April 3, 2023 SPX, SPY, ES Trade Plan
New start of the month, short trading week, and many news data catalysts
Good evening/day/morning traders. An amazing week in trades leading to some amazing gains from the market. As always, come Monday I wire out a large chunk if not all of those profits - otherwise what are you doing trading? Treat it like a job, wire those funds out and reset your weekly goals.
Note: This week is a shorten trading week with April 7 a holiday for the US Market for the regular markets, but futures will still be open till about 11am est. There is a big news catalyst on Friday with non-farm employment numbers and unemployment changes…If you are a futures trader beware of low liquidity on this day especially with a news event in the works.
Let’s quickly talk about last week. A lot of traders, fintwit, etc were surprised with the moves last week. Honestly, if you look back at our trade plans and some of my tweets there were clear signs.
Smart Money increasing inflows into the market
Dark Pool levels being supportive and kept adding to more key zones through out the week
Extremely HIGH put/call ratio
Volume Profile breaking one value area after the next to the upside
Again, shut the noise out. It messes with you mentally. This is why we create a trade plan to EXPLAIN WHY something could happen and what level it could happen at. This is based on price, volume, and no over emotional reaction to news or ones personal bias to the economy/politics/etc. I trade the levels and what gives me the edge are dealer levels, retail sentiment, volume, and basic charting strategies like trendlines and wedges.
Keep it simple, continue to follow this trade plan, and ask questions. Captain and I are here. Unlike the $100 or so a month you might pay in other subs with 20 trades a day we clearly break it down in a simple and easy fashion. Yes it is on you to understand some of these greeks, we can’t hand everything on a silver platter, but I promise you we will save you time and avoid the waste of one strategy or sub for another that doesn’t work as you jump from one to the next.
Last session trading recap
On Friday, I didn’t have a for sure backed idea to get bullish above 4065 and while we opened Friday at 4060 something was happening. Go back and take a look at your charts and why predicting will lead you more times than not to lose money than make it. While I had stated…
Above 4065 is a tough call…the data just doesn’t show us going above, but if we do look for 4080 then 4100
We hit all those levels…keep that in mind. Trade the price and volume momentum. That’s why I am thankful to have a trading partner who helped remind me to react don’t predict and that the volume profile looked extremely bullish.
If you don’t believe me, take a look at Captain Wick’s trade plan from Friday that helped sway my decision that we could get above 4065 and that there was data pointing to that bias. Again, if you follow Twitter we had so many folks bearish or waiting to pounce puts on that 4065 level and when it broke it shattered the bears.
I ended up taking this break and had a busy afternoon coming so I took a quick $750 in profit…better than most on the day and avoided the bear bait.
Remember…Stay #paytient, compound and the gains will come. You must put in the work, prepare, and it will pay off.
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
Our major news catalyst Monday comes after market open…
On the week we have some critical jobs numbers starting Tuesday with the JOLTS Job Openings…Wednesday brings us ADP Non-Farm Employment Change and ISM Services PMI…Finally on Friday - again a non-trading day - we have the Avg Hourly Earnings, Non-Farm Employment Change, and the Unemployment Rate…
10:00am est - ISM Manufacturing PMI
10:00am est - ISM Manufacturing Prices
For more information on news events, visit the Economic Calendar
SPX/ES/SPY Trade Plan
Remember you can use this SPX trade plan to trade ES or SPY. ES values are approx. 28pts more than the SPX levels shared below.
Bullish bias:
If there is a failed breakout of 4060 target 4100
NOT 0DTE
Bearish bias:
Below 4095 target 4065
4087-4084 could be an area of consolidation/basing for further push down - good first target
If there is a breakdown of 4065 target 4055
This should be a scalp and could be prone to a bear trap area near 4050
SPX - The Why Behind the Plan
Key Levels
Alright, before we get into our key levels I think it is important that we look at the tech sector and its seasonality. Typically when tech is bullish this is a risk on environment. With that said, look at the red dot and where we are at and what typically occurs for the next 2 weeks then a bit of a drop with the remainder of the month going up further.
Last week we broke out of a resistance down trendline and then started to peak above a rising wedge. Will we continue to go higher or get sucked back within? something to watch for…
Below Spot:
4048 - (403.63) - $6B dark pool has printed at this level
4040 - 10ema on the daily chart - will be curious to see how this level reacts if test
4018-4007 - OB (1HR chart)
4000 - LVN from 3/29 Gap Up and 2/27 weekly VAH
3979 - 3/27 weekly VAL
3950-70 - key dark pool level
is a critical zone for the bulls to hold. This zone had been hammered with dark pools and I will be curious to see if this breaks could be a major selloff.
