April 6, 2023 SPX, SPY, ES Trade Plan

Bears are scaring the markets...

Good evening/day/morning traders. Tomorrow/today is the last full trading day of the week. Be smart and wise with your money. We have been fortunate to have some amazing trades hit this week and the last thing you want to do is give that up. Treat this like a job and pay yourself. Keep a portion of your profits stashed away and even better wire it first thing tomorrow morning and then risk your normal trade size from there.

Last session trading recap

I had a call lotto I swung overnight to capture a small gap up in the morning, but we opened red. Won’t get them all right, but I knew how to manage my risk and only lost a small amount.

No worries we had a trade plan and at the market open, price was right in our bearish bias…

Below 4105 target 4080

I took my profits near 4080.

We then had our second bearish idea come through…

If there is a breakdown of 4080 target 4065

While we didn’t get to our target of 4065 we hit a low of 4072 and begin a reversal back to 4090. I closed this trade for a small loss - again manage your risk - and went on my day.

I am holding puts overnight as I saw an opportunity to short the market as we rejected a bearish orderblock at 4091-4100.

Now I could have kept my trade and it was a 1DTE option, but that would mean I would go through time decay, the trade further going against me, and no one likes seeing a trade in the red. Instead I waited #paytiently checking in on the market, observing and waiting for a trade plan to come through.

Remember, I only trade the first 2 hours of the session open and typically wait until near the close if there is an opportunity for an overnight trade. Unless you are scalping futures/points, trading options in that timeframe presents some of the worst trading hours filled with traps and fake breakouts and breakdowns. I will occasionally play a 0DTE power hour, but I manage my risk and only play it if I am in profits for that day.

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

1. 8:30am est - Unemployment Claims

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. 30pts more than the SPX levels shared below.

Bullish bias:

1. If there is a failed breakdown of 4060 target 4090

   1. I would see if we hold 4060 and at 4065 enter long

2. If there is a failed breakdown of 4050-45 target 4065 then 4080

   1. I would see if we hold 4050-45 and at 4055 enter long

Bearish bias:

1. Below 4090 target 4075

2. If there is a breakdown of 4075 target 4060

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SPX - The Why Behind the Plan

Key Levels

Below Spot:

1. 4070-4052 - FVG (1HR chart)

   1. 4052 - (403.63) - $6B dark pool has printed at this level

   2. 4051 - 10ema on the daily chart - will be curious to see how this level reacts if tested

2. 4018-4007 - OB (1HR chart)

3. 4000 - LVN from 3/29 Gap Up and 2/27 weekly VAH

Above Spot:

1. 4088-4100 - OB (1HR chart)

2. 4110 - (409.46) - $1.5B printed on 3/31

   1. 4106-4114 - FVG (1HR chart)

3. 4121-4134 - OB (1HR chart)

   1. 4122 - $3B printed at this level

4. 4136-4148 - 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.

1. 4122 - (411.02) - $3B printed at this level

   1. $1.5B printed on 4/4

   2. SPY Level 410.99 - $1.5B printed on 4/3

2. 4110 - (409.46) - $1.5B printed on 3/31

3. 4093 - (407.67) - $1B printed on 4/6

4. 4052 - (403.63) - $6B has printed at this level

   1. $4.5B was reported on 3/31

   2. $1.1B was reported on 3/30

5. 4025 - (401.34) - $1.3B was reported on 3/30

6. 3950-70 - (395.62) - Over $8B has been printed at this zone

   1. $3B was reported on 3/24

   2. $1.5B was reported on 3/27

   3. $1B was reported 3/28

   4. $2.6B was reported 3/29

7. 3940-45 - (393.40) $1.81B was reported on 3/24

8. 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.

4/6 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. 4088-4100 - OB (1HR chart)

2. 4106-4114 - FVG (1HR chart)

3. 4121-4134 - OB (1HR chart)

4. 4136-4148 - OB (2HR chart)

5. 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. 4070-4052 - FVG (1HR chart)

2. 4047-4035 - OB (2HR chart)

3. 4018-4007 - OB (1HR chart)

Key OB’s and FVG’s on SPX 2HR 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

I suggest you review Captain Wick’s VP levels. He has done a great analysis on this and you can find a link to his trade plan below.

4/6 SPY Trade Plan

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 are moving close to the lower end of our weekly option expected move. Something to keep an eye for…

SPX’s Weekly Option Expected Move for Week of 4/3

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VIX Update

Let’s review the VIX chart. VIX continues to play kangaroo. Overnight it goes up and through the trading day it loses some of its gain. There is a trendline that the VIX continues to reject to the downside and then another trendline holding its low. One of these will ultimately give and will give a better trend day for us.

Key levels…

Above Spot:

1. 19.35-19.40

2. 20.46-21.06

Below Spot:

1. 17.32-16.92

2. 16.04-15.44

3. 15.44-14.95

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 - negative vanna

2. 4100 - positive vanna

3. 4105-4140 - negative vanna

   1. 4140 is the largest vanna

4. 4145-4155 - positive vanna

5. 4160 - negative vanna

Below Spot:

1. 4090-4070 - negative vanna

   1. 4075 is the largest vanna

2. 4065 - positive vanna

3. 4060 - negative vanna

4. 4055-4050 - positive vanna

5. 4045 - 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

Above Spot:

1. 4145-4155 - positive gamma

   1. 4150 is the largest gamma

2. 4095-4140 - negative gamma

   1. Will act as an accelerant or dealers will act as permissive with no impact to price at these levels

3. Dealers must buy above 4090-95

Below Spot:

1. 4085 - positive gamma

2. 4080 - positive gamma

3. 4070 - positive gamma

4. 4060 - positive gamma

5. 4045 - positive gamma

6. Dealers must sell between 4090-4065 and below 4055

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. Again this is an aggregate view of SPX - doesn’t guarantee 0DTE bullish bias.

SPX Charm Notional Total Value shows more negative total notional value - bullish signal

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

SPY Charm Notional Total Value show more negative total notional value - bullish signal

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.

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Final Take

In futures currently we are sitting at 4106 (4079 SPX) and with a news catalyst coming out in the pre-market we could see a nice sized gap down. I wouldn’t immediately get too bearish if you are not in puts already. We have that major dark pool level in the 4050-55 levels which could act as an area of support.

These are not predictions and we are using data to dictate our trades. Remove the emotions, stick to the trade plan, and execute with a trade plan while managing your risk.

I look forward to seeing you all in the morning. Stay #paytient and react to the key levels - no predictions! Good luck traders.

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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

1. 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

   1. 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

   2. I then wait for key levels targeting one level to the next and taking profits at each one.

      1. 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)

2. I supply options greeks with OB (order blocks) and FVG (fair value gaps) otherwise known as Smart Money Concepts

3. 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

4. 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

5. 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

6. I always stick to two EMA’s on my chart and that’s the 10/50 EMA’s

   1. When the 10ema is above 50ema we are bullish

   2. When the 10ema is below the 50ema we are bearish

   3. 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

   4. 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.

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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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