January 5, 2024 SPX, SPY, ES Trade Plan
January 5, 2024 SPX, SPY, ES Trade Plan
Market Recap
This recap will be quick. Market opened at 4696 and took out the VAL & POC from 12/20’s selloff - effectively what this means is that it hunted for liquidity in that zone and found some buyers turning it into support as the dealers purchased their way up. This was the opportunity for our first trade idea…
If there is a failed breakdown of 4700 target 4715
We then consolidated for a good hour where we finally then got the breakout of 4715 to target 4725, our second trade idea…
Above 4715 target 4725
Be wary of reversals and fake breakouts
It was here where I warned of going any long further and taking profits and where our next two trade ideas formed on the bearish side…
If there is a failed breakout of 4715 or 4725 target 4700
Below 4700 target 4685
That last one didn’t break cleanly until the last 15 mins of the session. What I want to highlight here is that we produce these levels and targets due to liquidity in a given area. And so when 4700 broke and held the dealers finally caved in and joined the selling. There was a liquidity issue in this area.
This is why I stress these key levels find the ones that are stronger than others and then zones where there is liquidity where if a level breaks - either up or down - will give us that nice range, but more importantly it can cut through zones extremely fast.
Sharing an updated view of BPSPX…What was shocking given the amount of selloff we had that he candle on this wasn’t larger. Was this merely sector rotation? It seems like it with large moves that started in late 2023 with rotation into defensive stocks such as staples, utility, and healthcare. Still looking very bearish though…
1/5 SPX/SPY/ES Intraday Overview (TL;DR)
Friday’s trading session all comes down to premarket data with NFP/jobs data coming out. Not only are we looking for the number of jobs created/opened, but we also want to look at the avg hourly earnings numbers.
Those numbers going down will be bullish for markets…if they are up and if they are beat forecasts by quite a bit expect the selling to continue. The only thing to stop its bleeding besides key levels of support will be ISM Services PMI at 10am.
For the bears then if you get a beat on NFP things are good and below 4685 targets 4655. If VIX continues going up and the ISM services data beats forecasts then a breakdown of 4655 targets 4645. Below 4645 targets 4630 and below it 4610. For these trades to hit we really would need to have bad NFP numbers and VIX rising.
If you wanted to go long - you are a brave soul - you want to price above 4685 - as simple as that and you get that first starting with NFP missing numbers. Above this level it targets 4700. Above 4700 targets 4710-4715. If we continue to get price moving then a breakout of 4715 targets 4725-4730. More momentum will take us above to 4740-4745 and then 4755.
Any updates to the plan or levels will be provided in our chat room.
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News Catalysts
5:00am est - EU CPI
8:30am est - Non-Farm Employment Change
8:30am est - Unemployment Rate
8:30am est - Average Hourly Earnings m/m
10:00am est - ISM Services PMI
1:30pm est - FOMC Member Barkin Speaks
For more information on news events, visit the Economic Calendar
1/5 - SPX/ES/SPY Trade Plan
Bullish bias:
If there is a failed breakdown of 4685 or above 4690 target 4700
Above 4700 target 4710
If NFP numbers come below expectation with VIX down above 4710 targets 4725-4730
If we get further buying above 4730 targets 4740-4745 and above it 4755
Bearish bias:
Below 4685 target 4655
If VIX continues going up then a breakdown of 4655 targets 4645
If we get a catalyst for further selloff then a breakdown of 4645 targets 4630 and below it 4610
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.
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…
4732 - 2024 VAH - still forming
4711 - 2024 POC - still forming
4696 - 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.
4793 - Q4 VAH
4732 - 2024 Q1 VAH
4711 - 2024 Q1 POC
4696 - 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
4732 - January ‘24 VAH - still forming
4711 - January ‘24 POC - still forming
4696 - 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.
4793 - Previous Weekly High
4783 - 12/26 Weekly VAH
4774 - 12/26 Weekly POC
4766 - 12/26 Weekly VAL
4754 - Weekly High
4735 - 1/2 Weekly VAH - still forming
4704 - 1/2 Weekly POC - still forming
4696 - 1/2 Weekly VAL - still forming
4687 - 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
4726 - Previous Session High of Day
4709 - 1/4 VAH
4687 - 1/4 VAL
4687 - Previous Session Low of Day
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:
4690-4715 - negative vanna
This is a large cluster of negative vanna, but their size is small - the most being $41B in a single strike
Thus don’t just assume we can’t rip through this cluster especially if the VIX compresses
4725-4730 - negative vanna
4740-4745 - negative vanna
4755 - negative vanna
4765 - negative vanna
4775-4780 - negative vanna
Below Spot:
4685 - negative vanna
4655 - negative vanna
4645 - negative vanna
4610 - 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.
4699-4706 - OB (15min chart)
4703 midline
4716-4726 - OB (30min chart)
4721 midline
4724-4744 - OB (1hr chart)
4734 midline
4740-4747 - OB (30min chart)
4744 midline
4763-4776 - OB (2hr & 4hr 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.
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
4559-4538 - OB (4hr chart)
4549 midline
Overlay of Key Levels
Above Spot:
4690-4715 - negative vanna
4699-4706 - OB (15min chart)
4703 midline
4696 - 1/2 Weekly VAL - still forming
4704 - 1/2 Weekly POC - still forming
4709 - 1/4 VAH
4711 - 2024 Q1 POC
4725-4730 - negative vanna
4716-4726 - OB (30min chart)
4721 midline
4724-4744 - OB (1hr chart)
4734 midline
4726 - Previous Session High of Day
4732 - 1/2 VAL
4735 - 1/2 Weekly VAH - still forming
4740-4745 - negative vanna
4740-4747 - OB (30min chart)
4744 midline
4744 - 1/2 VAH
4755 - negative vanna
4754 - Weekly High
4765 - negative vanna
4763-4776 - OB (2hr & 4hr chart)
4770 midline
4761 - 12/29 VAL
4766 - 12/26 Weekly VAL
4775-4780 - negative vanna
4778-4797 - OB (2hr chart)
4788 midline
4770 - 12/29 POC - Hasn’t been breached
4774 - 12/26 Weekly POC
4775 - 12/29 VAH
4783 - 12/26 Weekly VAH
Below Spot:
4685 - negative vanna
4687 - Weekly Low
4687 - Previous Session Low of Day
4655 - negative vanna
4652-4643 - OB (2hr chart)
4648 midline
4651 - 12/13 VAL
4645 - negative vanna
4647 - 12/11 Weekly VAL
4628 - 12/12 Daily VAL
4610 - 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.