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Halftime: Doug Kass Starting to Short Market

Friday, 17 Sep 2010 | 1:47 PM ET

Given the three things that largely impact the market—technicals, fundamentals and valuation placed on the fundamentals and sentiment—famed strategist Douglas Kass said Friday he's starting to short the market.

"I'm souring on all three," explained Kass, founder and president of Seabreeze Partners. "In technical analysis, it's not the level that's important, it's the manner to which the market moves to a level. This has been a weak one technically."

Has the Market Topped?
Discussing whether the market has topped with Doug Kass, Seabreeze Partners Management president. Also, what the traders would like to ask President Obama at Monday's Town Hall.

With weak financials and the market making fewer new highs, he doesn't feel great about where the market is heading.

Steve Grasso of Stuart Frankel, however, disagrees. The market went down to the 1040 level in the S&P 500 Index and bounced back nicely, he noted. Before the market breaks 1110 to the downside, Grasso thinks the market will push higher.

A celebrated bear, Kass has gained attention with his apparent knack for reading the market. Less than a week before the S&P 500 hit a generational low of 676 on March 9, 2009, Kass went on CNBC and predicted the bottom. On July 6, 2010, he said the market had made its lows for the year and so far, that has also proved to be true.

Watch the video to see the full conversation with Kass.

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TRADING TECH

Better-than-expected quarterly results from Oracle and Research In Motion was not enough to fuel optimism on the Street, as the S&P 500 Index struggled to hold onto key levels in midday trading Friday.

Tech Moves Markets
Tech is lifting stocks higher, with the Fast Money team.

Pete Najarian praised Oracle's hiring of Mark Hurd as CEO, who was ousted from tech rival Hewlett-Packard. Najarian noted, however, that Oracle's success began well before Hurd was brought on. It is the company's second quarterly beat since it acquired Sun Microsystems for $7.4 billion earlier this year. In terms of valuation, CNBC's Melissa Lee said the stock is at its highest level since Feb. 2001.

Patty Edwards of Trutina Financial owns Oracle and is considering some off the table. From the floor, Steve Grasso of Stuart Frankel said investors think the stock could rally going into a company event next week. He said many are bullish Oracle and added that if the market moves higher, ORCL should move with it.

Turning to RIM, Brian Kelly of Kanundrum Capital said prepaid is going to be its growth area, which brings down their price-per-unit. The way to play this, he said, is with Vodaphone . There is tremendous growth in India with prepaid cards through VOD.

Edwards can't get behind RIM right now. She wants to see revenue growth supporting the earnings growth before she gets in.

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CHART OF THE DAY: GOLD

Gold futures hit record levels three times this week and the precious metal was up sharply in midday trading Friday, outperforming stocks, bonds and commodities.

Silver is also doing well and it's strength is two-fold, said Brian Kelly of Kanundrum Capital. It's an industrial and precious metal, he said. When China is doing well, the industrial side of silver shines. On the other hand, it being a precious metal, silver is cheaper than gold. So he thinks some people are buying silver for that reason, too.

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CALL TO THE FLOOR: MEDICIS PHARMACEUTICAL

Jonah Shacknai, CEO of Medicis Pharmaceutical , made a live appearance on the "Fast Money Halftime Report" to talk about a new drug in the works. Watch the videoto see the full interview with CNBC's Melissa Lee.

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TOWN HALL WITH PRESIDENT OBAMA MONDAY

As another election season draws near, the state of the US economy remains on the forefront of every American's mind.

On Monday, Sept. 20 at 12 p.m. ET, CNBC will host a one-hour commercial-free special town hall event with President Barack Obama live from the Newseum in Washington, DC.

At 'Investing in America: A CNBC Town Hall Event With President Obama,' hosted by CNBC's Chief Washington Correspondent John Harwood, the president will discuss and take questions on the state of the economy, jobs, housing, the markets and other important issues.

CNBC.com will be providing full coverage of the event, including a live blog, video, and reports from behind the scenes.

Click here for tickets to this special event.

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CALL THE CLOSE

"I think we probably flatline, but I am putting out shorts prepared for lower next week," said Brian Kelly, founder of Kanundrum Capital.

Patty Edwards of Trutina Financial also thinks the markets could push lower next week, but she still likes gold and platnium.

Steve Grasso of Stuart Frankel, however, thinks the market may push higher next week.

Pete Najarian, co-founder of optionMONSTER.com, is concerned. He said unless the financials start to turn Friday, he would take some off the table.

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Trader disclosures for Sept. 17, 2010:

PETE NAJARIAN
Pete Najarian owns (AKAM) Call Spread
Pete Najarian owns (GDXJ)

BRIAN KELLY
Accounts managed by Kanundrum Capital own (GLD)
Accounts managed by Kanundrum Capital own (GDXJ)
Accounts managed by Kanundrum Capital own (SLV)
Accounts managed by Kanundrum Capital own (ORI)
Accounts managed by Kanundrum Capital own (RGR)
Accounts managed by Kanundrum Capital own U.S. Dollars
Accounts managed by Kanundrum Capital own (TLT)
Accounts managed by Kanundrum Capital own (TIP)
Accounts managed by Kanundrum Capital own Swiss Francs
Accounts managed by Kanundrum Capital are short Euros
Accounts managed by Kanundrum Capital are short (BCS)
Accounts managed by Kanundrum Capital are short (IAI)
Accounts managed by Kanundrum Capital are short (XLF)
Accounts managed by Kanundrum Capital are short (OIH)
Accounts managed by Kanundrum Capital are short (BA)
Accounts managed by Kanundrum Capital are short Mexican Peso
Accounts managed by Kanundrum Capital are short U.K. Pound

PATTY EDWARDS
Edwards owns (GLD) for clients
Edwards owns (SLV) for clients
Edwards owns (PGM) for clients
Edwards owns (ORCL) for clients
Edwards owns (TXN) for clients
Edwards owns (AAPL) for clients
Edwards owns (HPQ) for clients
Edwards owns (AMZN) for clients

STEVE GRASSO
Grasso owns (ASTM)
Grasso owns (BA)
Grasso owns (BAC)
Grasso owns (C)
Grasso owns (CSCO)
Grasso owns (JPM)
Grasso owns (LPX)
Grasso owns (MO)
Grasso owns (MOT)
Grasso owns (NDAQ)
Grasso owns (PFE)
Grasso owns (PRST)
Stuart Frankel & Co and it’s partners own (BAX)
Stuart Frankel & Co and it’s partners own (COG)
Stuart Frankel & Co and it’s partners own (CUBA)
Stuart Frankel & Co and it’s partners own (GERN)
Stuart Frankel & Co and it’s partners own (HPQ)
Stuart Frankel & Co and it’s partners own (HSPO)
Stuart Frankel & Co and it’s partners own (MERC)
Stuart Frankel & Co and it’s partners own (NWS.A)
Stuart Frankel & Co and it’s partners own (NYX)
Stuart Frankel & Co and it’s partners own (PDE)
Stuart Frankel & Co and it’s partners own (PFE)
Stuart Frankel & Co and it’s partners own (PRST)
Stuart Frankel & Co and it’s partners own (RDC)
Stuart Frankel & Co and it’s partners own (TLM)
Stuart Frankel & Co and it’s partners own (TRV)
Stuart Frankel & Co and it’s partners own (XRX)
Stuart Frankel & Co and it’s partners own (SDS)
Stuart Frankel & Co and it’s partners are short (QQQQ)

DOUG KASS
***No Disclosures***

—CNBC.com and wire reports contributed to this story

  Price   Change %Change
MHA
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ORCL
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BB
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VOD
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