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Tuesday, March 06, 2012


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..... 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.


Hmyer said...

I own all three (KMI, KMP, and KMR). I was hoping that they would eventually roll all these up into one entity without IDR's, but that seems unlikely after the El Paso deal. Conventional wisdom says that KMI is the one to own, because of continued growth in the dividend as a result of higher and higher IDR's. Looking forward to hearing your take.

joewxman said...

I agree. KMI will probably outperform much like it did when it traded before the takeout in 2007. It makes sense with the common having more flexibility than the LP. Richard Kinder is a hard man to bet against. Id rather be on his side.