Everton have reportedly made a £250,000 bid for Kennedy, who has impressed during the opening games of the SPL season.
Shiels says the 17-year-old's head has been 'pickled' by the prospect of moving to Goodison Park, but has suggested Kennedy would be better off staying at Kilmarnock.
"The boy's head has been pickled with talk of Everton," said Shiels in the Daily Record.
"There are negotiations taking place at the top end of each club.
"I have spoken to Matty's father and told him what I think is the best thing for his son's career. A young lad's career is the most important thing here, not finances."