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Monday, June 06, 2011


It took a little longer for the dow industrial average chart to break below support but after Friday's action it seems clear that we are headed lower in the intermediate term. The ending of QE2 seems to be having some impact and that perhaps the period of the levitation of asset prices appears to be ending for the time being.

However as one market tops it appears another one has (finally?) bottomed. Natural gas has been in base building mode for eight months and we are now moving back to the top of that range. Im using UNG as a proxy here for nat gas (though not a perfect one i admit) and this base looks to be the makings of an important longer term bottom in nat gas. Certainly we appear to be moving to the top of the range (12.70 for UNG..5 dollars for cash nat gas). Perhaps the notion of high energy prices in the crude complex is finally drawing attention to nat gas which remains extremely cheap and we have plenty of. And apparently according to Salon Magazine on line, everything we have learned about fossil fuels is wrong! Then of course we have the I.E.A saying that nat gas could be entering a golden age but its still a fossil fuel and we need to focus on alternatives. Good luck getting alternatives to lower the cost of energy; not when solar costs 22 cents to produce a kilowatt hour of energy while coal costs 6 cents.

MLPS closed down Friday but off the intraday low under 360. 350 remains the magical place in my view as to whether we are still in bull or bear mode. Or maybe we are entering a longer term trading range between 350 and 390.

This morning so far we have no news and no upgrades or downgrades so far. BTW back to nat gas, keep an eye on this weather system in the Carribbean because that could provide an impact short term on nat gas prices. Nat gas is 3% higher pre open. Stock futures are a little lower. Crude is down a buck at 99 dollars a barrel and interest rates are moving higher this morning with the 10 year back at 3%.

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