LET THE TAPE TELL YOU!
For all the chatter out there about the death of this rally, it just keeps on going and in these instances you have to let the tape do the talking. Yesterday the dow pulled back over 100 points before reversing and closing flat on the day. These reversals were as you may remember absent during the long suffering decline. If anything the last hour of trading was often met by wholesale selling with both hands. Bottom line is the tape is bullish and pullbacks should continue to be bought.
MLPS which were not down hard by any means yesterday got back about half the losses on the day and that is not unusual as we sometimes take a day to play catch up.
There will be a drag on the MLP index today as Kinder Morgan is down 1.66 in the pre market as they are doing another 5 million share stock offering. They have the stock price they might as well use it. Also we have a stock offering for El Paso Partners (EPB) and that stock will probably be down at least a buck at the open. Nothing so far on the upgrade downgrade list but i would use downgrades as an excuse to add to positions given this enviornment.
Stock futures are stronger this morning and energy futures are strong too including nat gas which i believe may be completing a nice bottom formation on the charts. Using UNG as a nat gas proxy..17-18 is my first target.
The ratio of crude to natgas is 18-1 and we've only seen it that wide 3 other times and all three times were followed by very strong rallies. If you believe in the reflation trade, why should nat gas be left behind?
joseph cioffi's Source Page - Associated Content
3 comments:
Joe & others, please help me sort something out. I am a relatively new investor to MLP's. It seems everytime I buy a position (KMP for example) they come out with a new stock offering, the NAV takes a hit, and the stock never recovers to its previous highs. MLP's seem like a net losing game. Why should I continue to buy them?
KMP has done 2 stock offerings in the last number of months. The stock is higher from the first offering but of course the second just happened.
If you look at stocks that have done offerings recently their prices are higher 2 weeks or more after the offering. Holly Partners (HEP) did its offering a few weeks ago at 27 and the stock is now 32.
Inergy (NRGP) did their offering atound 22 and change and the stock is now at 26.
The market for the last 12 months for mlps has been awful. But since January 1st the group is up over 30% so mlps that sell for double digit prices are taking adavantage and frankly the appetite for the offerings seem to be getting absorbed pretty well.
I think the strategy is to look at mlps who have already come to market because except for KMP i think its unlikely they will come to the well again for at least 6 months.
Joe,
Thanks for taking the time to respond. I'm starting to feel a little more comfortable with my purchase of KMP!
Max
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