MLPS AFTER THE DISCOUNT RATE CUT

A fresh Monday morning and now we see whether we get any followthrough to Friday's rally off the discount rate cut. First off from the standpoint of sentiment there seems to be a universal conclusion that the sell off is not over and that we need a retest at least. This is an unscientific observation of all the CNBC guests. So that is actually a good sign. I was hoping for a small up open today and watch to see whether they can build it as the day wears on. I think that will be the best outcome. MLPS should see some more firming of prices but of course I will continue to have my eye out on any hedge or quant funds that will be liquidating into strength. Thanks to reader Bruce for providing at least some evidence that hedge funds did a major liquidation. Passport Global Master fund which is a hedge fund sold over 200,000 shares of Legacy Reserves (LGCY) as per a filing with the SEC. They own more than 5% of the shares so they had to file. The sale was on August 7th. I'll be looking around for more clues of shares being tossed out the window.


The energy complex is taking a hit this morning especially natural gas which made it to a 7 handle and is selling off hard as Hurricane Dean will track well south of the main producers in the Gulf of Mexico. Nat gas is down 60 cents or nearly 10%. Oil and gasoline are down as well. But the energy stocks are trading off the overall stock market for the most part of the last few weeks.


No corporate news this morning but we have an upgrade this morning of Universal Compression (UCLP) which is taken to outperform from market perform thanks to our friends at Wachovia.

The charts of the MLP index are for your enjoyment below. First off on the daily chart; it looks ugly. But we are deeply oversold. On the weekly chart it looks a little more contained and the 89 day moving average at 286 has held here as it held back a year ago.


So we are due for an oversold rally for sure but no signs yet of a firm longer term bottom in the daily chart. We have some work to do here.

So lets cross our fingers that we can have a nice relatively quiet uneventful up day. Headlines this morning as they break.