Doug Kass: Avoid Stocks

Seabreeze Partners Management's Doug Kass recommended investors to avoid stocks as he believes "the rising stock prices that we're seeing are just a "bear-market rally" rather than a new bull-market leg." Related Link: http://dougkassblog.blogspot.in/#sthash.9IUPXMh5.dpuf Recession concerns have disappeared as the Federal Reserve delayed anticipated rate hikes, and outflows from risk-on assets have morphed into inflows into junk bonds, equity ETFs and even emerging-market funds. "As a result, many now believe that we're in a continuation of the third-longest bull market in history, rather than just seeing a temporary rally within a broader bear market -- but I disagree," he wrote on the blog post. Kass noted that the previous bear-market rallies have had same conditions as today such as short covering, a change in sentiment from bearishness to bullishness and a fear of "missing out" on the market's apparent rise. The recent rally's five- to seven-week time-frame is consistent with previous rebounds from very deeply oversold conditions. The money manager said the rebounding sectors are also quite extended and overbought now, and are beginning to show some signs of momentum loss. He noted that the rebounding groups have benefited from a weakening U.S. dollar, but the greenback is approaching an important support level that the currency has historically rebounded from in recent years. "Personally, I believe the market has simply moved to an overbought extreme from January's oversold one," Kass added. At the time of writing, Dow and S&P 500 were down 0.20 percent and 0.08 percent, respectively. However, Nasdaq is up 0.35 percent.