January 4, 2024 SPX, SPY, ES Trade Plan
Market Recap
The new year starts with more red and more selling. For those not aware this selloff is not just random or profit taking, it aligns with the themes we discussed in Tuesday’s trade plan - rate cuts…
Prior to this week, the market was expecting 6 rate cuts and today - as you know someone always knows and is doing something well in advance - is that the FOMC minutes showed that while the FED expects rate cuts this year what the market was not expecting was the FED expects only 3 rate cuts.
The market was also expecting the first rate cut to come from the March FOMC meeting. So as you can see this entire year until we get those 6 interest rate cuts the market might continue to sell or go sideways until it knows this is happening or not. Welcome to the biggest storyline and theme for the market this year in 2024.
From our trade plan we had the following ideas - I don’t want to brag but how many people are giving you levels and targets like this? I get it last week or so of December was tough, but those are low volume weeks no momentum. Now, that we have some volume coming back and our levels are nailing those liquidity zones we are getting the movement that we wish for. Here are the three trade ideas that hit…
If there is a failed breakout of 4755 target 4740
Below 4740 target 4725
If VIX continues going up then a breakdown of 4720 targets 4698
Sharing an updated view of BPSPX…
Let’s jump into the trade plan and let’s review what we can expect tomorrow with the SPX/SPY/ES.
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News Catalysts
Overnight - Germany CPI
8:15am est - ADP Non-Farm Employment Change
8:30am est - Unemployment Claims
For more information on news events, visit the Economic Calendar
1/4 - SPX/ES/SPY Trade Plan
Bullish bias:
If there is a failed breakdown of 4700 target 4715
Above 4715 target 4725
Be wary of reversals and fake breakouts
Bearish bias:
If there is a failed breakout of 4715 or 4725 target 4700
Below 4700 target 4685
If VIX continues going up then a breakdown of 4680 targets 4670
If we get a catalyst for further selloff then a breakdown of 4670 targets 4650-4645
Any updates to the plan or levels will be provided in our chat room. 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. 42pts more than the SPX levels shared. To get SPY levels simply take the SPX levels and divide by 10.03.
1/4 SPX/SPY/ES Intraday Overview (TL;DR)
First and foremost there is a lot of resistance above spot. The bears have made some damage this week - could it change? Yes of course, but I would be wary of any longs unless they are failed breakdowns.
Thus, if you are a bear you want to defend 4715-4725 zone. If defended then we can push price back towards 4700 and then a breakdown of it will target 4685-4680. If we continue to selloff below 4680 targets 4670. If we have more volume or catalyst then a breakdown of 4670 will target 4650-4645.
For the bulls you want to play failed breakdowns. The first area is 4700 - this level is weaker but if we hold it and if there is a retest of it I would consider a long to target 4715. Above 4715 will target 4725. If we see any additional bullish trades we will communicate it via chat.
Any updates to the plan or levels will be provided in our chat room.
SPX - The Why Behind the Plan
Volume Profile & Trends
Now that we have the year complete, let’s review our yearly profiles on the monthly chart…
4736 - 2024 VAH - still forming
4713 - 2024 POC - still forming
4704 - 2024 VAL - still forming
4687 - 2021 POC
4433 - 2023 VAH
4128 - 2023 POC
3883 - 2023 VAL
From a quarterly volume profile on the weekly chart some key levels are seen.
4792 - Q4 VAH
4736 - 2024 Q1 VAH
4714 - 2024 Q1 POC
4704 - 2024 Q1 VAL
4555 - Q4 POC
4345 - Q4 VAL
If we take a look at the daily chart and review the monthly volume profile we find the following levels…
4818 - January ‘22 VAH
4793 - December ‘23 VAH
4737 - January ‘24 VAH - still forming
4717 - December ‘23 POC
4713 - January ‘24 POC - still forming
4704 - January ‘24 VAL - still forming
4610 - December ‘23 VAL
Let’s now look at the 4hr chart and review what the weekly volume profile levels show.
