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 past week, Kass discussed why it's hard to be bullish right now, why he sold his Procter & Gamble shares, and how he's trading oil stocks.

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Technical Damage Is Mounting
Originally published on Thursday, July 12 at 4:50 p.m. EDT.
  • Plus, the economic data are growing more ambiguous and the consensus corporate profit outlook looks less secure.
  • I wish I could get more bullish, but I can't.

    As I wrote earlier this week, we will likely be seeing a range-bound and directionless market for the next few months. This will provide opportunities for the trading community, but not for the buy-and-hold crowd.

    The economic data are growing more ambiguous, and the consensus corporate profit outlook looks less secure. There is a limit to how further monetary easing can provide a catalyst to growth -- fiscal policy remains the solution. But our leaders remain dysfunctional and divided -- and then, of course, there is Europe.

    Meanwhile the technical damage is mounting. And, as I wrote in two columns on sentiment this week, investors' confidence has been damaged by a plethora of factors

    If you will permit me a metaphor, Mr. Market is like a bathtub with investors sloshing around it, and the movement causing the tub to consistently lose water. There are no new inflows (or water) replenishing the tub. And the only active bathers are the high-frequency traders -- who are doing a disproportionate amount of the splashing. They are wild and unpredictable and don't use soap very often.

    Thanks for reading my Diary and enjoy your evening.

    I ended the day at about a 10% net long exposure, down from 25-plus% when the market swooned earlier in the day.

    Position: None

    Why I Punted Procter
    Originally published on Thursday, July 12 at 12:37 p.m. EDT.
  • Many of the company's problems are structural.
  • Let me explain my rationale for selling Procter & Gamble ( PG) on the Pershing Square news and the share price run-up.

    With a market cap of $175 billion, P&G is a whale.

    It is almost too big to restructure, and while the CEO is under some pressure for poor performance, many of the company's problems are structural.

    The company also faces a huge foreign-exchange headwind that will likely further weigh down earnings.

    Finally, the history of this company is that the shareholders and its directors are more patient than with most other companies (e.g., Yahoo! ( YHOO)).

    Bill Ackman is one of the most brilliant hedge-hoggers I know of, but he has a lot on his plate with J.C. Penney ( JCP) -- he owns 40 million shares, which is not going swimmingly. (Ratings are being cut, and its merchandising gambit seems to be foundering. Cash flow pressures and even capital pressures at J.C. Penney are mounting.)

    Position: None

    Confident in Oils
    Originally published on Thursday, July 12 at 11:53 a.m. EDT.
  • I continue to think that oils will lead.
  • Check out the intraday price action on Ensco ( ESV) shares -- after being up $1.50-plus yesterday and down by nearly a bean earlier today, they are now approaching breakeven.

    This is exactly what happened in July, 2011. The market got beaten up, but oils outperformed.

    Market Vectors Oil Services ETF ( OIH) is substantially my largest long position.

    Position: Long ESV and OIH

    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.