March 15, 2023 SPX, SPY, ES Trade Plan
PPI Day!
Good evening traders. We had a push up today hitting our bullish bias near the open with a reversal at our top level of 3935. Today will bring us more volatility with key pre-market news data.
Last session trading recap
Two trade ideas hit and they were a great opportunity to get into a trade at the open on a key level break of 3900 and hold it till we got to the 3935 level. This is then when the market reversed and sold off to 3875 and saw an impressive rally to end the day near the highs.
One of my key intraday tools I use is Quant Data. I have a 7-day free trial I can provide by following this link. Two key features they provide is the Net Flow and Options Exposure by Strike - both updated in real-time. This helps seeing the other side of the picture as the Volland data provides us dealer positioning where as Quant Cast shows us what institutions and retail - aka the customers - are doing. Try it yourself and reach out with any questions and visit the Quant Data YouTube for more tutorials.
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
PPI will surely give the markets a catalyst…
8:30am est - PPI
8:30am est - Retail Sales
8:30am est - Empire State Manufacturing Index
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.
Bullish bias:
Above 3910 target 3935
If there is a failed breakdown of 3895 or 3885 target 3910
If there is a breakout of 3935 target 3945
Bearish bias:
Below 3910 target 3895
Watch for a failed breakdown trap first
If there is a failed breakout of 3935 target 3915-10
If there is a breakdown of 3885 target 3870
SPX - The Why Behind the Plan
Volume Profile
We had a meaningful update on the volume profile.
SPX closed within February’s value area - suggesting it is trying to find acceptance in this area and will continue to seek February’s POC at 4012
Weekly Option Expected Move
SPX’s weekly option expected move is ~111.90 points. SPY’s expected move is ~11.86. Remember over 68% of the time price will resolve it self in this range by weeks end.
This should just be used as another data point. Most times than not price will end the week within this range, but when unaccounted news events occur - such as SVB failing - the expected move should be a muted data point then.
VIX Update
Let’s review the VIX chart. We had another push down in VIX today as we predicted to the 23 level where at 22.50 it found support and began to rise again only to falter towards the end of the day.
I think we will continue to test the lows of yesterday’s session and should it break will push a risk-on equity market.
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.
Above Spot:
3925-3935 is a cluster of positive vanna - acting as magnet
In order for price to move through these levels VIX must continue to decrease
3950 is negative vanna - acting as repellent
3940-4000 is a cluster of negative vanna
In order for price to move through these levels VIX must continue to decrease
4000 is a LARGE negative vanna - acting as repellent
4005 is positive vanna - acting as magnet
4065 is a LARGE positive vanna - acting as magnet
I want to also look at 0DTE Vanna which shows a little bit of a different story
3925-3960 is a cluster of negative vanna - acting as repellent
In order for price to move through these levels VIX must continue to decrease
3965 is positive vanna - acting as magnet
3980-3995 is a cluster of positive vanna - acting as magnet
Below Spot:
3910 is negative vanna - acting as repellent
3900 is positive vanna - acting as magnet
3895 is negative vanna - acting as repellent
3885 is negative vanna - acting as repellent
3875 is positive vanna - acting as magnet
3870 is negative vanna - acting as repellent
3865-60 is positive vanna - acting as magnet
3855-50 is negative vanna - acting as repellent
3825 is a LARGE positive vanna - acting as magnet
What does 0DTE show?
3905 is positive vanna - acting as magnet
3900-3885 is a cluster of negative vanna - acting as repellent
3880-3860 is a cluster of positive vanna - acting as magnet
3870 is the lone negative vanna here - acting as repellent
Gamma and Delta-Adjusted Gamma (DAG)
Above Spot:
3930-35 is positive Gamma - acting as resistance
3940-4000 is negative Gamma
Price is free to move here with no “pushback” from dealers. Dealer do not need to buy or sell in this zone they are already hedged
4005 is positive Gamma - acting as resistance
Dealers must buy above 3950
Below Spot:
3920-10 is a cluster of positive Gamma - acting as support
3895 is positive Gamma - acting as support
3885 is positive Gamma - acting as support
3870 is positive Gamma - acting as support
Dealers must sell below 3880
Charm
Charm is neutral on SPX. This suggests that Charm will have little to no impact in its current state for tomorrow’s session.
When reviewing Charm we also need to account for SPY’s charm. It is leaning bearish. Between the totals of SPY and SPX, SPX charm will outweigh SPY.
Keep in mind the total notional value of SPX should be multiplied by 10 for comparison to SPY.
Final Take
Today brings us 3 news catalysts which should drive pre-market data. If we get a neutral outcome on those expect a very tactical balanced/range based day. If you have profits especially hitting 10-20% lock them up with stop losses.
I don’t expect to see a large trend day nor a large reversal like today unless the data proves hotter or more negative than forecasted.
Thus, mark the key levels, review the trade plan and be ready to act based on the data.
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.