April 13, 2023 SPX, SPY, ES Trade Plan

Mild recession they now say huh? What happened to no recession...

Good evening/day/morning traders. CPI came and we had the initial fakeout on initial news announcement and after that we sold off to then retrace some of what we sold off only to then trap bulls to sell off in the last couple hours of the session.

These are tough markets and even with data if you are not managing risks or oversizing your trades your emotions will catch up to you and make you have a bad decision. Add on top of that if you are trading 0DTE options the decay and the sideways or rubberband snapback like moves will completely destroy your bank.

So if there is anything you have learned in this market this week it is:

1. Take profit while you can - on the initial break of 4110 we got a 10pt selloff - while the levels and targets are there to guide you never let a trade go from green to red. Take those profits, reassess, and enter the trade again

2. 0DTE options are risky as hell and as more money makers use it as an opportunity to hedge or even tilt the market in their favor you will get chopped up quickly with how fast the decay in these premiums occur. Simply trade 1DTE options at minimum or if you are trading SPY go weekly - the reward may not be as high, but the emotional toll and potential drawdown can be minimized

Last session trading recap

Today I ended up taking three trades - more than I normally do but on a rather large day of news catalysts premarket and in the afternoon opportunities will present itself. The first one being…

If there is a failed breakout of 4135-40 target 4115

This move came extremely fast and all within the first 10 minutes of market open. In these 2 5 min candles we had a double top, sellers pushing price down as it got near the highs. On big news event days I will get into a trade as quickly as I did because it hit a key level and based on my data this level would be a tough one to break. So I didn’t wait the full half hour like I usually did. The premarket move did it for me…

Now the mistake I did make and should have called it out and although we pushed down past 4110 and had another trade idea during the first selloff we bounced or rallied at 4095. At 4100 was a gamma level of interest and while I took puts on the break of 4110 I sold them when I started to see price hold the 4095-4100 level. This was a great call as we rallied almost 30pts from these lows into 4125.

This is when I saw SPX/SPY hit a bearish OB/resistance prior to the FOMC minutes and added puts at 4120 and I did get some heat on this post FOMC minutes, but I quickly analyzed the minutes and headlines and what did we see? FED sees the increase chances of a mild recession lasting up to 2 years. Wow you got to be kidding me and this is after a FED that has been saying there will be no recession…

The rest is history although I had a few points draw against me we finally had the market selloff and then enjoyed and took our puts with us to the bank…

Congrats if you joined us today and were able to take profit on the put side…

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

1. 8:30am est - PPI - major news catalyst

For more information on news events, visit the Economic Calendar

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SPX/ES/SPY Trade Plan

Remember you can use this SPX trade plan to trade ES or SPY. ES value is approx. 27-30pts more than the SPX levels shared below.

Bullish bias:

1. If there is a failed breakdown of 4075 target 4100

2. If there is a breakout of 4120 target 4135

Bearish bias:

1. Below 4100 target 4080

2. If there is a failed breakout of 4110 or 4120 target 4100 then 4075

3. If there is a breakdown of 4075 target 4060

   1. This could be a trap so manage risk on a potential reversal

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SPX - The Why Behind the Plan

Key Levels

Below Spot - support:

1. 4075 - positive gamma

   1. 4084-4072 - OB (1HR chart)

2. 4070-4060 - FVG (1HR chart)

3. 4045-55 - (403.63) - $6B dark pool printed at this level

   1. 4060-4051 - FVG (2HR chart)

   2. 4049-4035 - OB (2HR chart)
      

Above Spot - resistance:

1. 4104-08 - (409.21, 409.46, 409.61) - Over $13.91 has been printed at this level

   1. 4097-4107 - FVG (1HR chart)

   2. 4094-4088 - FVG (2HR chart)

   3. 4110-20 - negative vanna

   4. 4095-4100 - positive gamma

2. 4125-4135 - positive gamma

3. 4135-4148 - OB (2HR chart)

   1. 4140 - negative vanna

4. 4153-4176 - OB (1HR chart)

   1. 4150 - negative vanna

Dark Pool Levels

We need to pay attention to some key levels that have Dark Pool buildup. Mark them on your chart as key levels that we should pay attention to. Note I get my dark pool levels from Quant Data.

1. 4104-08 - (409.21, 409.46, 409.61) - Over $13.91 has been printed at this level

   1. An additional $1.96B was printed at this level

2. 4045-55 - (403.63) - $6B has printed at this level

3. 3950-70 - (395.62) - Over $8B has been printed at this zone

4. 3910-15 - (390.11) a key dark pool level that kept the market supportive

Here is a summary chart from Quant Data that shows the key levels that have been bought up in dark pool prints since the beginning of March 1, 2023. Remember the levels where we see dark pool prints greater than $2B should peak our interest.

