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Shrinking SPY, QQQ Short Positions

Originally published at 4:00 PM EDT on Oct. 29, 2015

I stopped myself out of yesterday's SPDR S&P 500 ETF (SPY) - Get Report and PowerShares QQQ Trust (QQQ) - Get Report shorts for losses and have taken down the positions to small in size.

I am now at my lowest gross exposure in 2015, reflecting that I have been wrong and have reduced confidence in my near-term ability to understand the recent market advance.

Separately, The Wall Street Journal reports that CVS Health (CVS) - Get Report is ousting Valeant Pharmaceuticals' (VRX) Philidor RX unit from its pharmacy benefit management program.

Here is what I wrote about Valeant this week.

Position: Short SPY, QQQ (both small)

Today's Takeaways and Observations

Originally published at 3:19 PM EDT on Oct. 29, 2015

My thoughts on the day to this point:

  • Another win for the bulls.
  • Uneventful, inside day, thus far.
  • Bonds were the feature, with yields rising in a delayed response to the Fed's statement yesterday.
  • Crude flattish.
  • Municipals were flat and junk was offered.
  • Closed-end municipal bond funds did well, despite the above.
  • Banks took small hits, but nothing compared to Wednesday's gain.
  • Autos, recently taken off my Best Ideas List, are conspicuously weaker in share price.
  • Retail still sucking wind.
  • Biowreck -- an exception being the strength in Allergan (AGN) - Get Report -- was mixed to lower.
  • The U.S. dollar weakened a bit after yesterday's rip higher.
  • Gold lower in the face of the Federal Open Market Committee communique.
  • Consumer nondurables rebounded from Wednesday's losses after the euro firmed.
  • According to the sentiment surveys (I should have emphasized the negativity more in my thinking at the September lows!), sentiment not surprisingly has rebounded into the bullish camp.
  • (T)FANG stronger again, though Netflix (NFLX) - Get Report and Telsa (TSLA) - Get Report down on the day.
  • Potash (POT) missed (better than I thought) slightly, though most of the miss was from a three-cent extraordinary charge, and lowered guidance for the balance of the year on tonnage/sales/earnings per share. This shouldn't be surprising -- I will come back with a review of the quarter on Monday; I added on today's weakness.
  • Apple (AAPL) - Get Report continues its run higher.
  • Potholes seen in GoPro (GPRO) - Get Report , Twitter (TWTR) - Get Report and former fav Buffalo Wild Wings (BWLD) .

I did little today.

Position: Long POT, NFLX puts, SPY puts, TWTR (small); short NFLX (small), SDS (small), SPY, AAPL, TWTR calls

Springing Into Post-FOMC Action

Originally published at 2:59 PM EDT on Oct. 28, 2015

I am re-shorting and adding back the life insurance stocks to my Best Ideas List (short) -- Lincoln National (LNC) at $52.90 and MetLife (MET) - Get Report at $50.80.

While the two-year U.S. note has spiked, there is little change in the 10-year and 30-year yields.

Moreover, I am of the view that intermediate- to longer-term yields could fall with a federal funds rate rise in December or in early 2016.

So, reinvestment opportunities will be meager for the sector for some time to come for life stocks, which was clearly highlighted this week by the punk results at Hartford Financial Services Group (HIG) - Get Report .

I am further reducing my money center bank holdings on the sharp spike in their shares. I have sold Bank of America (BAC) - Get Report at $17.13, Citigroup (C) - Get Report at $54.41 and JPMorgan Chase (JPM) - Get Report at $65.08.

I added to my short exposure in SPDR S&P 500 ETF at $207.05 and PowerShares QQQ Trust at $112.80, moving from small back to medium in size.

Position: Short LNC, MET, SPY, QQQ; long BAC, C, JPM (all small)

At the time of publication, Kass and/or his funds were long POT, NFLX puts, SPY puts, TWTR, BAC, C, JPM, and short SPY, QQQ, NFLX, AAPL, SDS, LNC, MET, 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.