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 week, Kass discussed why he's holding on to his eBay position, why there are plenty of potential economic shocks on the horizon and why the recent declines in Apple shares are good, not bad, for the broader market.

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Not Selling eBay
Originally published on Thursday, April 19 at 8:21 a.m. EDT.
  • The company's earnings (and the story) are that good.
  • I have owned eBay ( EBAY) since the depths of the stock market in 2009.

    My cost is $11.64, and, despite the $5.50 share price move upward today, I am not selling a single share as the earnings (and the story) are that good.

    At the time of publication, Kass was long EBAY.

    No Shortage of Shocks
    Originally published on Thursday, April 19 at 9:43 a.m. EDT.
  • More tepid domestic economic growth raises the susceptibility of our fragile economy to shocks.
  • Nothing compares
    No worries or cares
    Regrets and mistakes
    They are memories made.
    Who would have known how bittersweet this would taste?

    -- Adele, Someone Like You

    The jobless claims number was poor relative to expectations. Moreover, the previous week's numbers were revised upward. At 380,000, claims are consistent with a slowing in monthly payroll growth to about 175,000 a month, though I expect next month's report to be closer to 150,000.

    The excuse last week for the weak initial jobless claims numbers was Good Friday. Is there an excuse again this week? Can we sugarcoat the jobs report?

    Well, look at the yield on the 10-year U.S. note (at 1.97%); it seems to be signaling that more economic weakness lies ahead. Indeed, several of the most recent economic releases are consistent with decelerating growth.

    More tepid domestic economic growth raises the susceptibility of our fragile economy to shocks, and there is no shortage of potential shocks, as I related in my opening missive, "Dirty Dozen."

    I remain of the view that fair market value for the S&P 500 is approximately 1360 compared to last night's close of 1385. This is not an especially attractive reward vs. risk (though not terrible either), and I still think we are range-bound between 1300 and 1430 as far as the eyes can see. This helps to explain why I move back and forth around market-neutral, buying the dips and selling the rips.

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

    Why Apple's Fall Is Healthy for the Markets
    Originally published on Tuesday, April 17 at 7:40 a.m. EDT.
  • The disconnect from the majority of stocks led to low volume and weak breadth.
  • The prevailing view of most investors and traders is that Apple's ( AAPL) steady share price fall over the past several days -- it is down 10% from its high -- is a precursor to broader market weakness.

    Indeed, a Wall Street Journal article today makes the case that Apple's share price weakness will drag down the market.

    I respectfully disagree.

    In fact, the strength over the past three months in a relative few high-octane stocks (Apple, Google ( GOOG), Priceline ( PCLN), etc.) was, to this observer, a negative market tell, as the disconnect from the majority of stocks that led to low volume and weak breadth are typically signs of a narrowing market.

    So, it follows that if the high-beta cabal of stocks fall somewhat and breadth improves, as it did yesterday, when the Nasdaq dipped, the S&P 500 was flat and the DJIA rose, the technicals of the market might be growing healthier.

    I viewed the rotation yesterday out of Apple et al. and into the better performing consumer staples sector ( Procter & Gamble ( PG), Colgate-Palmolive ( CL), PepsiCo ( PEP), International Flavors & Fragrances ( IFF)) as a market positive.

    As I wrote yesterday, the great reallocation might be under way -- not a reallocation out of bonds and into stocks but rather a reallocation out of Apple and into all other stocks.

    The fact that we may no longer be in the NBA (nothing but Apple) market and that we might have entered the ABA (anything but Apple) market might be construed positively for the markets.

    So, adios, Kobe Bryant. Say hello to Dr. J!

    Viva la diferencia.

    At the time of publication, Kass was long PG, CL, PEP, IFF.

    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.