Bear Market Holiday Sale (by Phantomcapital)

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On Thursday I wrote a post titled "That Time of Year Again."  Basically, I
was calling for a major snap back rally to take the S&P back to the north
side of 1400.  While the market ripped
the bears to shreds today, another more interesting November needs to be
examined.  And that my friends, is a
November that occurred in the beginning of a bear market; November 2007. 

It seems everyone and their
brother was talking about a possible snapback rally on Friday.  1400 was a virtual given according to
conventional wisdom.  Today’s action
absolutely confirmed that we are in the midst of the snap back rally.  However, the difference between November 2011
and November 2007 is that we are now in a bear market.  As before, I’d like to present a few charts
with numbers (they are markers for my comments, not waves) to make a very
bearish case. 

SPX November 2007

1)  Snap back rally from a level of support.  2) 
Move to the target that “everyone” was looking for.  3)  A
push higher than the mark “everyone” was looking for which demoralized bears and brought
the last bulls in for slaughter.  4)  Bombs. 

SPX November 2012

So now I am going to stick my
neck out and go on record and show how the next two months is going to play
out.  1) 
Highly telegraphed bottom leading to a snap back rally.  2) 
Achievement of the “1400 is a given, GET SHORT” level followed by 3) the
dreaded break higher into bull market fantasy land.  4) 
Bombs.  Away.

Simply, I think we are going push
higher, hit 1400, and then make all bears puke with one last small push
higher.  So am I encouraging getting long
here?  Hell no.  This is a bear market unlike November 2011.  I’m starting to build a position of 2013 dated SPY puts.  The VIX at 15 is
currently holding their version of a Black Friday sale on options.  The major part of this sell off will happen
right when traders won’t have the stomach for puts.  And lastly, the market is one screw up away
from Washington, Europe, or the Middle East to start the plunge immediately.  Timing is everything.  Unless you buy plenty of time with the VIX
sub 15.  Then it is just simply placing a
flag in the ground before anyone else thinks to do it.  


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