July 17, 2023 SPX, SPY, ES Trade Plan
July 17, 2023 SPX, SPY, ES Trade Plan
Good evening/day/morning traders. As we mentioned multiple times last week if 4380 and then 4400 were not taken out the markets would continue to be supportive and push ahead. We received a cooler print from the CPI, PPI came down, unemployment claims came under forecast, and consumer sentiment is positive. This all lead to a supportive market that continued to rally from these levels last week.
As a recap we were keeping an eye on an ascending triangle and a trendline connecting December and February’s highs.
So what does this mean? It means that 4495 becomes support #1. If we break below it then it could target the resistance we broke from at 4456. Below that takes us to 4435. These are the trends to keep in mind for the immediate future. Now we also have that trendline from March and June low’s but we would need to see IV increase to get down there. Never say never, but you see what the key trends are to hold, which will help us in our trend/sentiment decision.
We are officially in earnings season and a time I enjoy trading especially taking a few lottos here and there. This week’s key earnings reports will come from the banks, TSLA, NFLX, ASML, TSMC, UAL, and AAL.
What’s interesting is the implied movement in NFLX and TSLA is at +/- 8%.
Overview (TL;DR)
For the bulls it comes down to defending 4500 to target 4530 - where we could see a speed bump at 4515 first.
For the bears they need to get price below 4495 to target 4475. If they can continue to selloff 4470 we will see 4455 then.
Let’s jump into the trade plan.
For intraday updates please follow me on Twitter @DarkMatterTrade.
News Catalyst
8:30am est - Empire State Manufacturing Index
Earnings season officially has begin. Here are the key earnings to keep an eye for.
For more information on news events, visit the Economic Calendar
SPX/ES/SPY Trade Plan
Bullish bias:
Above 4515 target 4530
If there is a failed breakdown of 4500 target 4515
If there is a breakout of 4530 target 4545
Bearish bias:
Below 4495 target 4475
If there is a breakdown of 4470 target 4455
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. 31pts 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:
4515 - negative vanna
4512-4515 - OB (15min chart)
4514 midline
4530 - negative vanna
4545 - negative vanna
4549-4561 - OB (30min chart)
4555 midline
4570 - negative vanna
4567-4583 - OB (4hr chart)
4575 midline
Below Spot:
4505 - negative vanna
4498-4493 - OB (15min chart)
4495 midline
4495 trendline - price back inside
4470 - negative vanna
4481-4466 - OB (1hr & 2hr chart)
4473 midline
4471 - 445.84 - $3.17B
4450 - negative vanna
4453-4438 - 444.02-442.48 - $20.06B
4390 - negative vanna
4408-4399 - OB (2hr chart)
4404 midline
4421-4393 - 440.85-438.06 - $25.11B
Dark Pool Levels
It’s safe to say that the 4453-4438 dark pool level is where we want to see how price reacts. Will it be another opportunity for whales to accumulate at or will that be at the newly printed levels at 445.84 and 449.62?
4509 - 449.62 - $2.99B
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.
4512-4515 - OB (15min chart)
4514 midline
4549-4561 - OB (30min chart)
4555 midline
4567-4583 - OB (4hr chart)
4575 midline
4589-4597 - OB (30min chart)
4593 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.
4498-4493 - OB (15min chart)
4495 midline
4481-4466 - OB (1hr & 2hr chart)
4473 midline
4408-4399 - OB (2hr chart)
4404 midline
4393-4380 - OB (1hr chart)
4386 midline
4375-4362 - OB (1hr chart)
4369 midline
4344-4328 - OB (1hr & 2hr chart)
4336 midline
4304-4297 - OB (1hr chart)
4301 midline
Weekly Option Expected Move
SPX’s weekly option expected move is ~55.03 points. SPY’s expected move is ~5.69. That puts us at 4560.44 to the upside and 4450.38 to the downside. For SPY these levels are 454.97 and 443.59.
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:
4510-4520 - negative vanna
4515 key negative level
4530 - negative vanna
4545 - negative vanna
4570 - negative vanna
Below Spot:
4505 - negative vanna
4470 - negative vanna
4450 - negative vanna
4390 - negative vanna
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.
The 0DTE view on SPX Charm shows a bullish bias. I would expect any dips to be bought intraday.
Note that the total notional value of SPX is 10x. Thus it’s charm will outweigh that of SPY’s. For the full charm effect to play out ideally we want to see SPX and SPY in sync.
So what does SPY’s charm tell us? It is leaning bearish at an aggregate view.
If we look at SPY for 0DTE we are seeing a bearish charm view.
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.