December 26, 2023 SPX, SPY, ES Trade Plan

Dec 26, 2023

Weekly Market Overview

After Wednesday’s surprise selloff due to liquidity and some blaming 0DTE options on - the weekly candle ended up and green. The beginning of the Santa Rally also started late last week and we still may have a Grinch sighting.

What is the Grinch sighting? The Grinch period starts 3 days prior and 3 days after Christmas. It officially started last week and thus far the market is down -0.49% since. Keep an eye on this one for potential swing trade ideas which would suggest that we find an “interim” bottom. This Grinch theory also brings a bullish January where 16 times it has been up and 3 times down - moving an avg of 4.3%.

Will the Grinch make an appearance this year? If so, the stock market sees on avg a return of 19% the following year…

Technically the Grinch is in full effect. While the Santa Rally has started it carries itself into the first 2 trading days into January where by then it should have a positive gain. So that leaves us potentially with more chop for the next few days so we can keep these Grinch days red followed with a Santa Rally, and an even better January. We can only wish right…

Since Wednesday’s trading session the Grinch has arrived and bringing with it so far a selloff at about 0.49% or approx. 24 pts

Where is that interim bottom? I sure hope we haven’t seen it already, but I would love to see 4650 trade, but most likely this bottom could be at 4700 and we triggered it last week. Thus I would suggest trading the 475, 480, 485 calls for February or March OPEX (3rd Friday of the month). One way you could play this swing trade is to enter a certain percent of your portfolio at that 4745-4735 zone. If we grind our way towards 4720 and hold scale into some more calls. Below this I want to reassess and see if we trade towards 4650 and how we react there.

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Another interesting stat shared by Wayne Whaley is in regards to the dollar’s strength especially the “last” trading week of the year. As you will see in the chart below when the dollar’s trailing quarter is below 1% then it has never had a positive week during this last week of the year. It’s record is 0 times up and 22 times down. So an interesting stat and if the $DXY is not on your radar you should add it and use it as a correlated ticker to the SPX like VIX. DXY goes up - bad for equities and vice versa.

Wayne defines the last week of the year as Dec 25-31 and the trailing qtr as Sep 25-Dec 25. The DXY 2023 trailing qtr is sitting at -4.03%. Since 1971, if trailing qtr is < -1% then the last week of the year is up 0 times and down 22 times.

News Catalysts

9am est - S&P Case-Shiller home price index (20 cities)
1pm est - 2-Year Note Auction

For more information on news events, visit the Economic Calendar

My Trading Rules

Dark Matter

April 11, 2023

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12/26 - SPX/ES/SPY Trade Plan

Bullish bias:

Above 4767 target 4775
If VIX continues going down then a breakout of 4780 targets 4790
If there is a failed breakdown of 4545 target 4765

Bearish bias:

If there is a failed breakout of 4765 target 4745
Below 4745 target 4735
1. Expect this zone to consolidate so reversals could come out of this zone quickly - lock trades and only scalp
If VIX continues going up then a breakdown of 4735 targets 4725
1. Similar note to bearish idea 2

As always keep an eye on Volland30 and the VIX for trend continuation or reversals.

Remember you can use this SPX trade plan to trade ES or SPY. ES value is approx. 50pts more than the SPX levels shared. To get SPY levels simply take the SPX levels and divide by 10.01.

SPX/ES/SPY Swing Trade Idea:

If 4745-4720 trades go long with expiration 2/16 or 3/15 475, 480, or 485 calls
1. I think if 4745-4735 trades this is the ideal zone to start accumulating calls
2. Should we trade near that 4720 level and it holds we can scale into more contracts at that point
3. Below 4715-4710 is where we would want to cut this trade and reassess

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12/26 SPX/SPY/ES Intraday Overview (TL;DR)

4745-4765 - is a chop zone. Don’t get caught trading in the middle of this zone unless you are already in a trade otherwise the best trade will come playing failed breakdowns or breakouts within this zone. Be wary of the breakout of 4780 we do have quite a bit of resistance and with volume expected to be on the lighter side we will need a news catalyst or shorts to get squeezed.

Thus, I want to see how price reacts at 4765 - we are near this level in futures action - and if we can breakout of this level and hold it in the morning session perfect. Above it will target 4775.

I then want to see how price reacts at 4780 if we have an overshoot from 4775. If we see weakness there we could see price selloff back towards 4745. Keep an eye on Volland for updates on 0DTE option flows.

4745-4735 will be supportive and this is an area of interest personally for me to consider taking longs swinging into March OPEX expiry. 475 or 480 calls. Could even consider 485 calls.

SPX - The Why Behind the Plan

Key Levels Overview

4697-4780 - We are just trading within last Wednesday’s value area and after that selloff the bulls have been able to put in a higher high and higher lows. We are coiling in this zone and thus any trades within it are going to be mainly on failed breakdowns or breakouts. So what are those key levels within this zone?

