Back to neutral

Today Dow and S&P down almost 3%, it took 3 days to gain more than 50% of recent losses, and it took one day to give back 50% of that gain. To say the market is volatile is an understatement. I used my indicators well, sold all my calls and SSO and UWM yesterday (not close to peak, BTW), but it's very good to see that I avoid another disaster if I still hold them today!

1. The market did exactly what I expected yesterday, turned lower in a hurry. I thought bulls could fight another day, but I overestimated their ability.
2. And I positioned myself right, with some IWM puts. Since I was wrong with recent SPY calls purchases (bought too early, and only yesterday it's profitable, and I sold for a huge loss last week), I only added small IWM puts yesterday.
3. Today I bought IWM 79 Aug put at 1.48 when market had a decent bounce off low early this morning, later I sold at 2.2.
4. This is not the best play, I should buy QQQQ or SPY puts, since today, I noticed the beaten down sectors and indices like Russell 2000, were the strongest. Like home builders. So it pays to pay attention to the market movements among different sectors, and pick the correct one to trade.
5. I knew the market would tank later into the close, but recently I was early to buy calls, I didn't want to be too early to buy puts either, I really wanted to see a bigger bounce into the afternoon so I could add more puts, turned out to be wrong.
6. The bulls never put up a strong fight after the initial strong bounce, it's down from there into the close. And the last 30 minutes program buying didn't show up either.
7. I also sold the IWM Aug puts I bought yesterday, at 1.5. I bought at 0.83. And the close is 1.73.
8. Now I'm back to neutral, all in cash.
9. VIX shot up 23% to 26.48, the highest level yet again in last 4 years!
10. I think the VIX option play is not a bad idea at this stage, but be prepared to lose them all if you pick the wrong bet.

Next:

1. The market can go either way from here, with VIX high, a big bounce or a sharp sell off will be next.
2. Since some of my indicators point to selloff, some points out to a bounce, I moved into cash. I'll let market tells me what's next.
3. It's very tempting to buy another sharp drop tomorrow morning and sell later.
4. It's also very tempting to short another big bounce tomorrow.
5. With a market like this, you may get the chance to do both tomorrow, for a good profit.
6. But if you're wrong, then result will be a disaster.
7. I will only do this if there is at least more than 1% move, to fade that move.
8. And I think tomorrow the market will sell off early in the morning, then bounce back, and then sell off again into close.
9. I rather to miss the chance to trade than being caught on the wrong side again.
10. No action is better than wrong action.
11. I think we'll have a decent chance to have a 10-15% correction this time, now we're half way there.