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Monday, January 24, 2011


The breakout in nat gas that (finally) occured last week is getting extended in pre market trading this morning. Nat gas is up nearly 2% in pre market trading. The cold winter continues in an unrelenting manner. Its 5 above this morning as I post. NYC is 6 above. And the weather pattern shows nothing but cold for the next 2 1/2 weeks with only the occasional moderation of a day or 2 at most.

While indutstrial demand longer term for nat gas remains the big question, the short term issue is keeping warm. Using UNG as a proxy 6.75 looks like the next line of resistence on the chart or another 5% higher from here. After that there appears to be nothing holding it back to the low 8 dollar level.

Monday morning in MLP land and its pretty quiet this morning with no corporate news. Nothing so far on the upgrade downgrade list. Stock futures start the day flat to a touch higher. Rates are also flat to a touch higher. Crude oil is down a little by half a buck. Overall the market melt up that began in December continues with some signs that its getting long in the tooth. MLPS took a bigger hit last week than the rest of the market and now sit 10 points below new all time highs. Divergences may be setting up here so i continue to advise we watch the rate market carefully. The tipping point in my view may be 3.50% on the 10 year. We're near 3.40% this morning.

From a technical standpoint, 350 to me is the line in the sand. If that breaks then we might conclude that the bull market in mlps that began in December 2008 is least as far as the easy money is concerned. But looking back i also believe that December 2008 was a once in lifetime opportunity here. Too bad very people had money at the time to take advantage of it.

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