Halftime: Doug Kass Starting to Short Market

Given the three things that largely impact the market—technicals, fundamentals and valuation placed on the fundamentals and sentiment—famed strategist Douglas Kass said Friday he's starting to short the market.

"I'm souring on all three," explained Kass, founder and president of Seabreeze Partners. "In technical analysis, it's not the level that's important, it's the manner to which the market moves to a level. This has been a weak one technically."

With weak financials and the market making fewer new highs, he doesn't feel great about where the market is heading.

Steve Grasso of Stuart Frankel, however, disagrees. The market went down to the 1040 level in the S&P 500 Index and bounced back nicely, he noted. Before the market breaks 1110 to the downside, Grasso thinks the market will push higher.

A celebrated bear, Kass has gained attention with his apparent knack for reading the market. Less than a week before the S&P 500 hit a generational low of 676 on March 9, 2009, Kass went on CNBC and predicted the bottom. On July 6, 2010, he said the market had made its lows for the year and so far, that has also proved to be true.

Watch the video to see the full conversation with Kass.