On last Thursday, SPX surged over 1.2% with volume higher than the prior day (Wed). This constituted a 2nd confirmation day since it was the 6th trading day after the market made a prior low on 6-6. As a result, IBD changed intermediate market trend outlook to confirmed rally.
According to my exit rule as noted in the last post, I had to exit the SPY put if market returns to the confirmed uptrend. Therefore, I was watching market on Friday and saw market falling with lower volume. It was not a bearish sign of institutional distribution due to the lower volume. So I exited all of my the SPY puts.
This trade intended for intermediate term only lasted for a few days with minimal losses. There was no frustration for me since it's part of trading life. I still consider a high probability of a significant market pull back (over 10%) when market starts to signal bearish signs again, because all of the previous pullbacks were shallow with less than 10% changes.
The next time when market gives us bearish signs for us to declare market in correction, I will continue to look for opportunity with intermediate term directional and bearish trade. I will stop any bearish directional trades if the intermediate term correction is not considered as high probability anymore. It means I may not do this type of trade for many months.