END OF QUARTER OR SOMETHING MORE?

We have been talking about the recent pressure on mlps and it continues today as the index is down just a little less than 5 points. Support and trendlines have been taken out and now what remains is the 200 day moving average which is down around 380. What is of particular interest today is the collapse (again ) in nat gas which is causing coal stocks to implode and in particular Alliance Resource Partners(ARLP).



We are seeing a rush out of this one today, down nearly 6 points at one point today and just off the lows as of this post. It seems overdone to me on this issue and it could be just a matter of running out of an mlp that reached 80 just 2 months ago coupled with end of quarter portfolio purging.

Nat gas is the other story today as it is down hard and has broken below its January low. This means 2 dollars is the next stop and we could see some panic selling and the possibility for a selling climax once the one handle becomes reality.

MLPS are down over 5 points on the index and we are now below 390 and below the 89 moving average. The 200 day on the daily chart is down around 380. We have a flight out of interest sensitive stocks like mlps as well as pressure on energy stocks as a whole. The dow is down 100 points and nasdaq is down 28. The 10 year is holding around 2.18 and there is no sign of any flight to quality. This could all be end of quarter noise but we never really know for sure until after we get through it.

Lots of mlps are down 1 point or more like Markwest (MWE) which is down 2 as the biggest loser. Plains All American (PAA), Alliance Resource (ARLP), Cheniere (CQP), Oneok (OKS), Kinder Morgan (KMP) and Atlas (ATLS) are all down 1 or more.

ARE THEY RINGING THE BELL???

They say they don't ring bells at tops to announce the end of a rally. But you have to wonder whether we are at an important inflection point for MLPS right now. The index along with energy stocks in general have stopped going up. Actually when you look at this chart after yesterday's 3 point loss, we are sitting very tenuously above support. The turn in mlps matches the firming of 10 year rates and while nothing disastrous has occured yet, some mlps are now well off their 52 week highs.

The charts above of Kinder Morgan (KMP) and Oneok LP (OKS) just don't look well right now, especially Oneok which looks like its heading south in a big hurry and has been ever since its last public offering of shares. Now this could be all a simple matter of end of quarter rotation or some other nonsense but im inclined to pay attention here. We could be at the beginning of a serious correction of the mlp rally that began in October of 2008 (double bottom in December) and has run from 145 to 410.

The index is down this morning off .70 as of this post with Oneok (OKS) down another 80 cents. Kinder Morgan is actually flat right now. Markets are a little higher right now after a soft open. Nat gas is btw poised to break below 2.20 and a 1 handle is not far off.

MLPS are down today and below 400 on the index as the dow marches up another 120 points. Kinder Morgan (KMP) and Markwest (MWE) are the 2 leading losers today. Energy Transfer Equity (ETE) is down 1.29 as the days biggest loser. Alliance Resource (ARLP) and EV Partners (EVEP) lead the gainer list up major fractions to a point.

Bulls lead the overall market higher as the tape feels like it wants to go to test all time highs perhaps on the S&P? Its not that far away. Nasdaq is at 11 year highs but needst 2000 points to get back to that magical high in March of 2000. That was before the first implosion.

GO POINT AND FIGURE!

Sounds like something someone's mom would say! Point and Figure charts have been around for ever and they are just dependent on price and not time. Its its a pretty basic system and every once in a while its good to take a look and see what they are telling us about the markets. Like anything else along these lines its a lot of opinion and they work when they work, and they dont work when they dont work. Still the P&F charts have been steadfastly bullish on mlps for a long time now and remain so inspite of recent short term headwinds.

Of the major mlp index components the only one that i could find that is bearish is Kinder Morgan (KMP) which we all know had a lovely run to 90 before the recent pullback. Its hard for me to visualize how the mlp index gets to a 492 upside target without Kinder Morgan driving it there but it might be a divergence worth paying attention to. It could be that the stall in Kinder Morgan could be a signal that the mlp index is not going to make that 492 target.


