ARE WE SETTING UP FOR
A CAPITULATION SELLOFF?

If past is prologue (and sometimes it is) we could be seeing the stage being set for a final capitulation selloff followed by a massive rally. If Art Cashin is correct, and he's been around for many of these types of selloffs it will work like this. Yesterday's big selloff is followed by a choppy day today. The weekend will be filled with hope only to have those hopes dashed. Then the trap door opens and Monday we see a bloodbath which could spill into Tuesday before a big rally ensues.

You can see that both the dow chart above and the S&P chart below are right at the bottom. Any break down from here can mean a fast trip to 10000 on the dow and 1050 on the S&P 500



MLPS on the other hand have performed so much better in this selloff. And why not with 10 year rates down to 1.70%. There is a 5 point spread between the two. If we get a capitulation blooodbath and the index takes a drop to 330 or less i think i will be backing up the truck.
If this happens which mlps do we buy? I probably will stay with the big guys and the best performers for the biggest bang for the bounce. Kinder Morgan (KMI), Enterprise (EPD), EV Partners (EVEP) Sunoco Logistics (SXL) and Oneok (OKS) are the obvious candidates. Of course i've planted out a pretty picture and sometimes they don't play out this way. So of course caution when playing in the minefield. And btw with next week being the last week of the quarter, you have to wonder whether other distortions will appear because of the usual end of quarter game playing.

No news and no upgrades or downgrades this morning in the group. Everyone is on tender hooks and headlines will cause swings in both directions today. Seatbelts and dramamine are the order of the day.