am monitoring. Initially, it is important to note that the orange and purple colors indicate negative and positive vanna, respectively. It is crucial to recall that negative vanna will push the price away from the relevant level, whereas positive vanna will draw the price towards that level. As such, one may consider orange to represent a stronger support/resistance, while purple may act as a magnetic force.
When we turn to the 1dte chart, we can observe a significant cluster of negative vanna levels from 414 to 420 above the spot, along with positive vanna levels below at 405. Additionally, there is a larger positive value at 425. Based on this data, it is apparent that the bulls will need to put in a considerable amount of effort to push the price up to the 418-420 area. It is important to note that the VIX has a significant impact on how vanna functions. If the price is rising into negative vanna levels while the VIX is increasing, a rejection may be anticipated. Conversely, if the VIX is decreasing, the price could potentially break through and approach the large magnet at 425. However, this does not imply that we should immediately go all-in on puts or 425 calls. Instead, we should keep a close eye on the VIX, as it will aid us in making informed decisions about which direction to take.
If we throw gamma into the mix we can see the the positive levels are 405, 413, 421, 425.
—2/15 Trade Plan—
Based on SPY's closing price of 412.64 and the positive gamma at 413, I have identified 413 as a key level for tomorrow. If the price falls below 413, my target levels will be 410, 407, and 405. Conversely, if the price rises above 414, I will be targeting 415, 418, and 420. In the bigger picture, it appears that the bulls are in a difficult position and the bears are patiently waiting for the market to collapse. Upon analyzing the volume profile, it seems that the bulls currently have a slight edge, but it is essentially a coin flip. When I examine the Volland data, especially the 1dte data, I suspect that the bears may have the advantage tomorrow. However, it is worth noting that the longer the bulls are able to maintain a position above 410, the more compelling their argument becomes. As a bear, I would be eager to see the market close below 410.
Happy Trading,
—WICK—
To cover our basis…
Welcome to my Substack where I provide a daily SPY trading plan to help guide my intraday trading. The purpose of this letter is not to advice you on your trading or investment decisions. I am simply documenting my daily trading plan for myself to help with planning and execution. These are simply my opinions and the data sourced from the likes of vol.land, TradingView, Tradytics and others. The stock market is risky, gains are not guaranteed. This is not about getting rich quick, but learn to educate yourself and make the necessary financial decisions on your own. This is not financial advice.