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Kass: Bulls on Parade

This column originally appeared on Real Money Pro at 7:35 a.m. EST on Nov. 29.

NEW YORK (Real Money) -- A number of strategists and talking heads are coming out bullish today (you all know, the cabal that worships at the altar of price momentum).

They are justifiably impressed with Mr. Market's intraday reversal on Wednesday and ability to climb through important technical markers.

I have my view whether they are right or wrong, but, regardless of that, I am not sure what the value added is in getting bullish after a 70-handle rally in the S&P 500 off of the early November lows. This is especially true in a market facing numerous uncertainties and potential headwinds.

Chase stock prices higher at your own risk. Price is what you pay, value is what you get, and after the sharp rally since a week ago Friday, the reward vs. risk has diminished greatly.

My view is that the market is now (adjusted for the rally in the S&P 500) fairly valued (1415 on the S&P 500). I continue to view the bond market, however, as greatly over valued and believe that a short bond position will outperform a long equity position in the months ahead.

That does not mean the U.S. stock market can't overreach and move higher than where I happen to think the market should be priced -- I have no concession on the market's truth -- just like it recently breached my fair market value calculation to the downside.

I start the day in a market-neutral position, and I am poised to opportunistically trade in the weeks ahead.

In doing so it is important -- at least, I think it is important -- to be emotionless, not to follow market spikes and to be willing to buy red and sell green.

And, oh, that fiscal cliff -- I am still not fearful of a lack of compromise -- it will be resolved. I have always thought so. The question is at what cost?

From my perch, the fiscal drag associated with resolution of the fiscal cliff will pose serious risks to consensus earnings estimates for 2013-2014. And, as important, it will not be anywhere near the seminal event that will unleash corporate hirings and business fixed investment.