June 5, 2023 SPX, SPY, ES Trade Plan
June 5, 2023 SPX, SPY, ES Trade Plan
Good evening/day/morning traders. Friday was a prime example of when I determine if I am taking a trade prior to the half hour mark or waiting it out. On Friday you had two opportunities to take the trade by taking it at the open or waiting for the half hour mark. Here is some of my criteria’s to determine whether I am waiting or taking the trade:
Do we have any new catalysts coming up at 10am est?
Did we have all of our news catalysts in the pre-market?
Are we breaching or has one of our trade ideas broke out?
What is my risk tolerance if I do take the trade before the half hour?
On Friday I ended up taking a long on SPY calls as soon as we broke 4245 one of our key levels. From our trade plan on Friday we had the following bias:
Above 4225 target 4240
If there is a breakout of 4240-45 target 4260
The first trade idea came during the futures session giving our ES traders a great opportunity to trade prior to the open.
The second trade idea we opened the session right at 4241 - which was a breakout level of one of our trade ideas. Why did I take this and not wait for the half hour mark? Going back to the above questions I already planned for this as such:
We had no news catalysts coming at 10am est
Our big news catalysts was in the pre-market and it held or never visited the key level where we would have turned bearish at 4195
Yes, we were breaching a key level to the upside - trade idea 2
I already had my risk tolerance in mind knowing that I would cut the trade below 4240, at max 4235
So having my trade plan, knowing what I was going to do if I got into a trade, this allowed me to take the trade at the open and ride it out to our first price target of 4260 - SPX saw a high of 4267 before it started to sell off.
I sold once I hit the first price target in our trade plan, waited paytiently and using the new real time data feed from Volland I saw that the 4250 level was growing in Vanna and Charm. Once we saw this level breakdown I still had my bullish bias in tact as long as we were above 4240-45. Price retraced from the 4267 high and I waited paytiently for the second test of 4260 and took this trade this time targeting 4280. I tweeted this in near real time on Twitter as well here and here.
That was it and I was done for the day all before noon est. This is why I preach on having a trade plan and establishing your risk tolerance.
With that, let’s jump into the trade plan.
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
With the debt ceiling news now behind us and an agreement that will go to President Biden to sign we now turn our attention back to key data prior to the market open…
10am est - ISM Services PMI
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. ES value is approx. 6pts more than the SPX levels shared below. To get SPY levels simply take the SPX levels below and divide by 10.01.
Bullish bias:
Above 4295 target 4320
If there is a breakout of 4320 target 4335
Use VOLD indicator for trend continuation
VIX should be decreasing
If there is a failed breakdown of 4280-75 target 4320
Use VOLD indicator for trend reversal
VIX should be decreasing
Bearish bias:
Below 4275 target 4260
If there is a failed breakout of 4335 target 4220
Use VOLD indicator for trend reversal
VIX should be increasing
SPX - The Why Behind the Plan
Key Levels
Above Spot:
4275-4291 - OB (2hr chart)
4283 midline
4303-4311 - OB (1hr chart)
4307 midline
4320 - negative vanna
4317-4325 - OB (15min chart)
4321 midline
4335 - negative vanna
Below Spot:
4280-55 - negative vanna
4280-55 - positive gamma
4280-4278 - OB (5min chart)
4245 - negative vanna
4245 - positive gamma
4254-4223 - FVG (1hr chart)
4238 midline
4235 - negative vanna
4235 - positive gamma
4222-4212 - OB (1hr chart)
4217 midline
4222 - 421.80 - $2.02B
4205 - 420.16-420.03 - $8.05B
4194-4179 - OB (1hr chart)
4187 midline
4196-80 - 419.20-417.60 - $16B
Dark Pool Levels
No major changes to our dark pool levels, but we are seeing some prints now come in at the 4222 level - a key level I will be watching to see how price reacts.
4222 - 421.80 - $2.02B
4205 - 420.16-420.03 - $8.05B
4196-80 - 419.20-417.60 - $16B
4160-56 - 415.66-415.28 - $9.84B
4150-25 - 414.64-412.18 - $23.31B
4120-07 - 411.59-410.34 - $17.13B
4100-4096 - 409.62-409.22 - $8.56B
We need to pay attention to these dark pool levels. Mark them on your chart as key levels that we should pay attention to. Remember the levels where we see dark pool prints greater than $2-4B 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.
4275-4291 - OB (2hr chart)
4283 midline
4303-4311 - OB (1hr chart)
4307 midline
4317-4325 - OB (15min chart)
4321 midline
4342-4385 - FVG (2hr chart)
4363 midline
4438-4470 - OB (4hr chart)
4456 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.
4280-4278 - OB (5min chart)
4254-4223 - FVG (1hr chart)
4238 midline
4222-4212 - OB (1hr chart)
4217 midline
4194-4179 - OB (1hr chart)
4187 midline
4161-4151 - OB (2hr chart)
4155 midline
4098-4072 - FVG (2hr chart)
4049-4035 - OB (2hr chart)
4042 midline
Weekly Option Expected Move
SPX’s weekly option expected move is ~54.89 points. SPY’s expected move is ~5.62. Remember over 68% of the time price will resolve it self in this range by weeks end.
Volland Data
The Volland team now provides new product tiers providing you with more intraday updates. This is an amazing asset to have intraday to see how dealers are positioning themselves adding more conviction to our levels and changes to the key levels for the 2nd half of the trading session. Take a look by visiting the Volland site for their various options - including Volland 30 - the package I have subscribed giving me updates every 30 mins.
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:
4320 - negative vanna
4335 - negative vanna
4365 - negative vanna
Below Spot:
4280-55 - negative vanna
4245 - negative vanna
4235 - negative vanna
4200 - negative vanna
Gamma and Delta-Adjusted Gamma (DAG)
Positive Gamma Above Spot - acts as resistance
Positive Gamma Below Spot - acts as support
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:
4285-4315 - positive gamma
4325-30 - positive gamma
Dealers must sell above 4285 and buy between 4230-4275
Below Spot:
4280-55 - positive gamma
4245 - positive gamma
4235 - positive gamma
Dealers must sell below 4175
Charm
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.
When reviewing Charm we also need to account for SPY’s charm. It is leaning bearish at an aggregate view.
If we look at SPY for 0DTE we are seeing a bullish charm view.
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.
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.