July 26, 2023 SPX, SPY, ES Trade Plan
7/25 Trading Session Review
Our key pivot level of 4550 held as the SPX hit a low of 4552 before it rallied to a high of 4580. Our plan targeted 4560 with an overshoot to 4565, but using the updated data in Volland30 the day became more bullish after 11am. Another reason why I suggest you checkout Volland. In our trade plan yesterday we did say that charm was bullish and displaying a GEX paradigm suggesting a target of 4575.
We have now formed a double top and with the mixed ER results between MSFT and GOOGL what’s next? At this point and time the bulls are still are in charge - a buy the dip kind of scenario. Tomorrow should provide us more clarity with FOMC at 2pm est and META ER after hours.
I won’t predict what may come of FOMC, but it will be volatile and swing us one way faking traders out only to reverse and do the opposite. What is expected is another 25bps hike, but what Powell says will be more important.
Size lightly tomorrow there will be more trading days and better trade ideas.
SPX/SPY/ES Overview (TL;DR)
For the bears they need to break 4555 - thus it becomes our line in the sand for the day. If the bears can push price below 4555 target 4540 and below it 4525.
For the bulls they want price above 4555 targeting 4580. If the bulls can keep price above it they will target 4595. Could overshoot to 4600.
Let’s jump into the trade plan.
ADBE
Good trade plan as ADBE didn’t present us with much options. While one could have traded at the open as we gapped down, the 520-525 zone was complete noise and chop. So how is the market now positioned?
525 is now a key resistance and looking at after hours price is at 522.05. ADBE bears want this to hold to target 520 then 515 and then 510.
Below 520 target 515
Above 525 target 535
If there is a failed breakdown of 510 target 517
If there is a failed breakout of 525 target 520
Below 515 target 510
MSFT
That charm outlook on MSFT towards the end of the day predicted a bearish tone on weekly options and boy did we get it. After pushing price up from 345 to 350 where we immediately faced resistance although we attempted multi times to break it hitting a high of 352.
As I said whether we continue to target above or sell off will all come to ER results and as soon as we closed price sold off towards 335 before it was bought up and then sold off again closing after hours at 338.
Tomorrow if you want more continuation bears need to take out 335 to target 330 where price is supportive. I wouldn’t consider a counter trend trade on this until we find balance and the next trade on it.
Below 335 target 330
For intraday updates please follow me on Twitter @DarkMatterTrade.
News Catalyst
10:00am est - New Home Sales
2:00pm est - FOMC Statement
2:30pm est - FOMC Press Conference
For more information on news events, visit the Economic Calendar
SPX/ES/SPY Trade Plan
Bullish bias:
Above 4580 target 4595
If there is a failed breakdown of 4555 target 4580
Bearish bias:
Below 4555 target 4540
If there is a failed breakout of 4575 target 4560
If there is a breakdown of 4540 target 4525
As always keep an eye on Volland30, VOLD indicator, 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. 29pts more than the SPX levels shared. To get SPY levels simply take the SPX levels and divide by 10.03.
SPX - The Why Behind the Plan
Key Levels
Above Spot:
4580 - negative vanna
4585 - charm target
4570-4575 - positive gamma
4574-4583 - OB (2hr chart)
4578 midline
4595-4600 - negative vanna
4585 - positive gamma
4589-4597 - OB (30min chart)
4593 midline
4640 - negative vanna
4665 - negative vanna
4652-4665 - OB (1hr, 2hr chart)
4658 midline
Below Spot:
4560-4555 - negative vanna
4560-4555 - positive gamma
4559-4547 - OB (1hr chart)
4553 midline
4567-4554 - 455.40-454.10 - $12.17B
4540 - negative vanna
4540 - positive gamma
4540-4535 - OB (30min chart)
4538 midline
4536-4534 - 452.29-452.14 - $7.5B
4529-4520 - OB (30min chart)
4525 midline
4522-4509 - 450.89-449.62 - $14.81B
4510 - negative vanna
4511-4500 - OB (1hr chart)
4506 midline
4490 - negative vanna
4490 - positive gamma
4498-4493 - OB (15min chart)
4495 midline
4480 - negative vanna
4480-4475 - positive gamma
4481-4466 - OB (1hr & 2hr chart)
4473 midline
4471 - 445.84 - $3.17B
4453-4438 - 444.02-442.48 - $20.06B
Dark Pool Levels
Another +$2B of dark pool came in at the 4567 level where we can clearly see that we are accumulating between two key zones. Is this the top of this long rally? Ideally, if it was we would be seeing larger prints, but never say never.
4567-4554 - 455.40-454.10 - $12.17B
4536-4534 - 452.29-452.14 - $7.5B
4522-4509 - 450.89-449.62 - $14.81B
4471 - 445.84 - $3.17B
4453-4438 - 444.02-442.48 - $20.06B
4421-4393 - 440.85-438.06 - $25.11B
4384-4375 - 437.18-436.20 - $24.71B
4349-4344 - 433.65-433.19 - $12.14B
4325-4292 - 431.26-427.92 - $18.46B
We need to pay attention to these dark pool levels. Remember the levels where we see dark pool prints greater than $4B should peak our interest. I get my dark pool levels from 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.
4574-4583 - OB (2hr chart)
4578 midline
4589-4597 - OB (30min chart)
4593 midline
4652-4665 - OB (1hr, 2hr chart)
4658 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.
4559-4547 - OB (1hr chart)
4553 midline
4540-4535 - OB (30min chart)
4538 midline
4529-4520 - OB (30min chart)
4525 midline
4511-4500 - OB (1hr chart)
4506 midline
4498-4493 - OB (15min chart)
4495 midline
4481-4466 - OB (1hr & 2hr chart)
4473 midline
4408-4399 - OB (2hr chart)
4404 midline
Weekly Option Expected Move
SPX’s weekly option expected move is ~60.84 points. SPY’s expected move is ~6.22. That puts us at 4560.44 to the upside and 4450.38 to the downside. For SPY these levels are 458.40 and 445.96.
Remember over 68% of the time price will resolve it self in this range by weeks end.
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:
4580 - negative vanna
4595-4600 - negative vanna
4640 - negative vanna
4665 - negative vanna
Below Spot:
4560-4555 - negative vanna
4540 - negative vanna
4510 - negative vanna
4490 - negative vanna
4480 - negative vanna
If we also zoom out further on the Vanna chart you will see that there is more total notional value in the immediate area of price above spot than below - something to consider.
Gamma
Positive Gamma Above Spot - acts as resistance - meaning that dealers want to push against the move
Positive Gamma Below Spot - acts as support - meaning that dealers will want to support price at these levels
Negative Gamma - becomes permissive to price as it moves there - aka neither resistance nor support - simply just chillin and watching what’s happening…
Above Spot:
4570-4575 - positive gamma
4585 - positive gamma
4605-4620 - positive gamma
Below Spot:
4560-4555 - positive gamma
4540 - positive gamma
4490 - positive gamma
4480-4475 - positive gamma
Charm
Remember if IV is not expanding charm will start to overtake Vanna especially 0DTE as it comes closer to expiration.
For all expiry’s, Charm total notional value is bullish - negative is bullish and positive bearish - take the total of the far left and far right values. This is a longer term view of the market and suggests we find key dips to buy to long.
The 0DTE view on SPX Charm shows a bullish trend. Currently, looking at charm we see a GEX paradigm which is a bullish 0DTE study from the Volland group, which suggests price will target 4585. The LIS - line in the sand - is 4550.
Note that 0DTE changes throughout the day and Volland provides updates throughout the day.
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.