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Monday, March 28, 2011


The last days of March and the end of Q1 approach and it has been a remarkable quarter with nice gains in the stock market. MLPS started the quarter with the index at 365 and there was a point 2 weeks ago where we were actually down for the quarter. But we have come off that pullback and we see the group is up 4% and one good up day away from an all time high. I mentioned last Friday about watching nat gas and interest rates and that we might be at the beginning of up moves in both those markets.

Late Friday both markets closed on firm notes especially nat gas which had a big rally last Friday. Rates also closed at the week's highs. The bullish arguments for both those markets hasn't changed much. We all know that rates are going higher because of inflationary fears (the bulls say) and the fed support for bonds will end with the end of QE2. The new support for nat gas is coming on the notion that thanks to the Japan earthquake, nuclear power is dead and nat gas is going to have to make up the difference. The logic behind both markets makes sense to me. Rates have corrected only slightly in the flight to quality trade. Nat gas is forever bottoming and we could see a rally up to the top of the range and still be nowhere in the longer term. Still those markets look like they will be getting attention. BTW as a reminder i use UNG as an illustration of nat gas and do not suggest that as a trading vehicle unless you are extremely nimble. It is not a long term hold because as it is contructed it is basically a wasting asset. UNL is a better vehicle and the best may just be nat gas stocks themselves.

MLPS may have been getting some tailwind support last week with the moves in nat gas. As we said earlier we are just a few points away from all time highs.

End of quarter may provide upside pressure as everyone may want to show stocks on the books especially the top performers. This morning we have no news in the group. Barclay's is raising its target price on Kinder Morgan (KMP) to 77 from 75. I wouldn't expect that to move the stock very much if at all.

Stock futures and rates are a little higher pre open. Nat gas was up but it always seems to sell off around this time of the morning and is now down 1% as of this post. Crude is down 1.5% ahead of the open.

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