Doug Kass shares his views every day on RealMoneyPro. Click here for a real-time look at his insights and musings.
Six Things to Make a Bear Happy
Originally published Oct. 26 at 7:57 a.m. EDT
As a bear, this is what I like about Wednesday's uneven action:
- A possible rally failure.
- Downside leadership seen in the Russell 2000 Index, which is breaking "levels."
- (T)FANG -- notably Amazon (AMZN) - Get Report (Tuesday's short, for which I received mucho grief(!) -- failed to rally when the averages rebounded and are now leaders to the downside.
- Absence of concern about any chance of a serious market drop or what I call a "Bull Market in Complacency."
- Continued weakness in General Motors (GM) - Get Report (and others) on relatively good EPS reports.
- Continued weakness (and no bounce) in Under Armour (UA) - Get Report , Chipotle Mexican Grill (CMG) - Get Report and others that reported poor EPS reports.
Though volatility is now likely on the rise, for now I am sticking with all of my shorts, including Tuesday's Amazon (rental), expanded PowerShares QQQ Trust, Series 1 ETF (QQQ) - Get Report and ProShares UltraShort S&P500 ETF (SDS) - Get Report (Trade of the Week) and financial shorts.
In terms of respectful and constructive criticism, my pal Tom Lee was on CNBC's "Squawk Box" Wednesday morning and said equities should prosper because the high yield index is up 17% this year -- and stocks almost always follow the junk bond market. I disagree, and I see that observation as positive data mining as he failed to mention that in 2015 the junk bond market fell by nearly 15%, yet stocks were not punished. Taking Jan. 1, 2016, as his launch date for his empirical evidence is playing with numbers, imho.
Position: Long CPB, SDS large, HIG large; short SPY, QQQ, XLF, AAPL, AMZN, GM small, IWM small .
The Ultimate Contrarian Short: Amazon
Originally published Oct. 25 at 2:18 p.m. EDT
Rising from the Brexit February low at about $475 a share, Amazon's shares (now about $836) have led the rally in the broad market and have been a leader in the overall advance in technology stocks.
Earlier Tuesday -- in highlighting the divergence performance of Whirlpool (WHR) - Get Report vs. PowerShares QQQ Trust, Series 1 ETF (QQQ) - Get Report -- I added to my QQQ short and moved to a medium-sized short.
Continuing the slowing consumer discretionary/retail thesis, it doesn't seem to me that Amazon's sales and share price will be impervious to a general weakening in aggregate retail activity and in the lower stock prices in the retail space.
Technically, there appears to be a potential double top in the Amazon stock chart at approximately $850 a share.
Since AMZN's shares are volatile (and speculative), I plan to stop myself out in the $850-$855 ashare range, which would be an upside breach of the aforementioned potential "Double Top."
Position: Short QQQ, AMZN small.
Action Alerts PLUS, which Cramer co-manages as a charitable trust, has no positions in the stocks mentioned.
At the time of publication, Kass and/or his funds were long/short XXX, although holdings can change at any time.
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.