Top thoughts on stocks and the markets from TheStreet's Doug Kass.

It's As Easy As ... 1, 2, 3? 

Based on my Twitter feed, the price chart (and technical positioning), my emails and other comments - the new stock du jour and fav trading stock is expected by many, to become Amgen ( AMGN) .
 
The stock was recommended by two people I admire, Carter Worth last night on Fast Money and earlier in the week by our own Bobby Lang -- on technical grounds.
 
While I understand the reason for their strong views, for a host of reasons -- not the least of which is the sudden consensus interest (and the implication that trading is as simple and easy as observing the chart) as well as the recent stock advance -- I took a very contrary (at least relative to the recent price action) short trading rental on the early morning strength.
 
Though the shares may very well move higher in a market where many worship at the altar of price momentum -- I am shorting the "breakout" because of these factors as well:
 
* As the shares have rallied, there has been no apparent change in the fundamentals at Amgen (that I am aware of).
 
* Amgen and other pharma/biotech face an Administration that wants drug prices to be lower and not higher.
 
* There is a near consensus notion that breakouts are to be bought (which has paid off handsomely in recent months) -- but this phenomenon could be coming to an end in a corrective market phase. (At least, if that corrective phase ever comes!)
 
I have a tight stop on this small "anti break-out" short.
 
Position: Short AMGN small.
Risk Builds Slowly; Awareness of Risk Happens Suddenly
 
"I have really in my own mind been looking for a crash, not a bear market... We are in the middle of something like 1946 and 1962 -- and to some extent something like 1929 but not as bad....I look not for a long bear market but for a brief but vicious decline. In 1962 it was done in two months, in 1929 in a matter of ten weeks."

--Marty Zweig, "Wall Street Week" (October, 1987)

The message from many markets of yesteryear -- including October 1987 -- is that risk happens fast and stealthily, but the market's awareness of it occurs suddenly.

Here are some noteworthy overnight and adverse events that may influence the markets Thursday:

* Apple (AAPL) shares drop (down $2.50) in premarket trading on demand concerns. I have been adding to my Apple short in recent days and as recently as Wednesday.

* Unilever (UN) shares are lower (down $2.75) on weak developed market comps/results. I reiterated my concerns with regard to Unilever and consumer packaged goods on Tuesday.

* Some evidence that China may need to deleverage in the face of risky lending practices.

* SAP's  (SAP) cloud business is exhibiting some unexpected weakness.

* Philip Morris (PM) missed and guided lower.

Oh, and good morning!

Originally published Oct. 19 at 7:55 a.m. EDT

Doug Kass fills his blog on RealMoney every day with his up-to-the-minute reactions to what's happening in the market and his legendary ahead-of-the-crowd ideas. This week he blogged on:
  • How to put off the inevitable
  • How to look at the FANG front

Click here for information on RealMoney, where you can see all the blogs, including Doug Kass'--and reader comments--in real time.

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