Doug Kass shares his views every day on RealMoneyPro. Click here for a real-time look at his insights and musings.
Adding to Twitter Long
Originally published April 26 at 12:59 p.m. EST
Here's What's Driving My Approach
Originally published April 26 at 10:40 a.m. EST
- The market has been buoyed by a handful of stocks of a technology kind.
- From my perch, (T)FANG has been materially exploited.
- The Nasdaq is getting overbought now.
- As mentioned at the outset, SPDR S&P 500 ETF (SPY) short interest has been materially reduced and is now back to 2007 levels, and as Peter Boockvar related earlier, bullish investor sentiment has risen in the last week.
- The long-expected tax reform package is now on our doorsteps, though approval and execution without impacting the deficit is likely problematic. The rumor of the package has been bought--perhaps the news will be sold.
- The 10-year U.S. note yield has risen by about 17 basis points from last Tuesday's low yield of 2.16%. Yields again could test the resistance at 2.32% (it is now 2.329%). If bonds rally in price and decline in yield, this could get the risk-parity crowd to sell stocks and buy bonds.
Takeaways and Observations
Originally published April 24 at 4:00 p.m. EST
'Til April in Paris, chestnuts in blossom
Holiday tables under the trees
April in Paris, this is a feeling
That no one can ever reprise
--April in Paris, Vernon Duke and Yip Harburg--(rare video with Ella Fitzgerald!)
The market gapped higher and spent the day in a narrow range--not sure what that means.
Here is an analysis from RevShark:
"...but the only thing I'm worried about is the inability of this market to generate momentum. Gap and flat action doesn't give us many opportunities, and that is of far greater concern to me than poor technical action."
- Rev Shark, Did You Sleep Through Big Market Move?
I remain bearish of self-confident "talking heads" who are often wrong but never in doubt.
"For Traders Only"--buying out of the money HIG calls.
Dipped on the short side--but in a minor way.
At 3:45 p.m., the S&P is near the top end of its daily trading range.
* The US Dollar got schmeissed after a salutary reaction to the French elections.
* The price of crude oil settled -$0.37 to $49.25.
* Gold fell by -$13. As I wrote last week, no likey.
* Ag commodities: wheat -3, corn +2.50, soybeans +8,75 and oats +2.50.
* Lumber fell by three beaners.
* Bonds declined in price and rose in yield (by 4- 4 1/2 basis points)
* The 10-year U.S. note yield is at 2.275% -- but below 2.32% it hit before trading commenced. (I thought that rollover in yields would cause stocks to take a breather from the highs -- but so far, no).
* The 2s/10s spread expanded by only one basis point to 104 bps.
* Municipals got hit but high yield was well bid on relief regarding EU economic growth.
*Blackstone/GSO Strategic Credit Fund (BGB) + a penny, I would not own here.
* Banks bolted higher as rates turned up. Seems to be exaggerated by machines, we will see throughout the week. Money centers ++. EU banks particularly strong (e.g. Deutsche Bank (DB) --which I would be selling).
* Insurance strong, though "Trade of the Week" (HIG) is lagging. I plan to add to very small Metlife (MET) and Lincoln National (LNC) shorts on any further gains (after covering lower).
* Brokerages had a "dead cat" bounce--looking to short both Morgan Stanley (MS) and Goldman Sachs (GS) after covering lower.
* Auto stocks underperformed.
* Ag equipment higher despite so-so Caterpillar (CAT) retail sales for March.
* Retail was mixed with Home Depot (HD) /Lowe's (LOW) remodeling complex upside leaders. Nike (NKE) , Kohl's (KSS) and Macy's (M) disappointing--and lower.
* Biotech stormed +2% as Celgene (CELG) led the parade. Speculative biotech was strong (ACADIA Pharmaceuticals (ACAD) etc.)
* Big pharma played catch up from recent weakness.
* Old tech stronger led by Microsoft (MSFT) , Cisco (CSCO) and Intel (INTC) .
* Media was conspicuously weaker--Disney (DIS) lower in a strong tape.
* Consumer staples prospered with a lower currency--my fave (but much hated), Campbell Soup (CPB) almost one dollar better.
* (T)FANG broadly higher. Amazon (AMZN) and Alphabet (GOOGL) continue their market leadership.
* In individual stocks, DuPont (DD) and Radian Group (RDN) stood out to the upside. As did Apple (AAPL) , a small short. Everyone has forgotten about Twitter (TWTR) --that's probably a good thing (up a nickel).
Here are some value added contributions on our site today: