MLPS UP BUT MARKETS TURNING LOWER

MLPS which have been pulling back over the last few days are a touch higher for now as 10 year rates push to 1.80 and look to challenge that 1.69 intraday low from last August. Meanwhile markets are setting up for what appears to be an outside reversal day. After opening 60 points higher the dow is now down 70 points on weak economic news. Chicago PMI is down to its lowest levels since last August and might be putting recession back on the table..


Still the dow chart says the uptrend is intact and the dow needs to crack below 12,000 to take out all the support levels we watch. So far now its just end of month profit taking and nothing more.

Enterprise Products Partners (EPD) and Kinder Morgan (KMP) are up about 50 cents apiece and make up for most of the gain in the mlp index which is also up about .50. Most mlps right now are either flat or fractionally lower. Inergy (NRGY) is back over 18 on earnings news which we knew were going to be light. The company pointed to a possible distribution cut last week which took the stock from 23 to 18.

Energy stocks are weak as a whole as Exxon earnings were in line but disappointing to some. Nat gas has stopped going up and is down hard today as it resumes its trip to zero.

MLPS OPEN LOWER, NUSTAR & INERGY UP FRONT

Monday morning blues here in the markets as we are back on Euro focus with another one of their silly summits where nothing gets accomplished. Dow down 100 points right now which is in order considering the unrelenting run we've had since January 1st. Nustar (NS) got a downgrade from Citigroup to neutral and the stock is down 1.50. Inergy LP (NRGY) which is down 50% from its highs is up 44 cents as of this post. It lost over 4 Friday on the probability fo a distribution cut coming. The mlp index is down 2.58 right now as the pullback from 400 continues. Also Kinder Morgan (KMP) continues to pull back from near 90 and its down over 1 point today.

Overall, markets are due for some correction here. Whether this evolves into something more serious depends on news items beyond our control. Europe, Greece, Portugal, etc all making noises with no deal in Greece and the buzzards circling around Portugal. MLPS are as extended as anything else out there that has rallied. The VIX has spiked above 20 and it will be interesting to see if it can hold above there. Crude is down. Nat gas is up as it continues its dead cat bounce rally from down around 2.20.

MLPS are down over 6 points and money rushes out. Kinder Morgan (KMP) is down 2.57 and Inergy LP (NRGY) is down over 4 points as the threat of a distribution cut looms. Since the stock price here has been cut in half it seems that the company plans the cut the distribution in half. The company did an IPO of its midstream assets a few months ago. You wonder whether that was such a good idea.

Dow down about 85. Nasdaq is up a couple. The tape is feeling the pull and tug and looks sloppy overall in here.

Inergy (NRGY) has broken below 20 and is down 3.11.

INERGY MAY CUT PAYOUT!

In a time when MLPS have been the stars of the market, one mlp diverged from that pattern and began selling off back in May and has been almost been cut in half. Inergy (NRGY) this morning announced its distribution (which had no increase) but more importantly is what the company said in the press release.

"management and the board of directors of Inergy are evaluating a reset of the quarterly distribution to a level that is supportable by the cash flow expected to be generated from Inergy’s businesses in the near term."

Reset means a cut. In the mlp world the one commandment is thou shall not cut the payout. And when you look at the stock price haircut, the market is telling us that the reset may be rather large.

Also moving down this morning by 2 points is Kinder Morgan Partners (KMP) which was on its way to 90 bucks when we get this technical note from Carter Worth who tells us that Kinder Morgan technically is trading at an unsustainable level. The stock is taking a 2 point hit and we now have the mlp index down almost 5 and under the 400 market on the index. Looks like a long overdue pullback is occuring in mlps. As long as the overall trends remain in place however any pullback is a another buying opportunity.

Markets overall reversed yesterday and this morning we are a little lower on a soft GDP number. The tape still holds a positive undertone to it and until we see a decisive move downward, the uptrend remains intact. Volume however remains a sticking point in this rally as it continues to spiral downward. At some point that might matter but we are still not at that particular point.

Sorry for the lack of posts this week but sometimes this stuff does burn you out a bit.

THE INTERSECTION OF RALLY &
CRITICAL JUNCTURE!

It the day after the Giants win of the NFC CHAMPIONSHIP! so i hope you will forgive me for this late first post. Markets of course have been ignoring everything over the last 3 months and the rally has continued marching higher but we have reached a point here where it will be break out or brickwall. The mlp index which has been strong all through this rally phase continues being led higher by Kinder Morgan Partners (KMP) which is up 1 and at another all time high. The index is trying to scale above 400 on a closing basis and its up over 3 right now.

News of the messiah's rejection of the Keystone Pipeline Project has existing pipeline stocks attracting cash, especially those with rich distributions and dividends. No new pipeline just makes the ones that exist that much more attractive. Meanwhile the dow industrials are approaching 52 week highs and its either going to make for a beautiful obvious triple top formation or we are the point where we will breakout above it and head for dow 13000 or even higher.



The 10 year yield has broken above 2% which is at least a sign that the safety trade is beginning to come off. Also we have the vix now at 18 which is telling us that fear is quickly disappearing. So all is right with the world at least for now. Pullbacks intra day have been very shallow. And the market doesn't seem to care even if Google is taken out and shot. So let the rally continue as we watch this area for longer term clues. For MLPS its 400 or bust! We're at 399 as i type.

Spectra Energy (SEP) is announcing a distribtuion hike which is the only news of note this morning. My God even nat gas is rallying today. Overnight it traded as low as 2.25 so this is a long overdue dead cat bounce.

NAT GAS DEATH SPIRAL!

Perfect example of what an ugly chart looks like!

THE RALLY CONTINUES!

