Here are Doug Kass' top thoughts on some of the biggest stories of the week.


Goldman Weakness Could Be Another Negative Tell

A few weeks ago I wrote a column that compared Rev Shark's reactionary trading style to my anticipatory trading and investment strategy.
 
If action is a "tell" and price should be reacted to (according to RevShark's methodology), I want to call attention to action this week in the shares of bellwether Goldman Sachs ( GS) .
 
I placed the very popular Goldman Sachs shares on my Best Ideas List as a short at $242 a share eight months ago. At the time the consensus was very positive on the shares.
 
In the market's schmeissing on Tuesday GS shares fell by $8 and rallied only by $1 on Wednesday.
 
This morning, against a slightly better market backdrop, GS shares are down by another $3 to around $215.80. The shares, stated simply, are breaking down.
 
While the decline in GS is a bit more exaggerated relative to the also-weak action in bank stocks this week, this sort of deep underperformance in a pivotal stock that typically anticipates a change in capital market activity and prices is another potentially quite negative tell.
 
Just as the bond market's strength could be an indicator of a slowdown in business and economic conditions relative to consensus expectations, the weak absolute and relative performance of GS shares should not be ignored.
 
At least I am not ignoring this short's weak action.
 
For these reasons and others, I am now adding a trading layer (short indices) to my core investment short position.
Position: Short GS, BAC small, C small, JPM small, TLT .

If you liked this article you might like

Kraft Heinz's New CFO Is Just 29

China's Banks Halt Business With North Korea Per United Nations Sanctions

Why Hurricanes Won't Force the Fed to Ditch a December Rate Hike

Fed Pares $4.5 Trillion Balance Sheet But Easy-Money Era Isn't Over

Bank Stocks Move Higher as Fed Decides to Start Unwinding Balance Sheet