Weekly Plan for April 20
Last week was a consolidation week as price remained within the tariffs anouncement day; the so called "Liberation Day". I discuss my weekly plan below for trading S&P 500 this week.
Summary
Over the last week, volatility has declined as the S&P 500 remained within a large trading range.
Most recently price has made a corrective bounce higher. In my analysis, I will review potential targets for this week and why the most recent bounce is a short covering rally.
Shown below is the long term S&P 500 future’s weekly chart using a trendline dating back to March 2020. A couple weeks ago this trendline was touched. I have annotated a number of times where price bounced higher off this trendline adding to the credability of this price reference.
Observe the rectangle above the current price. This area should act as a supply zone. I expect active selling in this area. The S&P 500 futures range is between 5550 - 5650. This area is critical as it defines a bearish to bullish view of the price action. This area is a potential bullish price target zone over the next few weeks.
A rejection at this level would validate the view that this was a short cover rally and therefore the decline would continue.
This chart was provided in previous weeks and still is used as a reference.
The analysis completed here is using the ESM2025 contract and or the SPX cash index. The future’s contract expires the 3rd Friday of June 2025.
From an elliot wave perspective the S&P 500 is in the final fifth wave move higher before a larger decline. Noted in the chart are potential targets.
When converting equivalent pricing between ESM2025 and SPX (S&P 500 cash index) that difference is approximately 30 points. This price spread declines as it gets closer to ES contract expiration.
S&P futures with Fibonacci Retracements
This chart shows S&P futures with both fibonocci levels from the most recent high/low and bollinger bands. The chart is using a daily timeframe.
Bollinger Bands are a popular technical analysis tool that helps traders assess price volatility and identify potential overbought or oversold conditions. For greater insight look here.
I have placed Fibonacci retracements from the high 6170 to the 4837 low. The bands encapsulate 2 standard deviations of price action.
The mid-line is the 20 day simple moving average. It also corresponds to the 50 percent retracement of the entire move lower. This price is approximately 5500.
If price moves above the 50 percent retracement area, then the next higher target is 5661 representing the 61.80 percent retracement.
I have highlighted potential key fibonicci targets:
Key Observation:
🔹 Resistance Cluster Ahead
Between 5,500–5,660 lies:
The mid-Bollinger band
The 50–61.8% Fibonacci zone
Psychological and structural resistance
This region will be a make-or-break zone to determine if price resumes its broader uptrend (potential Wave 5) or stalls into a larger consolidation/correction.
🔹 Support & Rebound Confirmation
Bounce off 4,836.98 (0% Fib) was sharp and decisive, indicating a potential Wave 4 bottom (if in EW structure).
Strong follow-through confirms this as a likely intermediate-term low.
🔹 Current Price Action
Price is now near 38.2% Fib (~5,346), which may act as short-term resistance.
If bulls maintain momentum, the 50% level at 5,500 is the next target, and 5,660 (61.8%) is a critical “decision point” for a trend continuation.
The Volume Profile View
The chart below shows the S&P futures (contract ES) 10 day daily volume profile/market profile chart.
The data aggregation is done in 30 minute periods. The pink line to the left shows the volume POC while the green line to the right shows the POC of time. Volume and time donot always line up to the exact location.
The basic idea is that most of the price action lies between the value area high and the value area low. The point of control (POC) is where the most significant amount of volume was traded for a given price bar. Statisically 70 percent of the price action occurs within the value area.
The area enclosed in the square shows that price has been within a large consolidation range. The first bar in the range represents the large move (10 percent higher) on the white house’s “Liberation Day”; large tariffs imposed on all US trading partners.
📊 10-Day Monkey Bar / Market Profile Analysis
🔸 Balance Area (Highlighted Zone)
The green box outlines a 7-session balance area, showing a clear consolidation between roughly 5040 and 5506.
This forms a composite value area, where both buyers and sellers have found agreement.
This range suggests a buildup of potential energy for a directional move.
Typically price remains range bound 70 percent of the time.
🔍 Key Observations
Feature Detail
Value Area High (VAH)~5505.9
Value Area Low (VAL)~5040
Point of Control (POC) Oscillated between ~5280 and ~5380 for most of the 7 sessions.
Price Location (as of 4/17) Trading around 5326, slightly above POCs from 4/16 and 4/17, and near the center of the balance zone.
POC Clustering Dense clustering of POCs (4/15, 4/16, 4/17) implies strong acceptance around this range (~5320–5380).
Single Prints (above) Notable unfilled single prints from 3/28 and 3/31 ~5600+ range — potential upside targets if breakout occurs.
📈 Bullish Scenario (Breakout Above 5506)
Setup Notes
Break above VAH Clears 5505 with volume → upside imbalance likely
Targets 5560–5600 (3/31 single prints), then possibly 5660–5700
Buy pullbacks above 5506 or breakout continuation over VAH on strength
📉 Bearish Scenario (Breakdown Below 5040)
Setup Notes
Break below VAL Below 5040 = failed balance → downside expansion begins
Targets: 4975, 4920, then 4850 (prior structure zones)
Confirmation Break down with strong selling volume
Rejection Strategy Short on retest of broken VAL or breakdown candle lows
🧠 Market Psychology Insight
This balance suggests that institutional players are in accumulation/distribution mode, awaiting a catalyst (possibly earnings).
Imbalance : The longer the balance holds, the more significant the breakout/breakdown move typically is.
📅 Watch Levels
Level Type
PriceValue Area High: 5505.9
Point of Control: 5326 (4/17)
Value Area Low: 5040
Major Support: 5146 (4/10 low)Single Print Gap (Target)5600+
The Volume Profile View ( 10 days )
The chart below shows the S&P 500 futures volume profile for the last 10 days aggregated by 30 minute periods. I am showing the candlesticks on the left with the profile histogram on the right.
The area boxed in on the right is the value area for the last 10 days. As you may recall the value area contains 70 percent of the trading volume for the period with the point of control indicating the highest area of volume.
The S&P futures are within the 10 day value area.
Volume Profile Breakdown (10-Day Composite)
Read about market profile and auction market theory here.
S&P 500 futures hourly chart
This chart shows the last 120 days of trading price action. The chart shows heikin candles using a 65 period simple moving average. Price is currently approximately 2 percent below this moving average. This is not extreme for this current market.
Over the last 4 - 5 months this area acted as good area of short term support or resistance. Notice when price moves in an extreme direction away from the moving average that price springs back towards it.
This chart shows has been useful for trading this market as price oscillates arounds this moving average.
Current Market Outlook Using Sectors
Listed below is the performance of the sectors that make up the S&P 500 for this period.
Observe that XLK ( technology ) was the worst sector. If technology continues to act bearishly, expect either continued price consolidation or a retest of the lows.
VIX Chart
The VIX is a number that measures how much people think the S&P 500 will move (up or down) over the next 30 days.
It’s often called the:
✅ “Fear Index”
because it rises when investors are nervous or expecting big market swings.
Currently the VIX has been in backwardation. A bullish SPX market would be in contango.
🔄 What is Backwardation in VIX?
Backwardation means:
Spot VIX > VIX Futures (especially 1-month out)
This implies the market expects volatility to decrease in the future, but currently sees significant near-term risk.
📘 What is VIX Contango?
VIX contango happens when:
🔸 The VIX futures prices are higher than the current (spot) VIX.
It’s the opposite of backwardation.
This implies that there is amount of risk, owning stocks short term.
Management of last week’s plan
Each week I sell calls for credit via broken wing buttefly strategy in the SPX. I wait for a short squeeze and sell above. I use the various areas of resistance on the chart along with the positioning information provided.
This strategy has performed well overall, as the market has been in decline or consolidation since the last quarter of 2024.
You can review all of my posts here.
The MenthorQ SMILE curve
The MenthorQ skew smile curve chart of the S&P 500 cash index.
🧠 Key Takeaways from the Chart
1. Sharp Left-Side Skew (Puts)
Deep out-of-the-money puts (left side) show very high implied volatility — over 150% IV, with 1M values even exceeding 200%+.
This indicates:
Heavy demand for downside protection
Traders are still hedging against tail risk
Market participants pricing in a potential crash scenario
2. ATM (At-the-Money) Implied Vol
The lowest IV is around strike 6000, above the current SPX level.
IV is still elevated vs historical (40–50% range), showing:
Ongoing concern even near current price
No clear reversion to a “normal” volatility regime yet
3. Call Wing (Right Side) Steepness
The far OTM calls (right side, > 6500 strikes) are slightly elevated in today’s curve vs 1M ago.
Suggests:
Some demand for upside exposure, possibly short covering or speculative call buying
Smirk shape forming — typical in volatile environments where both tails are priced rich
4. Smile Shift Over Time
Comparison Behavior
Today vs 5 Days Ago Slight reduction in extreme IV — suggests some stabilization but market still risk-off
Today vs Yesterday Almost identical — implies IV is holding steady, not decompressing yet
S&P 500 Term Structure
The chart below shows the $SPX term structure. The green line shows today’s term structure. It is lower compared to the last five days indicating price consolidation.