On the other hand We have Enterprise Products Partners (EPD) which continues its march higher and is just off its 52 week high in the low 50s. No sign of a significant pullback here yet and the chart remains pretty much ok.

We could go all day with this and if you would like to, here is the link so you can check out your favorite mlp or index or whatever. One of the more interesting ones to look at is the 10 year yield which has recently given a bullish signal and target to 3.30% which is a solid point higher from here. That could be a potential headwind for mlps in the weeks to come if that plays out.

No news this morning on the corporate side and no upgrades or downgrades. Natgas btw continues to hold that 2.25 low. The p&f chart has a downside target around 1.50.

FLAT MARKETS AHEAD OF THE OPEN

There isn't much going on this morning after yesterday's small sell off. MLPS lost a few ticks yesterday but the index is holding just above 400 or 2.5% below its all time highs. Crude is flat ahead of inventory numbers and nat gas continues to probe the 2.20-2.25 bottom that for now seems to be holding. The overall tape remains firm and i think the main thing to watch is the ten year.

The yield market has run to 2.40% which is the October 24th high when Europe instantly solved their problems. MLPS can continue to ride the market tailwind i think as long as yields don't spike higher above that high. A decisive uptrend here in yields could drive the late money in mlps out to other instruments. Some of that may be tempered by rising stock prices but this assumes that markets overall won't start paying attention to yields going up.

No corporate news and no upgrades or downgrades. Its a sideways open and we will go from there.

So far the rise in rates is not causing mlps to fall apart. In fact the index is up 4 points this afternoon and back over 400 as it is being led by Kinder Morgan (KMP) and Enterprise (EPD) showing strong gains. Those 2 make up a large chunk of the index. Nustar (NS) Atlas (ATLS) and Sunoco Logistics (SXL) are all 1 point plus gainers on the day. And most mlps are up major fractions.

Dow up 33, S&P up 9 and Apple is at 596 since Apple appears to be in a world all its own!

MLPS AT A CRITICAL JUNCTURE?

Last week's trading in mlps was not pretty with the index closing down nearly 8 points on the week. The move down came with a corresponding spike in 10 year yields which are nearing 6 month highs. However in the context of the entire bull move, last week's move was really just a blip down and we have not reached critical support levels.

Still one needs to pay attention here as we look at the weekly chart (above) and the daily chart (below). The daily chart is beginning to crack through the rising moving averages and one needs to pay attention to the 89 day moving average (at 390 ) because breaking below that will be significant. 360 on the weekly chart is corresponding support longer term.



And coupled with that breakdown will be a signficant up move in 10 year rates. This weekly chart is telling us that a signficant bottom has been put in so i would think a move to 2.75% on the 10 year looks likely. I would think the only thing that stops that would be a sudden breakdown in the stock market rally. Right now that does not appear likely.


Not much going on this morning on the news front and no upgrades or downgrades to speak of. Markets are flat and APPLE focused anyway as they announce a dividend. Nat gas is lower as it tests its 2.25 bottom of last week which seems to be holding for now. Crude is up a little and bonds are a little higher (yields a little lower) ahead of the open.

Take a look at the 10 year which is up 12 basis points at 2.23% and that has taken mlps down. The index is down 3 points at lunch time as the market is flat to a little lower on the day. Magellan Midstream (MMP) is down one. Williams Partners (WPZ)Kinder Morgan (KMP) is down 70 cents. Most mlps are fractionally lower by 50 cents or more. Martin Midstream (MMLP) and Atlas Energy (ATLS) are notable winners up 50 cents or more.

Energy stocks as a whole are down today. Natural Gas is trying to find a floor in here as it probes yesterday's lows.

DID NAT GAS RING A BELL YESTERDAY?

