The Best of Kass

I remain of the view that fair market value for the S&P 500 is approximately 1360 compared to last night's close of 1385. This is not an especially attractive reward vs. risk (though not terrible either), and I still think we are range-bound between 1300 and 1430 as far as the eyes can see. This helps to explain why I move back and forth around market-neutral, buying the dips and selling the rips.

At the time of publication, Kass had no positions in securities mentioned.

Why Apple's Fall Is Healthy for the Markets
Originally published on Tuesday, April 17 at 7:40 a.m. EDT.

The prevailing view of most investors and traders is that Apple's(AAPL) steady share price fall over the past several days -- it is down 10% from its high -- is a precursor to broader market weakness.

Indeed, a Wall Street Journal article today makes the case that Apple's share price weakness will drag down the market.

I respectfully disagree.

In fact, the strength over the past three months in a relative few high-octane stocks (Apple, Google(GOOG) , Priceline(PCLN) , etc.) was, to this observer, a negative market tell, as the disconnect from the majority of stocks that led to low volume and weak breadth are typically signs of a narrowing market.

So, it follows that if the high-beta cabal of stocks fall somewhat and breadth improves, as it did yesterday, when the Nasdaq dipped, the S&P 500 was flat and the DJIA rose, the technicals of the market might be growing healthier.

I viewed the rotation yesterday out of Apple et al. and into the better performing consumer staples sector (Procter & Gamble(PG) , Colgate-Palmolive(CL) , PepsiCo(PEP) , International Flavors & Fragrances(IFF) ) as a market positive.

As I wrote yesterday, the great reallocation might be under way -- not a reallocation out of bonds and into stocks but rather a reallocation out of Apple and into all other stocks.

The fact that we may no longer be in the NBA (nothing but Apple) market and that we might have entered the ABA (anything but Apple) market might be construed positively for the markets.