May 22, 2023 SPX, SPY, ES Trade Plan

Good evening/day/morning traders. Friday’s trading session gave us a nice selloff from 4210 to 4180 before the market found support there and closed at 4191.

We did have an overshoot, but let me explain why I didn’t turn bullish.

1. We had a news catalyst coming at 11 am est with Powell speaking. Any attempts of a breakout before a news catalyst I take with a grain of salt

2. Every time price hit 4212 it faced immediate resistance and a push down - look at the 5 min chart - this was also before our half hour rule of waiting to take a trade after the market open

3. Market options net flow on SPY via Quant Data showed early big buys of SPY puts

4. VOLD indicator didn’t paint a bullish trend nor a continued trend to the upside

Put this all together and it didn’t make me bullish so instead I took puts at about 10:15am est and held until we finally got our selloff once Powell began to speak and bringing my stop loss closer as we tried to hit our target of 4175. While we didn’t get there this is why I preach bringing your stop loss in especially if you are in profit over 30% - no reason to lose profits or to have that trade turn from green to red. Compound and wait for the next trade or trading day…

All in all a perfect trade giving us 30pts and a nice trade whether you traded futures or took options on SPX or SPY!

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

No news catalyst for Monday, but loads of data on PMI Tuesday, FOMC Meeting Minutes Wednesday, Unemployment Claims and GDP Thursday, and Friday brings us Core PCE, Durable Goods Orders, and the UoM Consumer Sentiment/Inflation Expectations.

As a reminder we are still in earnings season with the following companies reporting this week.

Companies reporting earnings for week of 5/22

For more information on news events, visit the Economic Calendar

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SPX/ES/SPY Trade Plan

Remember you can use this SPX trade plan to trade ES or SPY. ES value is approx. 13pts more than the SPX levels shared below. To get SPY levels simply take the SPX levels below and divide by 10.01.

Bullish bias:

1. Above 4200 target 4215

2. If there is a breakout of 4215 target 4230

   1. Use VOLD indicator for trend continuation

   2. VIX should be decreasing

3. If there is a failed breakdown of 4175 target 4190

   1. Use VOLD indicator for trend reversal

   2. VIX should be decreasing

Bearish bias:

1. Below 4195 target 4180

2. If there is a failed breakout of 4215 target 4200

   1. Use VOLD indicator for trend reversal

   2. VIX should be increasing

3. If there is a breakdown of 4175 target 4160

   1. Use VOLD indicator for trend continuation

   2. VIX should be increasing

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SPX - The Why Behind the Plan

Key Levels

Above Spot:

1. 4195-4200 - positive gamma

   1. 4196-4204 - FVG (1hr chart)

   2. 4196-90 - 419.20-418.60 - $9.01B

2. 4210 - negative vanna

   1. 4215 - positive gamma

3. 4225 - negative vanna

   1. 4230 - positive gamma

   2. 4231-4242 - OB (1hr chart)

      1. 4237 midline

Below Spot:

1. 4180-75 - negative vanna

   1. 4180-75 - positive gamma

2. 4160 - negative vanna

   1. 4160 - positive gamma

   2. 4171-4160 - OB (30min chart)

   3. 4160-56 - 415.66-415.28 - $9.8B

3. 4130 - negative vanna

   1. 4151-4134 - FVG (2hr chart)

   2. 4138-25 - 413.39-412.18 - $19.24B

4. 4125-4110 - OB (2hr chart)

   1. 4120-07 - 411.59-410.34 - $11.10B

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Dark Pool Levels

Lots of movement in the dark pools and adds by the whales. We now have dark pool prints above spot near the high of Friday’s session. This will be a key level to watch.

In the short term the 4160-56 zone if broken takes us to 4135 where we find another zone of heavy dark pool. That level is major for the bulls to hold if tested.

1. 4196-90 - 419.20-418.60 - $9.01B

2. 4160-56 - 415.66-415.28 - $9.8B

3. 4138-25 - 413.39-412.18 - $19.24B

4. 4120-07 - 411.59-410.34 - $11.10B

5. 4100-4096 - 409.62-409.22 - $8.56B

5/19 Dark Pool Levels via Quant Data

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.

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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.

1. 4196-4204 - FVG (1hr chart)

2. 4231-4242 - OB (1hr chart)

3. 4242-4279 - FVG (2hr chart)

   1. 4262 midline

4. 4274-4291 - OB (2hr chart)

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.

1. 4186-4164 - OB (1hr chart)

   1. 4174 midline

   2. 4171-4160 - OB (30min chart)

2. 4151-4134 - FVG (2hr chart)

   1. 4142 midline

3. 4125-4110 - OB (2hr chart)

   1. 4117 midline

4. 4098-4072 - FVG (2hr chart)

5. 4049-4035 - OB (2hr chart)

Green Fill: Bullish FVG’ or Demand - Green Outlines: OB’s or Demand; Blue Fill: Bearish FVG or Supply - Blue Outline: OB’s or Supply

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Weekly Option Expected Move

SPX’s weekly option expected move is ~63.48 points. SPY’s expected move is ~6.42. Remember over 68% of the time price will resolve it self in this range by weeks end.

SPX Weekly Expected Move for Week of 5/22

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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.

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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:

1. 4210 - negative vanna

2. 4225 - negative vanna

3. 4260 - negative vanna

Below Spot:

1. 4180-75 - negative vanna

2. 4160 - negative vanna

3. 4130 - negative vanna

4. 4100 - negative vanna

Aggregate view of Vanna via Volland

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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:

1. 4195-4200 - positive gamma

2. 4215 - positive gamma

3. 4230 - positive gamma

4. Dealers must sell all levels above 4195

Below Spot:

1. 4180-75 - positive gamma

2. 4160 - positive gamma

3. Dealers must sell below 4150, but buy between 4155-4175

Aggregate view of Gamma levels

Dealer buying vs selling pressure - positive notional value = buying - negative notional value = selling

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Charm

Charm total notional value is bullish - negative is bullish and positive bearish - take the total of the far left and far right values.

Negative total notional value shows bullish charm

When reviewing Charm we also need to account for SPY’s charm. It is leaning bearish.

SPY Charm - Aggregate 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.

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My Intraday Trading Rules

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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.

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