Picking bottoms can be a fools game but yesterday's moves in nat gas might be something to pay attention to. Nat gas prices came down below the low from early January and staged a key reversal by closing higher than the previous days high. The move came with the stock market rising over 200 points yesterday so you have to wonder whether shorts just decided to cover at the same time. But there is a short term floor at $2.25 and we'll see whether it holds. Nothing has changed as far as fundamentals are concerned for nat gas but the chart is interesting in here.

MLPS meanwhile responded yesterday not to the stock market rise but to the spike in bond yields and closed down on the day. The 5 month high in the 10 year has provided a little headwind to the mlp index in here as it struggles around the 410 area. Yields this morning are up 10 basis points to 2.20% and the index is down 1 and is holding above 401. A break of 400 might bring in more sellers so we might want to pay attention in here. Kinder Morgan Partners (KMP) continues to back away from 90 dollars and is at 84 and change right now down 71 cents. Sunoco Logistics (SXL) Markwest (MWE) and Plains All American (PAA) continue to back away from their recent trading highs. Still the overall market is a tail wind as the S&P approaches 1400.

Nat gas is selling off right now as it sits at 2.21 which is below the prior low close of 2.25! 2 dollar is just a handful of ticks away.

Stock futures have softened a bit ahead of the open as the Euro cash (FXE) breaks below 1.30.

ARE THESE CHARTS TRYING
TO TELL YOU SOMETHING???

When one looks at charts as ugly as these 2, the first thought that comes to mind is "happy I don't own them! If you do then its followed by that sickening feeling in your stomach. The other question that really presents itself as a temptation is "do i buy em?"





Inergy LP (NRGY) was one of mlp lands solid performers. It has prided itself in increasing distributions quarter after quarter for years. Then came last quarter where we got no payout boost and we got a warning that a payout cut was coming. Based on a 16% yield here you can bet the payout gets cut in half. Inergy is suffering from pressure from propane prices and volumes which suffered from the warmer than normal winter around the US. Ferrellgas (FGP)got a downgrade of its price target from Citigroup from 16 to 9 which is inferring a distribution cut. Right now Ferrellgas yields about 12% which is also signalling a cut though perhaps not a 50% cut. Still buying these 2 mlps on the notion that the market is wrong on the distribution cut is a risky proposition. In the past the market has been pretty good at figuring out that payout cuts where imminent. And usually it is not the only one. And its not a good sign that these stocks are still making new lows. Perhaps the market is not done pricing in a payout cut. If that is the case, unless you are an out and out gambler, your better off staying away until the dust settles.

This morning stock futures are stronger by 70 dow points. Nat gas is up this morning. Crude is up as it pushes against resistance up near 110. The fed meeting today will be looked at for whatever statement changes are made. Markwest Energy (MWE) is down over 2 points this morning as it does an equity offering. No other corporate news has crossed the tape this morning.

NAT GAS BREAKING DOWN (AGAIN)?

Natural gas continues on its spiral downward and the first initial push to 2.25 seem to have held however we now are there again this morning and looking at the technicals, we are at the point of another breakdown and if it does break below here, we could head to a 1 handle on gas in a big hurry. A seemingly endless supply is not good for producers but it is good for those who move the stuff especially toward markets outside the United States since our policy is to produce cheap energy and export it, rather than use it ourselves.



MLPS have come down to support and in an uptrend the 34 day moving average has held throughout this entire rally phase that began at 320. No sign of that breaking down, at least not yet as we hit that moving average last week and now we are straddling just above it. As long as the market overall holds up, i suspect mlps will also hold up. This morning we have Citigroup cutting the price target on Ferrellgas (FGP) form 16 dollars (where it is now) to 9 dollars so this to me says that Citigroup thinks the distribution is in trouble here. Inergy (NRGY) has already seen its stock price cut in half with its distribution in trouble as the company has already signaled. The stock is making new lows again as it breaks under 17.

No other news this morning. Markets are a little softer ahead of the open. Europe is a little lower. The dollar is higher. Oil and nat gas both lower.

THE ROAD TO FREE NAT GAS!

