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Wednesday, December 29, 2010


The action in natgas in the last 2 days is saying "bottom" to me and to some others, and the chart certainly has the look of a triple bottom. What has been more impressive to me has been the numerous attempts to break down only to end in late day upside reversals. So certainly the selling is drying up here and with the triple bottom in place, the first test for nat gas would be a rise to 4.75 or so on the gas contract, or for UNG a take out of that 6.30 level. After that its 5 bucks and 6.75 on this chart.

The mlp index has been going sideways through the month of December and there are 2 push and pulls going on. The stocks are probably sensing the rise in nat gas prices, and oil continues to push higher. In the other direction has been the rise in rates. So far neither is winning but i continue to believe that rates rising will be a headwind. If there is no rate spike into the 4 handle on the 10 year and a 5 handle on the 30 year, than that headwind will be manageable. Above those levels and then the selling could get quite serious.

First things first for the 30 year chart is 4.60 which is the recent high. Yesterday we had a failed middle leg of the auction of the 5 year. The 7 year is today so the market is watching that carefully. If it doesn't go well we could get the beginning of the next upleg to 4.80. That level takes us back to April levels.
This morning we have stock futures a touch higher as we have another watching paint dry day ahead. Crude is lower. Natgas is unchanged and rates are a little lower ahead of the open. No news on mlps and no upgrades or downgrades.

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