April 4, 2023 SPX, SPY, ES Trade Plan
Chop chop, but 4100 held
Good evening/day/morning traders. We had a very choppy trading session, but believe that this plays into our narrative that we still have more upside. What today showed/told me is that this is an area where we have enough buyers wanting to accumulate to push the SPX further up.
Last session trading recap
I woke up a bit under the weather today so today for me was just all about watching what the market was doing. Clearly what stood out to me is that the bulls are in control and any key levels where we may get a dip should be bought. Our downside bearish bias didn’t play, but as I tweeted the below this zone held and pushed us up nearly 25pts.
Note that the low on the day was 4098 so if I was trading I would have taken a long at 4100 or 4105 and rode it up. Again, don’t attempt every trade as 0DTE. Most times than not you will lose with 0DTE. While the payoffs are insanely huge, the risk is not always worth it.
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 comes after market open…
10:00am est - JOLTS Job Openings
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 breakdown of 4085 target 4100
If there is a failed breakdown of 4115 target 4145
Bearish bias:
If there is a failed breakout of 4145 target 4115
Below 4115 target 4100
I think we will chop like yesterday so avoid 0DTE options if you are trading those.
SPX - The Why Behind the Plan
Key Levels
Below Spot:
4116 - (410.99) - $1.5B printed on 4/3
4110 - (409.46) - $1.5B printed on 3/31
Based on the trading activity of 4/3 we can assume this area was a level of accumulation
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:
4110-4120 - 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.
4116 - (410.99) - $1.5B printed on 4/3
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 3/24
$1.5B was reported on 3/27
$1B was reported 3/28
$2.6B was reported 3/29
3940-45 - (393.40) $1.81B was reported on 3/24
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.
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.
4113-4120 - FVG (2HR chart)
4087-4084 - OB (30min chart)
4080-4073 - FVG (1HR chart)
4049-4035 - OB (2HR chart)
4018-4007 - 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.
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:
18.82-19.23
20.46-21.00
Below Spot:
17.32-16.94
16.02-15.44
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:
4125 - negative vanna
4130-4190 - positive vanna
4195 - negative vanna
4200-4230 - positive vanna
Below Spot:
4115 - negative vanna
4110-4090 - positive vanna
4085 - negative vanna
Gamma and Delta-Adjusted Gamma (DAG)
Positive Gamma Above Spot - acts as resistance
Positive Gamma Below Spot - acts as support
Above Spot:
4125-4190 - positive gamma
Really no levels that dealers must buy
Below Spot:
4120 - positive gamma
4115 - positive gamma
4085 - positive gamma
Dealers must sell at all levels besides 4115-25
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 we have the JOLTS job openings data point coming out. I want to see if the bulls continue to see support at 4100 and if so where do we go from there. The dark pool prints are starting to create a new zone here in the 4110-4116 zone. If price comes back to these levels would be a good consideration to long - not 0DTE.
I still believe that we are in a weaker Vanna period thus I believe the major data and levels to watch will come from Gama, but 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.