Doug Kass hasn't exactly been dead-on with his market calls this year. In fact, Kass has been bearish all year, while the S&P has climbed 19 percent. But this bear isn't backing down just yet.
"Combine the likelihood that we're at the upper range for price-to-earnings multiples, we have political issues that are profoundly important, and we have some deterioration in the technicals," and Kass believes he has all the reason in the world to be short the market right now.
The president of Seabreeze Partners Management laid out each potential catalyst in depth on Tuesday's "Futures Now."
Reason one: Multiples will contract
When asked what he missed about the market's rise this year, Kass pointed at one factor: Multiple expansion.
"Frankly, we have to realize that most investors and strategists and talking heads on CNBC have made very little change in their economic forecasts, and forecasts for earnings, for this year and the next," Kass said. "What's happened is that valuations have gone up from 14 times at the beginning of the year to over 16 times now."
In other words, it's not so much that earnings have greatly improved, but rather that investors have been willing to pay more and more for those largely flat earnings.
"If we look at the 35 percent increase in the S&P since the beginning of 2011, 90 percent of that gain came from multiple expansion," Kass said.
A price-to-earnings multiple of 16 may not be far above the five-decade average of 15.2. But Kass still believes that given the current state of the market, it is inappropriate for multiples to be elevated.
"Given the structural global economic issues—disequilibrium in the U.S. jobs market, continuing leverage, et cetera—and the fact that all this is contributing to tepid economic growth, a discount to the average over the last five decades of 15.2 is probably more appropriate," he said.
(Read more: Why I'm buying into the market right now)