4818 - All Time Highs
4793 - Previous Weekly High
4783 - 12/26 Weekly VAH
4774 - 12/26 Weekly POC
4766 - 12/26 Weekly VAL
4754 - Weekly High
4751 - 1/2 Weekly VAH - still forming
4743 - 1/2 Weekly POC - still forming
4715 - 1/2 Weekly VAL - still forming
4699 - Weekly Low
4647 - 12/11 Weekly VAL
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…
4789 - 12/28 VAH
4775 - 12/29 VAH
4770 - 12/29 POC - Hasn’t been breached
4761 - 12/29 VAL
4744 - 1/2 VAH
4732 - 1/2 VAL
4729 - Previous Session High of Day
4716 - 1/3 VAH
4704 - 1/3 VAL
4699 - Previous Session Low of Day
4698 - 12/20 VAL & POC - Hasn’t been breached
4651 - 12/13 VAL
4628 - 12/12 Daily VAL
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:
4715 - negative vanna
4725-4740 - negative vanna
4755-4765 - negative vanna
4775-4780 - negative vanna
4820 - negative vanna
Below Spot:
4685-4680 - negative vanna
4670 - negative vanna
4645 - negative vanna
4625 - negative vanna
4610-4595 - 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.
4708-4728 - OB (30min chart)
4718 midline
4724-4744 - OB (1hr chart)
4734 midline
4740-4747 - OB (30min chart)
4744 midline
4763-4776 - OB (2hr chart)
4770 midline
4778-4797 - OB (2hr chart)
4788 midline
4782-4787 - OB (30min chart)
4784 midline
4774-4807 - OB (4hr chart)
4790 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.
4720-4697 - OB (2hr chart)
4708 midline
4652-4643 - OB (2hr chart)
4648 midline
4618-4608 - OB (30min chart)
4813 midline
4591-4580 - OB (30min chart)
4586 midline
4568-4546 - OB (4hr chart)
4557 midline
4766-4736 - OB (4hr chart)
4751 midline
Overlay of Key Levels
Above Spot:
4715 - negative vanna
4708-4728 - OB (30min chart)
4718 midline
4713 - 2024 POC - still forming
4713 - January ‘24 POC - still forming
4714 - 2024 Q1 POC
4715 - 1/2 Weekly VAL - still forming
4716 - 1/3 VAH
4717 - December ‘23 POC
4725-4740 - negative vanna
4724-4744 - OB (1hr chart)
4734 midline
4729 - Previous Session High of Day
4732 - 1/2 VAL
4736 - 2024 VAH - still forming
4736 - 2024 Q1 VAH
4737 - January ‘24 VAH - still forming
4743 - 1/2 Weekly POC - still forming
4744 - 1/2 VAH
4755-4765 - negative vanna
4763-4776 - OB (2hr chart)
4770 midline
4751 - 1/2 Weekly VAH - still forming
4754 - Weekly High
4761 - 12/29 VAL
4766 - 12/26 Weekly VAL
4770 - 12/29 POC - Hasn’t been breached
4775-4780 - negative vanna
4778-4797 - OB (2hr chart)
4788 midline
4774 - 12/26 Weekly POC
4775 - 12/29 VAH
4783 - 12/26 Weekly VAH
Below Spot:
4720-4697 - OB (2hr chart)
4708 midline
4699 - Previous Session Low of Day
4699 - Weekly Low
4698 - 12/20 VAL & POC - Hasn’t been breached
4685-4680 - negative vanna
4687 - 2021 POC
4670 - negative vanna
4645 - negative vanna
4651 - 12/13 VAL
4647 - 12/11 Weekly VAL
4652-4643 - OB (2hr chart)
4648 midline
4625 - negative vanna
4628 - 12/12 Daily VAL
4610-4595 - negative vanna
4618-4608 - OB (30min chart)
4813 midline
4610 - December ‘23 VAL
Weekly Option Expected Move
SPX’s weekly option expected move is ~51.69 points. SPY’s expected move is ~5.33. That puts us at 4821.51 to the upside and 4718.13 to the downside. For SPY these levels are 480.68 and 470.02.
Remember over 68% of the time price will resolve it self in this range by weeks end.
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.