Doug Kass: Short These Stocks Ahead of Sell-Off

Wednesday, 29 Feb 2012 | 6:41 PM ET

Yesterday, he told us which stocks to buy after the pull back comes.

Today strategic investor Doug Kass reveals which stocks to short ahead of the sell-off - and make no mistake, he's convinced it's coming.

Famed for his market timing, Doug Kass, who is president of Seabreeze Partners and a CNBC Contributor, has been garnering a lot of attention lately, largely because he’s convinced that the next big move in the market is lower.

Kass points to a string of negatives:

- “It rarely pays to buy stock when 85% of the S&P trades above its 50-day moving average as is the case today.”

- "The market also tends to decline when only a small number of S&P stocks are oversold, again the case now."

- Historically stocks don't perform well when 10-week moving average of gasoline prices rises. “At the rate they’re moving now– historically it has not paid to own stocks.”

Market Correction Protection & Volatility Playbook
Doug Kass, Seabreeze Partners Management, discusses whether it is time for investors to take some profits in long positions and short selected industries. Also, a trade to protect your portfolio in areas where volatility is expanding, with Pete Najarian, OptionMonster.com.

Kass feels even more confident after hearing Ben Bernanke’s commentary before Congress today. Kass believes it’s not so much what Bernanke said, it’s what he didn’t say. The Fed chairman gave no signals that further easing will be on the table.

He says all signs point to a sell-off, and Kass believes the trade is short. In fact, he thinks 3 areas of the market are particularly vulnerable.

1. Discretionary consumer based companies:
Kass suggests shorting American Express, Regal Cinemas, Henry Schein, RTH

2. China
Kass says to play it short FXI

3. Companies leveraged to capital markets
Kass tells us he's shorting Goldman Sachs, Morgan Stanley

“I’m personally short all of the above and much more,” he says. “We must recognize that tops are processes – I continue to believe the risk on trade is coming to a close – some of the easy money might have ended today.”

* Doug Kass is also contributor to Jim Cramer's RealMoney Pro Website


DO YOU KNOW?: Why are optimistic investors called bulls?
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Trader disclosure: On Feb 29, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Najarian is long (AAPL); Najarian is long (INTC); Najarian is long (YHOO); Najarian is long (HPQ); Najarian is long (MSFT); Najarian is long (JOY); Najarian is long (SLV); Finerman is long (AAPL); Finerman is long (JPM); Finerman is long (HPQ); Finerman is long (NTAP); Finerman is long (GLUU); Finerman is long (IWM) Puts; Finerman is long (.SPX) Puts; Finerman is short (SPY); Finerman is short (MDY); Finerman is short (IWM)

For Karen Finerman
Finerman’s Fund is long (AAPL)
Finerman’s Fund is long (JPM)
Finerman’s Fund is long (HPQ)
Finerman’s Fund is long (MSFT)

For Ron Insana
No disclosures

For Dennis Gartman
Gartman is long Gold vs. Euro
Gartman is long Gold vs. Japanese yen

For Doug Kass
Kass is short (FXI)
Kass is short (AXP)
Kass is short (RGC)
Kass is short (HSIC)
Kass is short (EFA)
Kass is short (IWM)

For David Pogue
No disclosures

For Niccolo De Masi
No disclosures

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