The short-term IV spike over the next few days suggests continued risk. Over the next few weeks the term structure suggests that volatility will decline.
🔍 Observations
(Connected to VIX Backwardation)
🔺 1. Front-End Volatility is Elevated
The green curve (today) starts above 27% IV at short expirations (0–7 days) and slopes down.
This confirms the VIX backwardation regime: the market is pricing immediate risk more heavily than future risk.
📌 Interpretation: The market is worried about short-term events. Over the next 30 - 90 days volatility remains high and constant.
S&P 500 Cash Gamma levels
The chart shows four different GEX chart with the highest level of GEX. Market participants are mostly positioned bearish. GEX identifies areas on the chart where PUT and CALL volume exist at various strikes ( price levels).
Reviewing the charts, we can observe some bullish near 5480 for Monday and 5320 - 5370 for Tuesday. There is very little GEX expiring these two days.
For the May expiry, 17 percent expires on this day with mostly a bearesh slant 5500 - 5100.
This chart reflects market participants continued bearish bias.
The market maker implied move for the S&P cash index this week is +/- 118 points. The futures closed at 5283, therefore the market maker expected range is between 5401 to 5141.
🔭 Strategic Takeaways
Scenario
Outlook Strategy Ideas
🔻 Market drops below 5250 Dealers hedge by selling → could accelerate down to 5200 or below. Buy put debit spreads; avoid selling naked puts
🔼 Breaks above 5350–5400 Dealers must buy to hedge → potential gamma squeeze. Long call diagonals strategy
↔️ Stays 5250–5325 Choppy mean-reversion driven by short gamma Short straddles/strangles with tight risk or iron condors.
Long Term rates (10 year Treasury)
The FOMC cut rates (December 2024) a .25 basis point cut. Rates peaked in the first week of January 2025. The yield is currently at 4.35.
At the most recent meeting FOMC left rates unchanged. The fed-fund watch tool shows that there is a 13% probability that short term rates will get lowered by 25 basis points at the next meeting in May.
I have placed bollinger bands around the price action. It shows increasing volatilty and a potential bounce off of the mean.
🧭 Risk Sentiment Matrix (Yields vs SPX)
10Y Yield Level SPX Signal Risk Mood
< 4.10% Bullish SPX Goldilocks, Fed in control
4.10–4.40% Neutral chop Confused regime, data-dependent
> 4.50% Bearish SPX Inflation concern, risk-off
I list the major events below.
US Market Moving Events for the current week
I have listed the events in the order of significance (highest to lowest).
For the week of April 21 to April 25, 2025, several key economic events and notable earnings reports are scheduled in the United States.
📅 Economic Data Releases
Wednesday, April 23
S&P Global Flash PMIs (April): Preliminary readings for U.S. manufacturing and services sectors, offering insights into economic activity and potential impacts from recent trade developments.
New Home Sales (March): Data on newly constructed home sales, reflecting housing market trends amid affordability challenges.
Thursday, April 24
Durable Goods Orders (March): Measures new orders for long-lasting manufactured goods, indicating business investment trends.
Chicago Fed National Activity Index (March): A composite index of economic indicators, providing a gauge of overall economic activity.
Existing Home Sales (March): Statistics on previously owned home sales, offering additional perspective on the housing market.
Friday, April 25
University of Michigan Consumer Sentiment Index (April, final): Final reading on consumer confidence, which has been declining over recent months.
🏛️ Federal Reserve Speakers
Monday, April 21: Fed Governor Christopher Waller
Tuesday, April 22: Minneapolis Fed President Neel Kashkari
Wednesday, April 23: Philadelphia Fed President Patrick Harker
Thursday, April 24: Cleveland Fed President Beth HammackS&P Global+2Investopedia+2Econoday+2
Remarks from these officials will be closely monitored for insights into the Federal Reserve's outlook on inflation, interest rates, and economic growth, especially in light of recent tariff developments.Investopedia+1S&P Global+1
💼 Corporate Earnings Reports
Tuesday, April 22
Tesla (TSLA): Q1 earnings release, following a reported decline in vehicle deliveries. Investors will watch for updates on production and guidance amid tariff uncertainties.
GE Aerospace (GE): Earnings report, with attention on aircraft demand and supply chain dynamics.
Wednesday, April 23
Boeing (BA): Results anticipated amid reports of potential delivery halts to Chinese airlines due to trade tensions.
AT&T (T): Earnings release, providing insights into telecommunications sector performance.Investopedia
Thursday, April 24
Alphabet (GOOG): Q1 earnings, with focus on AI investments and cloud revenue performance.
