2/3 SPX Trade Plan

Bear hibernation done?

The bulls continued their push to the upside today holding our key bullish bias levels of 4125 (gapped above it) and then in the first hour of trading held 4150, which began the slow ride up to 4175 and then 4195.

As shared on trader, I took a trade on the defense of the 4175 level going to 4195 a positive vanna level. Had there been any continuation we need to see $VIX continue down. As seen in the chart below $VIX actually increased…It is here where I entered a stop loss.

SPX vs VIX 5min chart

Before we kick into the trade plan while I hate making predictions we can’t ignore earnings, the gap down in futures already and looking at weekly expirations…If you are the money makers you want price to close below 415 and above 411.

OI of 2/3 SPY Weekly Options via Tradytics

Trade Plan:

Bullish bias:

1. Above 4175 target 4190 then 4205

2. If there is a failed breakdown at 4150 target 4175

3. If there is a breakout of 4205 target 4220

Bearish bias:

1. Below 4150 target 4125 but expect support to kick in at 4140/35. Break 4125 then 4110

2. If there is a failed breakout at 4175 target 4150 then 4125 then 4110

3. If there is a breakdown of 4100 target 4085/80

News Catalyst

Another jam packed news events premarket will determine whether bears keep pushing or bulls regain previous high.

1. 8:30am est - Avg Hourly Earnings

2. 8:30am est - Non-farm Employment Change

3. 8:30am est - Unemployment Rate

4. 10am est - ISM Services PMI

For more information on these events, visit the Economic Calendar

Vol.land Data

Vanna

What is Vanna? For details see the video, but at a high level positive vanna acts as a magnet pulling price to it and negative vanna acts as a repellent pushing price away from it. As we reach one of the vanna levels below in order to determine whether we will continue or reverse we keep a close eye to $VIX and the IV of the underlying ticker. In order to go past a negative vanna we need to see $VIX and IV decrease. For positive vanna if it stops here you will see an increase in $VIX or IV.

Above Spot:

1. 4175 is a major negative vanna - acting as repellent

2. 4200 is a medium positive vanna - acting as magnet

3. 4205 is a minor negative vanna - acting as repellent

4. 4225 is a major negative vanna - acting as repellent

Below Spot:

1. 4150 is a minor positive vanna - acting as repellent

2. 4140-4125 are minor negative vanna’s - acting as repellent (for price to rip through these levels we need to see $VIX go up)

3. 4115 is a minor positive vanna - acting as magnet

4. 4110 and 4100 are minor negative vanna’s - acting as repellent

5. 4065 is a major negative vanna - acting as repellent

• Vanna levels indicate a pull to the downside - our largest magnets to the upside face major negative vanna’s prior to them

• Our range could be 4100-4175

• Below 4175 and for a continued red trend day VIX needs to continue to increase with first stop at 4140

• 4140-4125 zone will provide some consolidation and if broken targets 4105

Vanna data from vol.land

DAG

Above Spot:

1. 4175 is a minor positive DAG - acting as resistance

2. 4195 is a minor positive DAG - acting as resistance

3. Above 4180 will trigger dealer buying pressure targeting 4190

Below Spot:

1. 4165/60 are minor positive DAG’s - acting as support

2. 4140 is a major positive DAG - acting as support

3. 4125 is a major positive DAG - acting as support

4. 4110 and 4085 are minor positive DAG’s - acting as support

5. Below 4135 will trigger dealer selling pressure targeting 4105

• Below 4175 support comes in at 4160 and 4140

• If we lose 4140 we target 4125 then 4110

DAG data from vol.land

Vega - Key levels with highest volatility

1. 4185 major

2. 4165/60 minor

3. 4140 major

4. 4125 major

5. 4110 minor

Stay #paytient and react to the key levels - no predictions! Good luck traders.

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