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Kass: Market Storm Clouds Bring Rays Of Opportunity

Thursday, 27 May 2010 | 5:35 PM ET

Worried by the dark clouds hovering above this market? According to strategist Doug Kass they’re actually generating fantastic buying opportunities.

You read that right, buying opportunities.

In his regular column Kass says the market has been vexed by so much disruption that it’s making him feel rather bullish.

We were so intrigued by his latest analysis that we invited Kass to join us on the desk.

He tells us that one of the biggest influences in the market right now is the growing reliance on high frequency trading. “Once accounting for 50% of the day's trading volume, it’s probably close to 70% now,” he says.

And that’s a mixed blessing for investors.

The machines generate quick and sudden moves that leads to a spike in volatility. In turn that leads to fear and it undermines investors confidence.

As a result markets sell-off – bad if you’re bullish.

But ”the disruptive role of quant trading is providing a short-term opportunity to buy stocks cheaply." In other words the sharp volatility has left investors selling first and asking questions later. As a result many stocks are oversold.

And that’s good if your bullish.

Kill the Trading Machines
Discussing whether high frequency trading has distored cheap valuations, with Doug Kass, Seabreeze Partners Management.

” The abrupt market moves have temporarily distracted market participants from the reasonably good prospects for the U.S. economy and for better profit trends,” he says.

What’s the trade?

Kass tells us he expects the S&P to trade between 1080 and 1180 through the end of the year.

And if you're looking for single stock stories on last Friday’s Fast Moneyhe said, "financials are attractive. ETrade looks great. And I love the mortgage insurers. The housing industry has been underperforming and I think it recovers far faster than anyone expects."

What's the bottom line?

"The hardest trade is to buy," he tells us – but it’s the best trade.




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Trader disclosure: On May 27, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Finerman’s Firm Owns (AAPL); Finerman Owns (BAC) & (BAC) Calls; Finerman’s Firm Owns (BAC); Finerman’s Firm Owns (GOOG); Finerman’s Firm Owns (GS) Calls; Finerman Owns (HPQ); Finerman’s Firm Owns (HPQ); Finerman Owns (JPM); Finerman’s Firm Owns (JPM); Finerman’s Firm Owns (PDE); Finerman’s Firm Owns (RIG) & (RIG) Calls; Finerman Owns (RIG) Calls; Terranova Owns (FTO), (STLD), (YHOO), (OIH), (APA), (AXP), (BTU), (SWN), (GLD); Seymour owns (AAPL), (BAC), (F), (GOOG), (RTP), (UNG), (VALE); Adami Owns (C), (GS), (INTC), (MSFT); Grasso Owns (C), (BAC), (JPM), (NDAQ), (BP), (LPX); Edwards owns (VXX); Levy Owns (GS) ; Levy Short (BP) Calls

For Patty Edwards
Edwards owns (AAPL) For Clients
Edwards owns (VXX) For Clients
Edwards owns (MS) For Clients
Edwards owns (JPM) For Client
Edwards owns (BAC) For Clients
Edwards owns (AMZN) For Clients
Edwards owns (GOOG) For Clients
Edwards owns (MSFT) For Clients
Edwards owns (HPQ) For Clients
Edwards owns (YHOO) For Clients
Edwards owns (INTC) For Clients
Edwards owns (NVDA) For Clients
Edwards owns (CSCO) For Clients
Edwards owns (QQQQ) For Clients
Edwards Owns (BP) For Clients
Edwards Owns (C) For Clients
Edwards Owns (COP) For Clients
Edwards Owns (COST) For Clients
Edwards Owns (CVX) For Clients
Edwards Owns (DO) For Clients
Edwards Owns (F) For Clients
Edwards Owns (JPM) For Clients
Edwards Owns (LCC) For Clients
Edwards Owns (MS) For Clients
Edwards Owns (NE) For Clients
Edwards Owns (PDE) For Clients
Edwards Owns (RIG) For Clients
Edwards Owns (SLB) For Clients
Edwards Owns (TOT) For Clients
Edwards Owns (VXX) For Clients
Edwards Owns (XOM) For Clients
Edwards Owns (YHOO) For Clients
Edwards Owns (SPX) For Clients
Edwards Owns (QQQQ) For Clients
Edwards Owns Gold For Clients
Edwards Owns Platinum For Clients
Edwards Owns Silver For Clients

For Jared Levy
Peak6 investments owns and has an options postion (GS)
Peak6 investments is short and has an options postion (MS)
Peak6 investments is short and has an options postion (DB)
Peak6 investments owns and has an options postion (JPM)
Peak6 investments owns and has an options postion (CS)
Peak6 investments owns and has an options postion (BAC)
Peak6 investments owns and has an options postion (UBS)
Peak6 investments owns and has an options postion (C)
Peak6 investments is short and has an options postion (XLF)
Peak6 investments is short and has an options postion (AMZN)
Peak6 investments owns and has an options postion (AAPL)
Peak6 investments owns and has an options postion (YHOO)
Peak6 investments is short and has an options postion (EBAY)
Peak6 investments is short and has an options postion (GOOG)
Peak6 investments owns and has an options postion (MSFT)
Peak6 investments is short and has an options postion (HPQ)
Peak6 investments is short and has an options postion (DELL)
Peak6 investments owns and has an options postion (ADBE)
Peak6 investments owns and has an options postion (BP)
Peak6 investments is short and has an options postion (RIG)
Peak6 investments is short and has an options postion (HAL)
Peak6 investments is short and has an options postion (CVX)
Peak6 investments is short and has an options postion (XOM)

David Hilal
FBR Capital Markets is a Market Maker of (MSFT)




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