Pre open nat gas is down another 2% or almost 4 cents as we approach the 2.25 bottom set back on January 23. For longs this is a criticial test and if it holds in here there will be all sorts of divergences that will develop in the argument that this may be "the" bottom instead of "a" bottom. Average daily volume, relative strength, and all sorts of momentum indicators will be screaming "go long" in here. But as always with these things one must tread carefully. We have been at these points along the way down in what is a vicious bear market. $3 dollars one might remember was the last unbreakable line in the sand. Then it was $2.50. You wonder if a 1 handle on nat gas is the ultimate destiny. It might be if they keep finding more of it and we have an administration that wants to put a windmill in every car.

MLPS took their biggest hit in a long time yesterday down almost 6 points on the index and holding just above 400. No news drivers other than the sell off in the overall market and we really don't have much to move issues today other then the market is up pre open on a post sell off bounce. We will find out what this sell off is made of by the quality of the rally attempt today. No upgrades or downgrades on the tape this morning.

The dow is down nearly 200 points and the mlp index is down over 6 and threatening to break under 400. Its a long overdue sell off market wide and everything pretty much is lower. Nasdaq is holding above 2900 for now. Plains All American (PAA) is down a little less than 3 due to a stock offering but it is the biggest loser on the index. And there are a slew of 1 point plus losers among the leaders.

The Vix is back over 20 so some fear is returning to the market place although we are no where near the vix highs of 48 last September.

Btw Plains All American (PAA) is down 2 and change on its public offering of shares.

IS THE MARKET RALLY OVER?

The rally that began in early October and has taken us almost straight up for the last 5 months seems to be at least hitting some headwinds this morning with the dow poised to open down over 100 points. Lots of things going on geo politically with Israel and Iran and whether Israel got the green light to attack Iran. We also see oil at a problematic $125 on Brent which is the world oil price. And technically markets have been struggling over the last week or so on a daily basis. So a triple digit pullback should be no surprise here. The dow has not closed down 100 points or more since before Christmas.

A pullback here would not be a surprise and we could easily head to the moving average support lines which are still in an uptrend. So i wouldn't be too worried here until or if those moving averages get breached. MLPs will be getting their tail wagged today by the market but the same applies here with regards to the uptrend. MLPS will be supported by a 10 year under 2% which will see if any fight to quality developes.


Here is an interesting question. Which Kinder Morgan do you prefer? Is it the MLP which is just under 90 and just off all time highs...or.....

..is it the new common Kinder Morgan (KMI) which came public as an ipo last year and has now moved solidly above its initial offering price of 30 bucks? Or should you own both? Or should you own both but only after waiting for better entry points? An interesting question which i will share my thoughts on over the next few days. Meanwhile markets are set to open sharply lower.

Latest on Linn Energy and its purchase of 1 billon of nat gas assets.

Markets are a little lower headng into lunch time. Nothing exciting going on. So far its just a typical pullback.

IS NAT GAS PUTTING IN A FINAL BOTTOM?

Truly a dangerous question is being posed here as nothing is more dangerous then trying to pick tops or bottoms. However yeserday's drop in nat gas seems to be setting up for a bottom retest of the lows of 2.30 set back on January 23. And you can already see via the chart that if that happens its going to happen on lower volume and with all sorts of momentum divergences. Nat gas has been in a bear market for years given the fact that nat gas has seemingly endless supply coming to market long term and an unfavorable demand outlook over the short term. Still it is worth noting that nothing goes down forever.



MLPS meanwhile continue in their uptrend with no signs of a top. With volatility being squeezed out of markets, its been a continuation of a grinding higher rally. There is nothing out there that seems to want to stop this train for now. So other than stock offerings which bring in temporary selloffs in price, the path of least resistance remains higher.

This morning markets are quietly lower here. No news of consequence and no upgrades or downgrades. Stock futures a few ticks down. Nat gas a few ticks up. Oil a few ticks down and the dollar is higher against the Euro on whatever they are worried about over there today.