The Best of Kass

NEW YORK (TheStreet) -- Doug Kass of Seabreeze Partners is known for his accurate stock market calls and keen insights into the economy, which he shares with RealMoney Pro readers in his daily trading diary.

Among his posts this past week, Kass discussed the eurozone's challenges, how the market's reaction to bad news on Tuesday indicated a short-term bottom and why he was taking a new long position in Yahoo!.

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Heavy Lifting Ahead for Eurozone
Originally published on Friday, July 27 at 2:18 p.m. EDT.

The fundamental problems facing Europe cannot be resolved by bond purchases alone.

While Draghi's rhetoric has more volume than usual today and yesterday, there is a lot of heavy lifting ahead, especially within the context of the numerous challenges facing Italy and Spain in their quest for economic growth and in their much-needed debt financings.

Moreover, Draghi must convince the ECB council members, especially the Bundesbank, and it is unclear how quickly the EFSF can actually buy the sovereign debt of Italy and Spain.

It is my view that the swift rise in the indices since Wednesday has now more than discounted Draghi's comments and that a lot of the rise today is short covering. Don't lose sight of the fact that the fundamental problems facing Europe cannot be resolved by bond purchases alone.

At the time of publication, Kass had no positions in stocks mentioned.

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Gauging the Reaction
Originally published on Wednesday, July 25 at 7:18 a.m. EDT.

It is often how the market reacts to news that is more important than the news itself.

From my perch, a short-term market bottom might be falling into place.

Consider what Mr. Market had to deal with yesterday:

• high-profile earnings misses at Apple (AAPL) and at economic bellwether United Parcel Service (UPS);
• Spain moving closer to the need to be rescued (with its 10-year note yielding more than 7.5%);
• reports that another round of debt restructuring are needed for Greece (again!);
• evidence of an emerging German recession/slowdown; and
• a weakening domestic economic picture manifested in a disappointing Richmond Fed Manufacturing Index.

A very poor market day on Tuesday -- at one point, the DJIA was down by more than 200 points; it closed down by only 100 points -- got a kick save from John Hilsenrath's 3:45 p.m. EDT column in The Wall Street Journal suggesting that more cowbell will be forthcoming from the Fed.

Apple's miss after the close turned S&P 500 futures down another 8 handles, and Nasdaq futures dropped by nearly 30 handles, but that was the bottom for the Tuesday-evening/Wednesday-morning trading session. S&P futures are now up by 6 handles, and Nasdaq futures have erased two-thirds of the aforementioned loss and are down by only 9 handles.

I have learned throughout my investment career that, at times, it is often how the market reacts to news that is more important than the news itself.

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