2/27 SPX, SPY, ES Trade Plan
Where do we go next?
Hello team. Welcome to another installment of our daily trade plan. Amazing end to the week yielded us two great trades. For a recap and understanding of the trades I took please visit this Tweet and this one.
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News Catalyst
Lots of news catalysts and speakers for tomorrow…Note that Biden is meeting with the G7 for further Russian sanctions - something beyond economic news data to be aware of.
8:30am est - Durable goods orders
8:30am est - Core orders
10am est - Pending home sales
10:30am est - Fed Gov. Jefferson speaks
For more information on these news events, visit the Economic Calendar
SPX Notes:
No major updates to our trendline besides breaking below the October 2022 low trendline and then rallying back above it. This is the trendline on watch now…See item 3 below
Orange - This is now our resistance trendline…for any bullish activity to occur it must break above this trendline
Purple - This trendline is from our October 2022 lows - We broke down from this trendline, but I wouldn’t be shocked if we retest it
White - this trendline is the down trendline from the ATH’s in January 2022 that we broke in this recent rally
We have two gaps to fill to the upside at the 4010 and 4071 level
Weekly Option Expected Move
SPX’s weekly option expected move is ~77.06 points. SPY’s expected move is ~7.65. Remember over 68% of the time price will resolve it self in this range by weeks end.
One item to take note of going into tomorrow’s trade plan is a the major amount of calls that were purchased at the end of Friday. See the below screenshot courtesy of Quant Data…
Again, let’s not predict, let’s jump into the data and build a trading plan reacting level to level.
SPX/ES/SPY Trade Plan:
Remember you can use this SPX trade plan to trade ES or SPY.
Bullish bias:
Above 3975 target 3995
I would be careful with this trade and potentially lock profits around 3985 or bring the stop loss tighter in
I would be cautious of any longs above 3995 - IF we were to even get there - the R/R is high risk and not worth it
Below 3970 target 3955
If there is a failed breakout above 3985 or 3995 target 3970 then 3955 with a speed bump at 3985
If there is a breakdown of 3950 target 3925
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.
Let’s review the VIX chart. I want to see what are some key critical order blocks and fair value gaps. Currently, on the 1hr chart VIX is trying to fight its rally staying above 21 - two key levels here are 21.30 and 21. That 21 level puts us right at the orange trendline VIX broke above, retested, and looks like another test of it is to come. Below this level I am interested in how VIX reacts at 20.50 and 20.20.
Remember, typically VIX going down correlates with a uptrend in the market.
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:
3985 is a minor negative vanna - acting as a repellent
3995 is a positive vanna - acting as a magnet
4000 is our giant negative vanna tower - acting as a repellent
4010-4020 is a cluster of negative vanna - acting as repellents
Below Spot:
3970 is a minor negative vanna - acting as a repellent
3950 is a minor negative vanna - acting as a repellent
3940-35 are minor negative vanna - acting as a repellent
3930-3920 is a cluster of positive vanna - acting as a magnet
3915-10 are negative vanna’s - acting as repellents
Our range could be 3920-3995
Vanna indicates price could go up, but faced with sellers again near 4000
Hard to see how Vanna takes the bulls above 4030
Hard to see how Vanna takes the bears below 3920
Gamma and Delta-Adjusted Gamma (DAG)
Above Spot:
3975 is positive Gamma - acting as resistance
3995 is positive Gamma - acting as resistance
4025 is positive Gamma - acting as resistance
Price above 3980 will increase dealer buying pressure till 3995
Below Spot:
3950 is positive Gamma - acting as support
3940 is positive Gamma - acting as support
3925 is positive Gamma - acting as support
Price below 3975 will increase dealer selling pressure till 3955
3995 will be a major barrier to get past for bulls
3975, 3950 are major levels and if lost takes us towards 3925
There isn’t anything significant besides the negative 4000 gamma that continues to whip price up near it and below it
Final Take
I think we could have another kangaroo like trading day where price floats one direction, reverses in another direction.
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.