5 good reasons to sell stocks now

Earnings season is apparently going gangbusters — even if we’re barely through and there’s a lack of love for big banks.

Netflix  shot to a record and lifted all boats yesterday, with the major indexes rising to the best level in a month. The low is in, says this VIX chart. The worst is over, says this other one.

Let the grumbling begin. “The market traded today as if only the 4 FANG companies matter. It is as if Netflix’s earnings erased any privacy concerns for Facebook and Google and the Presidential criticism Amazon is facing,” grouses JonesTrading’s Michael O’Rourke.

On that note:

Does O’Rourke have a point? Maybe, judging by our call of the day from the often bearish fund manager Doug Kass, who offers up five reasons why it’s time to “sell all your stocks and run away.”

Kass says he’s used the two-day big run-up for stocks to beef up his short position on the SPDR S&P 500 ETF  — already a large one. His first reason is narrow leadership, which is the fact that only a handful of stocks are pushing the overall market higher.

“We’re back to a market that’s basically led by the FAANGs — Facebook Amazon  , Apple Netflix  and Google/Alphabet  ,” he says in an article for The Street, echoing O’Rourke’s thoughts.

What’s the rest of his rationale? He mentions rising short-term rates, with the 2-year U.S. note yield  about 1.3 basis points higher at 2.39%. Another is investor complacency after the market rallied off its recent lows.

“Anecdotally, there is little or no concern of a large drawdown in stock prices - there is a consensus mantra that every dip is to bought,” said Kass in an email.

He also thinks gold’s rise — up 3% so far this year — is “solid,” and he’s long the SPDR Gold Shares ETF  .

“Also, oil stocks have been leading non FANG sector in the stock market over the last few days/weeks — in response to the rise in crude oil prices. Historically, a market being led by oil stocks is close to a top and can be characterized as a mature bull market,” adds Kass in an email.

His last reason to sell stocks is that banks’ trading has been lackluster. That’s even though he’s still a buyer of Bank of America  , Citi   , JP Morgan  and Wells Fargo  .

Kass says he’s been switching from small bullish to big bearish positions on U.S. stocks this year, given the rampant volatility. And that’s one thing we likely haven’t seen the last of.

Key market gauges

The Dow  , S&P 500  and Nasdaq  are all flat to slightly lower this morning.

European markets  are up. Asia  saw some strong gains. Gold  is up, while the dollar  is holding steady. Crude  is also trekking higher on optimism over U.S. supply data due later.

See the Market Snapshot column for more.

The buzz

Morgan Stanley  is shooting up after posting results. U.S. Bancorp  and Abbott Labs   also reported early, with American Express  and Alcoa  due after the bell.

The chart

Inverted head and shoulders or maybe the giant “shrug” chart? Take a look at the past 24 hours for bitcoin  , which shot up again this morning after a similar rapid move on Tuesday. More whale action? Maybe.

CoinDesk

The quote

“I’ve been gone for a year. I’m like a breakup he can’t get over ... I'm out there living my best life, he wakes up in the morning and tweets at me.” — That was former FBI Director James Comey, talking to The Late Show’s Stephen Colbert about what it’s like to be the object of Trump tweets.

In a lengthy interview , Comey also said that even if Deputy AG Rod Rosenstein and Special Counsel Robert Mueller were ousted, “everyone in the Justice Department” would have to be fired too, to stop the Russia election-tampering investigation.

The stat

4 in 10 — That’s how many Americans live in counties with unhealthy levels of ozone or particle pollution, according to the American Lung Association’s ‘State of the Air’ report released Wednesday.

Los Angeles remains at the top of the list of cities with ozone pollution, and a bunch of other California spots are on that list, as are New York City, Chicago and Washington-Baltimore.

Random reads

Touching love letter from George WH Bush to his wife Barbara, who has died at 92.

CIA director Mike Pompeo had a secret meeting with Kim Jong Un last month

People are being airlifted out of Hawaii’s flooded island of Kauai

#NationalHaikuDay, so go get ’em.

Sandy Hook parents are suing conspiracy theorist Alex Jones

Kimye. What is happening? (Nothing, by the way)

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