2/22 SPX, SPY, ES, QQQ Trade Plan
Will Bears Prevail or Kangaroo...
Today's trade plan was a beauty. Another stress free trade plan:
- Below 4065 target 4040
- If there is a breakdown of 4040 target 4010
The trade plan provided 2 opportunities.
Congrats if you held until our price target of 4010 and even to 4000. When I am busy I typically don't like having active trades especially when they are 0 or 1 DTE. So I left profits on the table, but I am not here to call bottoms or tops. #compound money and grow that #bank.
Separately, I want to callout how flexible the trade plan is allowing $ES or $US500 traders to take a trade overnight. Today provided a nice one-way trend day allowing regular trading hour (RTH) traders to partake in the selloff.
I enjoy interacting and learning from other traders so continue to share your trades, ideas, and how you use this trade plan by messaging me on Twitter @DarkMatterTrade.
News Catalyst
Nothing to see here...besides the FED!
2pm est - FOMC Meeting Minutes
5:30pm est - FOMC Member Williams Speaks - fireside chat titled "Taming Inflation"
For more information on these news events, visit the Economic Calendar
Below you will find the key earnings reports for this week highlighted by Walmart, Home Depot, Coinbase, Toll Brothers and Nvidia.
SPX Notes:
Orange - We had a failed breakout of the wedge and then a breakdown below with a test of this wedge come at the close of Friday’s (2/17) session
Blue - This trendline was broken at FOMC around 4093/95, but have now broken below it. Will this act as a key resistance line?
Purple - This trendline is from our October 2022 lows - it shows potentially where if it were to be tested it would be in the 3985-4000 level
White - this is our trendline from the Covid 2020 low - currently price is below it and could be another key area of interest for the bears
White - this other white line I am going to bring back which is the down trendline from the ATH’s in January 2022 that we broke in this recent rally
SPX’s weekly option expected move is ~72.25 points. SPY’s expected move is ~7.42. Remember over 68% of the time price will resolve it self in this range by weeks end.
SPX/ES/SPY Trade Plan:
Remember you can use this SPX trade plan to trade ES or SPY.
Bullish bias:
Above 4005 target 4020
I would consider scaling out at 4115 or tightening your stop loss
If there is a failed breakdown at 3990 target 4010
If there is a breakout at 4020 target 4040
Below 4000 target 3980
If there is a failed breakout above 4020 target 4005
If there is a breakdown of 3980 target 3940
Vol.land Data
For a better understanding of the various greeks below I would suggest you visit the Volland YouTube Page. Volland provides unique data showing where dealers are positioned providing in my opinion a higher degree of conviction to where price may move to.
As many of the greeks rely on volatility I want to look at the VIX chart and call attention to the trendline we gapped above and the gap it left. If bulls have any shot of price moving up they will want to see VIX retest the trendline it broke out from.
Vanna - Levels where price may repel or act as magnet
Remember for price to go above spot through a magnet or repellent VIX and IV must decrease or stay flat. For price to go below spot through a magnet or repellent VIX and IV must increase.
Above Spot:
4000 is a minor negative vanna - acting as repellent
4015-4060 are minor negative vanna’s - acting as repellent
I think when we have such a large cluster like this we should look at a midpoint such as 4020 or 4025 as the key vanna level
4030 is the larger of the vanna’s between 4015-4030
4040 and 4050 are other areas of interest in this negative cluster
4065 is a medium positive vanna - acting as magnet
4075 is a minor negative vanna - acting as repellent
Below Spot:
3990 is a minor negative vanna - acting as repellent
3980 is a minor negative vanna - acting as repellent
3975 is a positive vanna - acting as magnet
3975-3945 is a cluster of positive vanna
3940 is a negative vanna - acting as repellent
Our range could be 3995-4030
Most likely we are going to see a balanced chop day, perfect for technical scalpers - take profits when you have them
It’s a hard argument for the bulls to see upside above 4070
Gamma and Delta-Adjusted Gamma (DAG)
Above Spot:
4065 is positive Gamma - acting as resistance
4100 is positive Gamma - acting as resistance
If price gets above 3995 this will increase dealer buying pressure, but it’s impact will be tiny - don’t go for the homeruns take profits
Below Spot:
3990 is positive Gamma - acting as support
3980 is positive Gamma - acting as support
3940 is positive Gamma - acting as support
Price below 3975 will increase dealer selling pressure
4065 will be a major barrier to get past for bulls
3980 is a major level and if lost takes us towards 3940
QQQ Trade Plan
Unfortunately, I am still having some access issues with volland and could barely get to the SPX data so will return back with a QQQ analysis tomorrow.
At a high level, I think QQQ has room to run up to 296 and above it to 298.
Stay #paytient and react to the key levels - no predictions! Good luck traders.
I am going to share my key rules to intraday trading in the end of the plan moving forward to build better habits and allowing you to grow as a better trader.
My Intraday Trading Rules
I do not trade within the first half hour UNLESS I am in a trade from the prior session and looking to close the trade or we have a major gap or a key level already broken
I let the initial balance do its thing - I am just a small fish in a large ocean of traders so let's let them fight it out
I then wait for key levels targeting one level to the next and taking profits at each one.
If there are key levels that are 10pts apart that is when I have scalping mindset and anything above 10pts I want to give it the room to hit the price target with a 5 pt buffer to take profits once we reach within 5 pts of a target - I also tighten my stop loss once at 10-20% profit with the goal of never allowing trades to go red when I have a nice profit)
I supply options greeks with OB (order blocks) and FVG (fair value gaps) otherwise known as Smart Money Concepts
When I am scalping - ie targeting 10pt trade levels I will take profits and never go more than 10% red. Simple as that, know your trade plan strategy and the risk. When you are wrong you are wrong and reset
For 20pt trade level targets I will increase my stop losses to 20% and allow more of the trade to play in the event I entered too early
I try - key word try ha - avoid trading lunch hours defined as 12pm to 2 pm est. Money for the most part unless you are scalping - is made in the first 2 hours of the trading day and the last 2 hours
I always stick to two EMA’s on my chart and that’s the 10/50 EMA’s
When the 10ema is above 50ema we are bullish
When the 10ema is below the 50ema we are bearish
Go put these on your charts and when you view them on timeframes less than the daily timeframe you will see the power they provide
For scalpers out there the smaller timeframes provide great opportunities to scalp 5-10pt moves
There are more we could discuss including volume profile, low volume nodes that I think are great strategies to compliment option greeks. Maybe in the future we can include more details.
Trading is not for the unprepared. It is critical you abide to a strategy and checklist and walk into every trade with a plan. Without a plan you are simply gambling and have a better chance at the slot machines. There are more nuances to my weekly and daily checklists, but I think this provides a good read for now and we will/can continue adding to it.
To cover our basis…
Welcome to my Substack where I provide a daily SPX 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.