MLPS seem to making another assault on 400 on the index. Earnings and distribution hikes are kicked off by Kinder Morgan (KMP) who put up earnings yesterday and another distribution hike. Usually these things are pretty much priced in to the equation and we might see a little selling on the news. MLPS will pretty much follow the overall tape which continues to just rally along. And while MLPS are near the top of the range, the rest of the market seems to be playing catch up

The dow is near the two tops of 2011. This will be a critical area for the markets overall. Are we putting in a major top here? If you believe that the economy will continue to improve than the answer to that question is no. If you believe that the world is about to begin another circling of the drain, the answer is now. Its that simple folks. For now the path of least resistance is higher.

Definitely circling the drain is nat gas which is down another dime and sitting at $2.41! The non winter and unending supply has simply caused prices to crash.
This is about as ugly as a chart gets. This is what free fall looks like and there is no sign of a bottom whatsoevr. An oversold bounce is due after being down 7 days in a row and 11 out of 13. But who knows when that comes and what the catalyst is. Crude oil now sells for over 40 times the price of nat gas. 20 used to be the wall!

Markets are set to open a little higher and my guess is buyers will push the tape up as the day wears on.

CHART DAY!!!!

Late first post but this is what happens after a holiday weekend and you have to come back from a nice weekend with the deer in Pennsylvania. The market began by playing catch up to Europe which of course rallied after the S&P downgrades last Friday. The downgrades themselves are utterly meaningless to the markets and if I were S&P, Fitch, and Moody's, i would recognize that their downgrades continue to come pretty late in the game. The dow industrials ran up 150 but are now up about 100 points. The tick (net uptics/downtics) has been running negative much of the day so far so sellers are around here. Financials aren't rallying today for the most part thanks to Citigroup and its earnings (so called) so we watch the tape for signs of a top in the October rally. Each attempted top has been aborted and we have gone on the new highs but only marginally so. Except for the dow industrials and the mlp index we are barely above the October 24th high. So i figured lets put up some charts and see what they are telling us.


The nasdaq 100 is making its 5th attempt to break out above 2400. Either this is a monstrous top being formed or we will breakout decisively out of a long base that goes back to the beginning of 2011. The S&P 500 meanwhile hasn't even gotten back to its 2011 highs yet and it is struggling here at 1300 even.


The MLP index meanwhile has taken out its 2011 high and remains in an uptrend although it is only break even since January 1st. Its attempt to rally to 400 has failed and it looks like its mounting another try. Its up 2 on the day today being led by Kinder Morgan (KMP) which is up 1 ahead of earnings.

The last chart i thought was pretty interesting and that is the index of nat gas stocks. Now to look at nat gas today it is down 5% and sits at an amazing $2.45. We have been told by so many experts how 3 dollars was the wall. Well guess what? We are closer to 2 than 3 thanks to endless supply and a non existent winter in the US this year. That base at 620 doesn't look likely to hold here if the commodity itself continues to circle the drain and demand overall continues to contract.

What are we to conclude from all this? Well for now it seems rather ambiguous. The market continues to rally overall in the face of Europe. The economic numbers here are not exactly ramping up. Energy stocks as a whole seemed to be rolling over as the same money gets moved around from group to group. MLPS continue to do okay. Earnings and distribution annoucements begin this week and increases are already priced in. Still 6% yield continues to attract cash against a 10 year at 1.85%. Short term the market appears to want to go higher, but at some point you have to ask yourself whether any of this is sustainable given what is going on out in the world. And i keep asking myself the same question. If the world is getting better, why oh why is the 10 year still under 2%? As for MLPS, our bull market here began in December of 2008 and has begun its 4th year. No sign of a top, at least not yet.

Here is what the left thinks of the collapse in nat gas prices. They are not happy.

Markets trying to rally back with the dow down 60 and mlps are now up on the day for the first time in 6 days. Bulls still in control.

Everyone seems to know that S&P is going to cut ratings across the eurozone. I guess they are waiting for the market close. Dow off 101, Nasdaq down 22, MLPS down about 2.

Dow cut its losses in 1/2 as we head into lunch. No news yet on S&P downgrades. MLPS down 1.50 on the index which a is off its lows of minus 2. Euro down 1.5 cents off its low of down 2 cents. Should be a fascinating afternoon. The way the tape has traded lately, don't be surprised if the market runs toward unchanged by days end.

DOWNGRADES COMING? MLPS DOWN 6 IN A ROW!

Markets were due for a pullback and they are getting one in a big way this morning so far with the dow down 135 and mlps down nearly 2 points. A S&P downgrade of Europe appears imminent according to news sources. Now lets go back to last August. The S&P downgrade of the US came in Early August which took the S&P down from 1250 to 1100 in a hurry. Now comes word that the Greek haircut would be forced instead of voluntary which means default as negotiations breakdown. The Euro is down 2 cents on that news. So now we've come to some sort of breaking point. Is the rally that began in October over? Now as i type we have Reuters reporting that S&P has downgraded France.


Meanwhile the mlp index is down 6 days in a row after reaching 396. Energy stocks as a whole have been selling off since the year began as money seems to be going from last year's winners to last years losers. Net net this is not good as we are basically moving the same chips around the table with no new money coming in.

Attention continues to center in energy on the implosing of nat gas which went from holding 3 bucks to 2.65 in a hurry. Energy producers who have been going head first into nat gas may have earnings issues (see Chevron). MLPS seem to be suffering from the money flow out of energy but getting support from the collapsing 10 year yield which is heading fast to 1.80% and it looks like we will retest 1.69% which we got to last October.

On the coporate side Copano did a public offering of shares so its down 1.40 right now. Not much else happening here. No upgrades or downgrades. Targa Natural Resources (NGLS) took the distribution up again by 3%. We should be hearing from the bulk of mlps next week.

Dow and MLPS just off the lows of the day here.