MLPS BEGINNING TO LAG

While the overall market has marched higher through the 10,800 short term breakout point MLPS have lagged lately. Now this could be nothing more than a much needed rest or it could be the beginnings of a leadership change. I mentioned earlier this week that the 10 year spiking to the top of its range could be signaling something potentially more ominious for MLPS in the short to medium term. We got to 3.93 yesterday and the question will be whether 4% holds. My own personal view is if rates break above 4% it could put pressure on MLPS as yield spreads potentially widen. Corporate yield spreads to treasuries ( outside of mlps ) have reached unheard of levels in some cases. JNJ and Berkshire corporates are actually yielding less than federal government paper. Its the new world we live in. From a chart basis the 300 level is proving a formidable resistence level. At this point i think the easy mlp money has been made and one does well to stay with mlps that grow the distribution quarter to quarter..or if one wants to gamble to lay a few dollars on mlps that may resume the payout down the road.

Penn Virginia Holdings (PVG) has a 10 million share secondary on the table this morning and the stock is down 1.40. Please note that this is the selling of a unit holder's shares and not a company offering that is dilutive. They did this a few months ago with the stock down around 16 which became another buy point. Of course the wind was still strongly at our backs. Elsehwere UBS is raising its price target on Enterprise (EPD) from 33 to 41 bucks. No other corporate headlines this morning.

Markets are up this morning. The dollar is down. Oil is up and nat gas is hovering around 4 bucks. Rates are flat at 3.88 on the 10 year. Again keep an eye on any approach to 4%.