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Friday, February 18, 2011


Took a day off yesterday and it was another all time high close for the MLP index though by only a tiny fraction higher. The charts remain in their uptrend and what has become rather interesting is that we continue to see both the markets and the MLP index both pretty much in lockstep with rising long term yields.

Now i have been trying to push the idea (wrongly so far) that rising rates would be the catylist to send markets and mlps lower. And that may still be the case however note on the charts that no divergence has occured yet. Not even close in fact! Bonds in fact usually catch a bid on rare days the markets have been soft. So the trend being your friend means that until we start to see the divergence in any meaningful way, resistence is futile. The uptrend will remain in place. So im done fighting the tape and will stay until the party ends..but hopefully not much longer than that.

MLPS seem to be in a sweet spot with an improving economy and rising distributions and the market players thirst for yield. And energy stocks as a whole have been outperforming which gives mlps another added tailwind. This morning we have no news headlines and no upgrades or downgrades. Stock futures are flat along with crude. Nat gas is sitting right on the breadown point on the charts so today will be a critical day. The chart here is looking everybit like its breaking down and a new down leg in the bear market is beginning.
Of course....ever hopeful as i am...i am praying for a reversal here today so that we can at least be on tender hooks here for another day. You would think a strengthening economy would push nat gas to at least stop going down. But when you have an almost endless supply of gas and seasonals which now play against nat gas for the next few months, its hard to imagine this going anywhere in the intermediate term.

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