4745-4735 - this is an important level for the bulls to continue to consolidate. This would be a zone that I would consider adding longs to swing through March OPEX.

4725-4720 - If we want to target ATH’s and do it before the end of the year or even the beginning of the year this zone is crucial to hold. Otherwise it starts the selloff towards 4700 and then 4650.

4770-4780 - major level of resistance. Once this level is broken we start to get after the ATH’s and start targeting 4820.

Volume Profile & Trends

Here are the trend lines - cyan color - that I am watching. Additionally you will see that price has clearly been trading within this channel - in red - and the break of it either up or down will bring a larger move.

SPX has been trading within this channel since 12/14 and we have a couple of trend lines we are watching

From a quarterly volume profile on the weekly chart some key levels are seen.

4776 - Q4 VAH - still forming
4687 - 2021 POC
4684 - Q4 2021 POC
4552 - Q4 POC - still forming
4532 - 2023 VAH

SPX Weekly Chart with Quarterly Volume Profile Levels

If we take a look at the daily chart and review the monthly volume profile we find the following levels…

4818 - January ‘22 VAH
4786 - January ‘22 POC - hasn’t been breached
4778 - December's VAH - still forming
4718 - December's POC - still forming
4599 - December’s VAL - still forming

SPX Daily Chart with Monthly Volume Profile Levels

Let’s now look at the 4hr chart and review what the weekly volume profile levels show.

4778 - Previous Week High
4763 - 12/18 Weekly VAH
4740 - 12/18 Weekly POC
4722 - 12/18 Weekly VAL
4697 - Previous Week Low
4647 - 12/11 Weekly VAL

SPX 4hr Chart with Weekly Volume Profile Levels

On the smaller timeframe and intraday let’s go to our 30min chart where we will put our session volume profile on. Our levels of importance are…

4772 - Previous Session High of Day
4765 - 12/22 VAH
4752 - 12/22 VAL
4736 - Previous Session Low of Day
4728 - 12/21 VAL
4697 - 12/20 VAL
4651 - 12/13 VAL

SPX 30min Chart with Session Volume Profile Levels

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Volland 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:

4765 - negative vanna
4775-4780 - negative vanna
4790-4800 - negative vanna
4820 - negative vanna

Below Spot:

4745 - negative vanna
1. 4750 - positive gamma
4735 - negative vanna
4725 - negative vanna
1. 4725 positive gamma
4715-4710 - negative vanna
4700 - negative vanna
4690 - negative vanna

Orderblocks (OB)

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.

4763-4766 - OB (15min chart)
1. 4765 midline
4769-4778 - OB (30min, 1hr, 2hr chart)
1. 4774 midline
4774-4808 - OB (1hr, 2hr, 4hr chart)
1. 4791 midline

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.

4735-4708 - OB (2hr chart)
1. 4722 midline
4718-4712 - OB (15min chart)
1. 4715 midline
4652-4643 - OB (1hr, 2hr chart)
1. 4648 midline
4590-4546 - OB (1D chart)
1. 4568 midline
4568-4546 - OB (4hr chart)
1. 4556 midline

Orderblocks via Smart Money Concepts - blue are bearish supply blocks where as green are bullish demand blocks

Overlay of Key Levels

Above Spot:

4765 - negative vanna
1. 4763-4766 - OB (15min chart)
  1. 4765 midline
2. 4763 - 12/18 Weekly VAH
3. 4765 - 12/22 VAH
4775-4780 - negative vanna
1. 4769-4778 - OB (30min, 1hr, 2hr chart)
  1. 4774 midline
2. 4772 - Previous Session High of Day
3. 4776 - Q4 VAH - still forming
4. 4778 - Previous Week High
5. 4778 - December's VAH - still forming
4790-4800 - negative vanna
1. 4786 - January ‘22 POC - hasn’t been breached
2. 4774-4808 - OB (1hr, 2hr, 4hr chart)
  1. 4791 midline
4820 - negative vanna
1. 4818 - January ‘22 VAH

Below Spot:

4745 - negative vanna
1. 4752 - 12/22 VAL
2. 4740 - 12/18 Weekly POC
4735 - negative vanna
1. 4735-4708 - OB (2hr chart)
  1. 4722 midline
2. 4736 - Previous Session Low of Day
4725 - negative vanna
1. 4725 positive gamma
2. 4728 - 12/21 VAL
3. 4722 - 12/18 Weekly VAL
4715-4710 - negative vanna
1. 4718 - December's POC - still forming
2. 4718-4712 - OB (15min chart)
  1. 4715 midline

Weekly Option Expected Move

SPX’s weekly option expected move is ~57.62 points. SPY’s expected move is ~5.92. That puts us at 4812.26 to the upside and 4697.02 to the downside. For SPY these levels are 479.54 and 467.70.

Remember over 68% of the time price will resolve it self in this range by weeks end.

TradingView Chart Access

For access to my chart laying out all of the above key levels please visit here.

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Dark Matter Trade

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…

2 years ago · Dark Matter

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.