4/12 Dark Pool Levels via Quant Data

4/11 Dark Pool Levels via Quant Data

Orderblocks (OB) and Fair Value Gaps (FVG)

These are smart money concepts and some areas I am looking to see how price reacts. I will give higher credence to OB’s whereas FVG’s could be areas of basing/consolidation if they break.

Resistance levels - at these levels I want to see if price rejects to short or consolidates for a push up. I couple this data with Volland, intraday option flows, and Dark Pool levels. Higher timeframe OB’s or FVG will be harder to break. OB’s are the stronger levels over FVG’s.

1. 4097-4107 - FVG (1HR chart)

2. 4135-4148 - OB (2HR chart)

3. 4153-4176 - OB (1HR chart)

4. 4176-4200 - OB (2HR chart)

Support levels - at these levels I want to see if price rejects to long or consolidates for a push down. I couple this data with Volland, intraday option flows, and Dark Pool levels. Higher timeframe OB’s or FVG will be harder to break. OB’s are the stronger levels over FVG’s.

1. 4084-4072 - OB (1HR chart)

2. 4070-4060 - FVG (1HR chart)

3. 4060-4051 - FVG (2HR chart)

4. 4049-4035 - OB (2HR chart)

5. 4018-4007 - OB (1HR chart)

Bullish orderblocks and fair value gaps continue to grow while bearish order blocks and fair value gaps continue to be mitigated

Volume Profile

Let’s review the volume profile and some key levels there. If you are unfamiliar with the Volume Profile I highly suggest reviewing some YouTube videos or reading this quick overview on it.

Some keywords to be aware of:

• VAH = value area high

• VAL = value area low

• POC = point of control

  • A naked POC means it hasn’t been tested after it was formed - these will typically act as magnets

Some key updates reviewing the volume profile with the biggest being our rejection of February’s POC twice. I suggest you visit Captain Wick’s trade plan where he breaks down the volume profile changes in full detail. It’s a good read…

4/13 SPY Trade Plan

Weekly Option Expected Move

SPX’s weekly option expected move is ~60.78 points. SPY’s expected move is ~7.64. Remember over 68% of the time price will resolve it self in this range by weeks end.

SPX’s Weekly Option Expected Move for Week of 4/10

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VIX Update

Let’s review the VIX chart. The VIX bounced off nicely from our wedge briefly breaking it and then pushing back up to again breaking the wedge only to end the day getting sucked back up.

Above Spot:

1. 19.41-20.10

2. 20.45-21.06

Below Spot:

1. 18.96-18.68

2. 17.32-16.92

3. 16.40-16.00

4. 16.04-15.44

5. 15.44-14.95

6. 14.13-12.95

Key VIX Levels

Remember, typically VIX going down correlates with a uptrend in the market and vice versa for a downtrend in the market.

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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.

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.

Positive vanna - will act as magnet

Negative vanna - will act as repellent

When price goes through a positive or negative level it will flip it - ie negative becomes positive and vice versa.

Above Spot:

1. 4095-4100 - positive vanna

   1. 4100 the largest vanna

2. 4110-4120 negative vanna

   1. 4120 the largest vanna

3. 4125-4135 positive vanna

4. 4140 - negative vanna

5. 4150 - negative vanna

Below Spot:

1. 4090-4080 - positive vanna

2. 4075 - negative vanna

3. 4070-4060 - positive vanna

4. 4055 - negative vanna

5. 4050-4020 - positive vanna

   1. 4050 and 4025 largest vanna’s

6. 4015 - negative vanna

Aggregate Vanna data from Volland

Gamma and Delta-Adjusted Gamma (DAG)

Positive Gamma Above Spot - acts as resistance

Positive Gamma Below Spot - acts as support

Negative Gamma - becomes permissive to price as it moves there - aka neither resistance nor support - simply just chillin and watching what’s happening…

Above Spot:

1. 4095-4100 - positive gamma

   1. 4100 largest gamma

2. 4125-4135 - positive gamma

3. 4145 then 4155-4190 - positive gamma

4. Dealers have no level they need to buy

Below Spot:

1. 4075 - positive gamma

2. 4015 - positive gamma

3. Dealers must sell below 4095 till 4075

Aggregate Gamma data from Volland

Dealer buying vs selling pressure - positive notional value = buying - negative notional value = selling

Charm

Charm is negative on SPX. This suggests that Charm will have little a more bullish impact on SPX, but note how large its value is - roughly only $1B - take the left amount and right amount and subtract. So if any bullish bias plays out it will have minimal impact until that value increases. Again this is an aggregate view of SPX - doesn’t guarantee 0DTE bullish bias.

SPX Charm total notional = bullish although the amount is minimal suggest a smaller sized bullish move to come

When reviewing Charm we also need to account for SPY’s charm. It is leaning bearish.

SPY Charm Notional Total Value show more positive total notional value - bearish signal

For the full charm effect to play out ideally we want to see SPX and SPY in sync.

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My Intraday Trading Rules

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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, Quant Data 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.

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