Above Spot:
4110 - (409.46) - $1.5B printed on 3/31
Could be a short term sell or an area of accumulation - key level to see if more dark pool activity occurs here
4110-4120 - FVG (1HR chart)
4136-4148 - OB (2HR chart)
4176-4200 - OB (2HR chart)
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 combine my dark pool analysis from multiple sources as I don’t get a clear picture from just one always - for this I use Quant Data and Tradytics.
4110 - (409.46) - $1.5B printed on 3/31
4048 - (403.63) - $6B has printed at this level
$4.5B was reported on 3/31
$1.1B was reported on 3/30
4025 - (401.34) - $1.3B was reported on 3/30
3950-70 - (395.62) - Over $8B has been printed at this zone
$3B was reported on Friday
$1.5B was reported on Monday
$1B was reported Tuesday
$2.6B was reported Wednesday
3940-45 - (393.40) $1.81B was reported on Friday
3910-15 - (390.11) a key dark pool level that kept the market supportive
I like the below chart view from Tradytics and will keep a view of it from the previous day so we can monitor the changes to the levels…
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.
4110-4120 - FVG (1HR chart)
4136-4148 - OB (2HR chart)
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.
4087-4084 - OB (30min chart)
4080-4073 - FVG (1HR chart)
4049-4035 - OB (2HR chart)
4018-4007 - OB (1HR chart)
4006-3971 - FVG (2HR chart)
3965-3951 - OB (1HR Chart)
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
Monthly Levels:
Price is currently pinned between January’s VAH and a naked poc at 4138. We are currently trading within February’s value area which is 4054 VAL and 4180 VAH.
If we continue to defend 4054 I would expect us to target 4138 then 4180. At that point we await and see if price will go further into August 2022’s VAH at 4213.
Above Spot:
4138 - Aug 2022 Naked POC
4180 - February 2023 VAH
4213 - August 2022 VAH
Below Spot:
4085 - January’s VAH
4054 - February’s VAL
4016 - March’s VAH
3917 - March’s POC & January’s VAL
3894 - March’s VAL
Weekly Option Expected Move
SPX’s weekly option expected move is ~60.15 points. SPY’s expected move is ~6.27. Remember over 68% of the time price will resolve it self in this range by weeks end.
We tagged the upper range of the weekly move and busted right past this. Again one of the few weeks where price blows past this expected move. IMO I believe it blew past the expected move due to all of the shorts in the market who ultimately were squeezed into Friday’s trading session.
VIX Update
Let’s review the VIX chart. VIX continued its selloff…although we based in that 18-19 range this didn’t stop the SPX/SPY to continue to rally.
Looking at the VIX chart unless we get some kind of news catalyst, I don’t see any reason why this trades above 20-21. Ultimately, I think we see the vix test 17 and could potentially see it test the 16-15 range after that…
Key levels…
Above Spot:
18.88-19.42
20.28-20.62
Below Spot:
17.30-16.92
16.00-15.44
15.44-14.97
Remember, typically VIX going down correlates with a uptrend in the market and vice versa for a downtrend in the market.
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:
4110-4190 - positive vanna’s
4195 - negative vanna
4200-4220 positive vanna’s
4225 - negative vanna
Below Spot:
4105-4095 - positive vanna’s
4090 - negative vanna
4085-4065 - positive vanna’s
4060 - negative vanna
4055-3965 - positive vanna’s
3960 - negative vanna
Gamma and Delta-Adjusted Gamma (DAG)
Positive Gamma Above Spot - acts as resistance
Positive Gamma Below Spot - acts as support
Above Spot:
4110-4190 - positive Gamma
Really no levels that dealers must buy
Below Spot:
4105-4100 positive Gamma
4090 - positive Gamma
4060 - positive Gamma
Dealers must sell at all levels besides 4080-4105
Charm
Charm is negative on SPX. This suggests that Charm will have little a more bullish impact on SPX. Again this is an aggregate view of SPX - doesn’t guarantee 0DTE bullish bias.
When reviewing Charm we also need to account for SPY’s charm. It is leaning bullish.
Between the totals of SPY and SPX, SPX charm will outweigh SPY. When they are in sync that further adds to the charm impact. Keep in mind the total notional value of SPX should be multiplied by 10 for comparison to SPY.
Final Take
Tomorrow is a big news catalyst with manufacturing PMI. What I am most interested in is if we do have a selloff how we react at 4095 and 4060. If 4060 can hold with an overshoot to 4050-55 and then reclaim 4060 this is a great opportunity to buy the “dip” and swing calls until 4150 and even 4200.
If this 4050-60 level breaks I can see 4000-10 trade then…This is a key dark pool level that I would add to your charts.
Again we will play it level by level, but mark these key levels or have them handy and be ready to pounce on them should we get an opportunity.
I still believe that we are in a weaker Vanna period and Gamma is a bit interesting on SPX thus I believe the major data and levels to watch will come from dark pools and our order blocks and fair value gaps.
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, 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.