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The Best of Kass

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

Early-Morning Market Look
Originally published on Friday, March 15 at 8:00 a.m. EST.
  • Let's take a peek at the overnight and early market movements.

Overnight the beat goes on:
  • S&P futures flat;
  • European markets down;
  • euro up;
  • gold flat;
  • crude flat; and
  • 10-year U.S. note yields 2.03%.

The second stage of the stress test was good for Citigroup (C) and Bank of America (BAC) and bad for Goldman Sachs (GS) and JPMorgan Chase (JPM), but I thought even more significant were the findings against JPMorgan Chase.

In other news, the certainty of the trajectory of the U.S. housing recovery is challenged by a spate of new foreclosures and by rising mortgage rates.

And then there was the introduction of the new Samsung Galaxy S4.

Today is expiration day. (Note: SPDR S&P 500 ETF Trust (SPY) is ex-dividend about $0.70.)

Now, back to the markets.

Mr. Market goes for the 11th consecutive rise today.

I don't want to sound like I am nitpicking, but the low-volume rise has raised some other questions to me.

First, look at the diminishing number of new highs on the NYSE -- all the while, the market moved steadily higher:
  • Last Friday, March 8 -- new highs = 351
  • Monday, March 11 -- new highs = 315
  • Tuesday, March 12 -- new highs = 220
  • Wednesday, March 13 -- new highs = 104
  • Thursday, March 12 -- new highs = not yet available on Bloomberg

Second, the Dow Jones Transportation Average is now about 19% above its 200-day moving average. The last time this occurred was in early May 2010 -- the market proceeded to drop by 18% over the next two months. And in January 2010 the Dow Jones Transportation Average stood 19% above its moving average -- it fell by 12% over the next month. Finally, in May 2006, the Dow Jones Transportation Average (this time) was 21% over its moving average -- it fell by 11% over the next two months.

At the time of publication, Kass was short BAC, GS and SPY.

Doug Kass is the president of Seabreeze Partners Management Inc. Under no circumstances does this information represent a recommendation to buy, sell or hold any security.

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