Intel (INTC): Results under new leadership, highlighting responses to tariff impacts and strategic shifts.
Procter & Gamble (PG) and PepsiCo (PEP): Reports offering perspectives on consumer spending trends.Investopedia
Anytime During the week
Potential Commentary or Speeches from the US President
– Look for any remarks by the United States President and or high ranking cabinet officials which may move the market. This is NOT date specific.
These events collectively offer a comprehensive view of the current economic landscape, encompassing monetary policy, corporate performance, housing dynamics, and consumer behavior. Investors and analysts will closely monitor these developments to inform their strategies and forecasts.
QQQ Daily Chart
Looking at the QQQs or the Nasdaq100 futures are an important part of my trading plan. The XLK (technology ETF) represents a 33% component of the S&P500. Therefore I use this as an indicator to trade the S&P 500. QQQs closed at 444.
🧭 Strategic Scenarios
📉 Bearish Continuation (High Probability)
If QQQ fails to reclaim 458–460 zone
Watch for break below 441
Target: 400 → 380 → 350
📈 Short-Term Relief Rally (Countertrend)
If bulls push above 458.5, potential to test 470–480
Bearish setup remains valid unless >500 is broken
QQQ Gamma levels
The chart below shows the positioning information for QQQ. Current GEX profile is showing a slight negative gamma environment. Currently price is 444. The key inflection point is 465 (high volume level).
🧠 Net GEX Profile Interpretation
🔻 Below Spot (~444 )
Heavy negative GEX dominates from 440 down to 410.
Dealer hedging is destabilizing: as price falls, dealers are short gamma and must sell more, increasing volatility and accelerating downward moves.
This negative gamma zone supports higher realized volatility and price fragility.
🔼 Above Spot (444 – 500)
Zone Gamma Profile Implication
445–465 Mixed GEX, slightly neutral Price could chop in this zone with some volatilty compression
465–485 Increasing positive GEXDealer positioning becomes stabilizing here. if price reaches this zone, it may slow volatility
500+ Strong call wall Acts as ceiling/resistance due to hedging saturation and potential roll off risk
The Weekly Plan and trading idea
My general strategy for the current market is limit the weekend exposure to the market. With that being said, I am generally more than 75 percent in cash on any given weekend.
With the details I provide above, I pick my spots of trade entry judiciously. I spend large amount of time analying the S&P 500 and I am trading spreads in this market. As the market has been mostly down, I look to exploit large upward spikes in CALL premium. I will structure trades as broken wing butterflys where I am a net seller of call premium.
This article gives a general idea of the trade strategy.
Structuring of trades this way, allows the trade to work in two different ways:
I collect a credit premium upon trade entry. If the market continues to fall then the trade wins via credit collection.
I am selective in picking the long strike and short strike of the trade, such that if a gamma squeeze occurs, the short call will have neglible impact.
I am mindful of the fact that the market can squeeze much higher then I initially accounted for. In this situation, I adjust the middle strike higher to mitigate risk providing more room for the trade to work. As the trades are short term 3 - 10 days out, I attempt to exploit option time decay (theta). Market don’t move in a straight line up or down and I count on this concept as part of my edge in trading.
If the above point does not mitigate risk sufficiently, and the market continues to squeeze than I will simply close the trade.
My strategy also includes trading small as well as different dates of expiration, different strikes and ranges to mitigate risk.
In trading, it is fool hardy to believe that every trade will win. I am mindful of this fact and constantly monitor my risk. I am playing the long game and I understand that losses are part of the game!
One additional idea is to buy a calendar spread in SPX for the end of week. If the SPX continues to stay range bound, then this strategy takes advantage of theta decay (time decay). This would capitalize on the high volatility for the week and short time to expiration.
Have a successful trading week, by waiting for your trade setups to come to you. Always manage your risk and understand what you expect to lose prior to trade entry. By managing risk, you unlock profitability.
Remember to size down your trades, as volatility is high!
Gamma Level data (netgex data) and skew data (market sentiment) was provided by menthorQ.com
Presentation on VIX
This week I will provide a presentation on the VIX. Watch it live 4/24 12noon EST.
How I trade
I did a number of presentations of my trading process with menthorQ. You can find them here. This is under the highlights section of my “x” account found here.
Follow me on X formerly twitter . I post my market view during the week.
Disclaimer
Please don’t follow my idea(s) blindly. Do your own due dilligence before you attempt to trade. Always manage your risk.
Thank you for reading my weekly plan.
Joel
