"Just one more thing."
-- Lt. Columbo

Watch Lee Cooperman deliver his pearls of wisdom on CNBC from this afternoon.

The afternoon was a non event with little overall price change.

Give another win to the Bulls.

One cautionary observation was the bad breadth (1,270 advances 1,680 decliners) after yesterday's flat breadth.

I have nothing to add, back to some research now.

Thanks for reading and enjoy your evening.

Doing some research.

More bullish commentary from my pal Tony Dwyer: 

Powell pause reinforces our bullish view

There is just no way to paint today's comment from Powell as anything but bullish.

• Powell's written comment for today's testimony on monetary policy to the Senate Banking Committee:
• With inflation pressures "muted," the Federal Open Market Committee in its decision last month to keep interest rates unchanged "determined that the cumulative effects'' of its actions and global and financial developments, "along with ongoing government policy uncertainty, warranted taking a patient approach with regard to future policy changes,'' Powell said in prepared testimony.
• "Going forward, our policy decisions will continue to be data dependent and will take into account new information as economic conditions and the outlook evolve.''
• Our whole bull story for new highs and beyond is that weaker economic growth leads to more dovish Fed policy. This is similar to what took place in early 1995 following the overly aggressive Fed policy in 1994. To remind you what was taking place at that point:
• In Dec 1994, the Fed caused the 2-10yr U.S. Treasury Yield Curve to flatten to under 10bp - same took place in Dec 2018.
• Fed did final hike 02/1995 then cut rates in July and Dec when the S&P 500 (SPX) rallied by 34% by year-end.
• Growth slowed dramatically to less than 1% GDP annualized growth in both the first two quarters of 1995.
• There was a threat of a trade war with Japan - the world's second largest economy - when President Clinton threatened 100% tariff on the top 13 Japanese cars due to unfair trade practices.
• Volatility stayed low the whole year despite slower growth, a Fed pivot, a potential trade war, and a President under investigation.
• The SPX never saw a 5% drop from peak despite the market gains and all the issues.

Summary of our view: The market is straight up 18% since the Christmas Eve 2018 low, and that brings a fear of a near-term pullback. Our positive fundamental core thesis driven by credit coupled with the history of "breadth thrust" indicators continues to suggest focusing on the intermediate-term potential new high in 2019 vs. any temporary risk. The 4Q/18 crash suggested the Fed made a mistake, and the ramp back indicates the Fed's pivot to a "patient" data-dependent stance fixed it. This is the third global "recession" scare this cycle, and while all three major corrections associated with these fear-based drops have been larger than anticipated, similar to 2011 and 2016, the pessimism again became too extreme. Absent an inversion of the yield curve that shuts down credit, the market pessimism following a non-recession crash continues to set the stage for new highs in 2019.

After eliminating a long,  (DDS) , adding two shorts, (HD) and (CAT) , and expanding my (SPY) and (QQQ) shorts (as Mr. Market ramped on a better consumer confidence print - which is non predictive to the markets), I have further expanded my overall net short exposure.
I have a business lunch meeting today.

Three weeks ago I sold my JP Morgan (JPM) position and took the stock off of my Best Ideas List:

Feb 04, 2019 ' 10:58 AM EST DOUG KASS

Out of JP Morgan

On Friday I mentioned paring back my JP Morgan JPM long investment:

I was a bit over my skiis long the banks (after buying all the way down) and I sold some (JPM) June $100 and $110 calls (yesterday and today) to reduce to a delta equivalent medium-sized position after the +$12 rally from Chirstmas. (This is the first sale I have made in the banks and is keeping with my "pause" view over the next few months. I WILL NOT be disturbing my (WFC) , (BAC) and (C) long investment positions but I might further reduce JPM which I view on a reward risk basis the least attractive bank )

I have decided to eliminate the position, based materially on the above coupled with an ursine market view. (As I wrote, I have no current plans to reduce or sell my other investments in the financials).

Here is a good summary of the bank's investor day. 

* And that's a dumb reason for a rally!

Consumer confidence is a notoriously lagging economic indicator.

It moves up or down - with a high R squared - based on the health of the stock market.

Markets rallied hard in January and so did consumer confidence.

The economic series is non predictive and useless in terms of forecasting markets.

I have put on three new shorts in the last few days - Disney (DIS) , Home Depot (HD) , and Caterpillar (CAT) .

Gluskin Sheff's David Rosenberg responded to me via email to my last post:

"80% of the SPX subsectors are still below their peaks and the Transports/Utilities RSI is breaking down again and off 10% from its nearby peak ... maybe the stock and bond market aren't that far off from each other ... one ask, what sort of bull market is when the only two sectors testing the highs were in the utilities and REITS space?"

- Rosie

* Taking advantage of gap higher in (DDS) shares

Dillard's just hit $78/share - a gain of +$11 on the day.

I have taken off my DDS long this morning at $77.75.

What a trading sardine!

I plan to buy back on weakness.

The 10 year U.S. note yield is down by four basis points to under 2.64%.
For those that are confidently expressing the notion that global (and U.S.) economic growth will soon reaccelerate - the 10 year U.S. note yield disagrees and is making a strong statement that worldwide growth will be slowing.
And that slowdown, in my view, could be far more rapid than consensus expectations - to wit I give you weak retail sales (confirmed by Red Book and numerous retail company results), a decline in housing, poor auto industry shipments, a halt in business fixed investment, etc.
With the S&P +450 handles since Christmas Eve - a bullish posture and/or bet is not something that I am even close to willing to take.

