Starting roughly two weeks ago negative economic data from across the globe struck fear in the markets causing major sell-offs.
Yet, as the market made volatile swings higher and lower, widely followed strategic investor Doug Kass told us, the market had made its lows for the years. That was on August 9th.
“I see no evidence of a double dip,” he said at the time. And despite the downdrafts since then, Kass still thinks the sellers have it all wrong.
“Talking heads and public opinion polls are unanimously negative, but they are no substitute for analysis,” he says.
The ‘tells’ or gauges that he uses to time the market suggest the right trade is the hard trade - and that's buy.
The Conference Board’s Leading Economic Indicator is up 6.2% year over year, and “usually we don’t have a recession until it’s negative.” Kass says. The same holds true for retail sales. “The Johnson Redbook Index was up 4.7%. And the 4-week moving average on initial jobless claims is now at its lowest levels since April.”
All told, “things just aren’t as bad as the market suggests. I just don’t think we’re falling off a cliff.”
Kass isn't alone in his assessment. Trader Joe Terranova is also constructive on the market, broadly. But Kass is even willing to venture into an area where the usually bullish Terranova is cautious - we're talking financials.
On Thursday August 18th Kass told us that banks were ridiculously oversold; that the space should gain about 10-15% in 2 months and advance much more than that in about a year.
And despite the dismal action in stocks such as Bank of America, Kass is again is sticking by his call. “I strongly believe we’ll see 50% gains in banks and as much as a doubling over the next 6-15 months.”
In case you're wondering why we give so much real estate to Doug Kass’ market calls, it's because he has an uncanny knack for timing markets.
Last year -- on July 6, 2010, Kass said the market had made its lows for the year and his call proved to be extremely accurate. And 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. (You can click on the links in the preceding sentences to go to those posts.)
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Trader disclosure: On Aug 23rd 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Seymour owns (BAC); Finerman owns (BAC) ; Finerman owns (AAPL) ; Finerman owns (MSFT) ; Finerman owns (JPM) ; Finerman owns (FS); Finerman owns (FL); Terranova owns (VRTS) ; Terranova owns (CAT) ; Terranova owns (OXY); Terranova owns (CVI) ; Terranova owns (DAR) ; Terranova owns (AXP) ; Terranova owns (EMC) ; Terranova owns (ORCL) ; Terranova owns (WFM) ; Terranova owns (AMZN) ; Terranova owns (JPM) ; Terranova owns (FCX) ; Terranova owns (WFC) ; Terranova owns (AAPL) ; Terranova owns (IBM) ; Terranova owns (XOM); Kelly owns (JJC) ; Kelly owns (SLV) ; Kelly owns Euro; Weiss owns (JPM) ; Weiss owns (BTU) ; Weiss owns (NIHD) ; Weiss owns (UGL) ; Weiss owns (COP) ; Weiss owns (DVN) ; Weiss owns (QCOM) ; Weiss owns (NS) ; Weiss owns (ETP) ; Weiss owns (EUO)
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For Doug Kass
Kass owns (GLD)
CNBC.com with wires.