Kass: I'm Sprouting Bull Horns

So, I am now calling an audible on many of the investments that have occupied my short book, like the Retail HOLDRs (RTH - commentary - Cramer's Take) and a number of other consumer names. Moreover, the better acting early cycle sectors could be joined by the oversold materials and energy groups, which are now looking very much like the mid-July capitulation in the banks.

If this occurs, an upside breakout could happen sooner than later.

"The odds are six-to-five that the light in the end of the tunnel is the headlight of an oncoming train."

-- Paul Dickson

I am not ignoring the obvious headwinds, which include a pernicious credit cycle, a deeply indebted consumer, a hedge fund community in disarray, the world's fractured financial institutions (and the attendant loss of credit availability) and a weakening corporate profits picture, but all of these issues are now well known and quite possibly have been discounted in the current price level and valuation of equities.

Nor am I willing to bet the ranch that lower commodity prices are creating something of a sea change in the form of improving corporate profits, that the relative strength in early cycle stocks will be sustained, that the oversold materials/energy stocks will rebound meaningfully nor that political change (or its investment ramifications) will have a salutary impact.

Though I am a Democrat and a short seller, as I have written repeatedly, there is no place for partisanship in the investment process. I have equal disdain for Polyannas and Cassandras, and I abhor inflexible investors who ignore the message of the market and remain too anchored in unbending dogma.

My investment conclusion?

The light at the end of the tunnel may not be an illusion, but the tunnel might be!

It's time to get more bullish.

Doug Kass writes daily for RealMoney Silver, a premium bundle service from TheStreet.com. For a free trial to RealMoney Silver and exclusive access to Mr. Kass' daily trading diary, please click here.

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At the time of publication, Kass had no positions in the stocks mentioned, although holdings can change at any time.

Doug Kass is founder and president of Seabreeze Partners Management, Inc., and the general partner and investment manager of Seabreeze Partners Short LP and Seabreeze Partners Short Offshore Fund, Ltd.