With the government still playing catch up with the economic data, today's somewhat dated December housing starts totaled 1.078 million, well less than the estimate of 1.256 million. That's the least amount of starts since September, 2016 as both single family and multi-family starts were down. Single family in particular fell to the least since that month in 2016. Permits for single family also fell by almost 20k (month over month) to a four month low while multi-family permits were up by +23k to the most since April, 2018. With strength in the rental market, it certainly makes sense to have more building for multi-family apartments.

Bottom Line

As stated, this data is dated and not reflecting enough time for consumers to respond to lower mortgage rates. That said, the weekly MBA data on purchases has shown no real rebound in response to lower mortgage rates. Multi-family still remains the most vibrant area of the housing market with strong demand for rentals.

MULTI-FAMILY PERMITS

Source: Peter Boockvar

I own two retail stocks, (M) and (DDS) - as posted, I have consistently been adding to them recently.

M had an earnings beat but guided in-line. The stock may have a relief rally - given these results.

DDS had a nice EPS beat and good guidance. My favorite trading sardine of all time (I have now made over $120 share on the accumulated long trades over the last two years) is trading +$8/share from yesterday's close. This heavily shorted name could maintain that price advance (and even build on it) over the near term.

Both stocks are on my Best Ideas List.

I will have a more detailed analysis after perusing the quarterly reports and listening to the conference calls.

In my chart as I closed my Diary yesterday I presented this idea of a potential quadruple top in the S&P Index:

Feb 25, 2019 ' 04:05 PM EST DOUG KASS

'Markets In Turmoil' Special Tonite?

I am not a technical analyst (I will leave it to Bobby Lang, Rev Shark, Divine and the others) but I strongly suspect that it is not a very good sign when the market makes a multi-week high and closes at the low of the day.
Not only did stocks fade hard and close on the lows but they faded into $281.25 (SPY) , which is now the fourth time at this level. Time will tell...
This is big spot in the market. And it could very well end up being quite the right shoulder of a big head-and-shoulders formation.

Source: Peter Boockvar

Here is more on this potential top.

* I am at my largest net short exposure since September, 2018
* My calculus suggests that the market downside dwarfs the upside today

My investment career has qualified me more as a Contrarian than as a Cassandra.

I am never fearful in going against the crowd - especially when I see what I believe to be an important inflection point in the markets. (I base this assessment on my analysis of the real economy and of corporate profits - with an overview of a calculation of upside/downside risk - in markets, sectors or individual stocks).

When my calculus of reward v. risk changes materially - as it seems to do in this new regime of volatility - I prefer to react and not cheer.

Based on these considerations and others I covered all my shorts in mid- to late-December and went very long by year end, selling out my positions for large profits by mid-January.

Recently I have slowly built up a large (SPY) and (QQQ) short hedge, while slowly reducing (on strength) my individual long holdings (even in FB , (GS) and others that I like for the long term).

As I recognize that I have no concession on perfecting entry points, "slowly" is my operative word - as I recognize that momentum in either direction (abetted by machines, algos and ETFs) can continue far longer than I and others expect.

I ended yesterday's commentary by noting:

Feb 25, 2019 ' 03:26 PM EST DOUG KASS

Speaking Frankly

* Maybe it's just me!
* Higher stock prices are the enemy of the rational buyer

I end the day with the question of how short I should be, not whether I should be short.

That said I am taking up my net short exposure by taking profits and not (broadly) by shorting the Indices.

Bottom Line

My net short exposure is at the highest level today since September, 2018.

And Danielle DiMartino Booth's chart of the day speaks volumes:

The U.S. Economy Squares Off Against Itself

VIPs

• The U.S. economy is in a constant tug-of-war between expansionary and contractionary forces; while most of the time expansion wins, the odds are increasing that the pull of a contraction will drag the economy into the mud
• The wholesale sector is flashing a warning sign as the differential between falling sales and rising inventories is widening; the current signal is reminiscent of the economic upheavals that preceded the Great Recession of 2007-09 and the industrial recession of 2015-16 in 2019
• 2018's artificial supply bulge is evidenced by the surge in wholesale inventories which posted a 10% quarter-over-quarter annualized gain, the biggest in six years
• U.S. growth, driven by supply and not final demand, would shock sell-side economists' GDP models; the unfavorable supply-demand mix would force economists to cut their first-quarter 2019 growth forecasts
• Slowing first-quarter momentum will be pressured by falling tax refund proceeds that weaken consumer spending further even as capital expenditures slump; residual first-quarter seasonality challenges increase the likelihood of a first-quarter GDP downside surprise

"There is nothing like price to change sentiment."

--Divine Ms M

In the last month, global equities have detached from real economies around the world.

Who are you going to believe -- the perma-bullish "talking heads," or the data?

From Rosie (David Rosenberg), who delivers the hard data and facts:

I am shorting Home Depot (HD) (EPS miss) and Caterpillar (CAT) (UBS downgrade) in premarket trading.