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Monday, December 08, 2008


Futures have been strengthening all night and markets seem to be lining up to rally from here and certainly we have headroom. For MLPS we need to line up the markets and some support from the energy side of the equation. The Dow Jones Oil and Gas index lines up pretty well with the dow chart and both have put in a base in here.

Of course the MLP chart doesn't the relative smoothness of the other 2 charts but we will continue to move along with everything else. One encouraging sign might be the action in financials which seem to have shown a little leadership in the last several days. Certainly they led the way higher Friday and this is somehting we should watch.

Going foward in the longer term Joe Battapaglia was on CNBC this morning and said you will want to own companies who have enough cash to carry them through for the next 3 years and do not have to roll over debt or access new debt. Not exactly the kind of enviornment MLPS can do well in!

This morning we have no news on the corporate side and no upgrades or downgrades so far. As we mentioned earlier stock futures are strong this morning. Dow futures up 200 points. Crude is up while nat gas is down this morning. Some key levels to look for. MLP index can rally at least to 190 before hitting some resistence. 220 is important. On the dow chart we need to get above
8772 which we will do at the open this morning. Ultimately 9500 is the top of the base which is the first bounce high back in October. That will be formidable but that is also many points from here. Market repair is essential for mlps to gain any type of traction. Big money might be made if you can figure out which of the beaten down mlps will be able to survive all this. And will those with now single digit handles be cutting distributions or has all that been priced in?


Bruce said...

Is anyone listening to the DPM call this morning? If so, please post your reactions for those of us who cannot hear it.

The market reaction may be disguised--or amplified-- by the big rally we are apparently going to have this a.m.


Anonymous said...

My guess is that every potential piece of bad news - from a horrifically deep recession to an eternally frozen credit market to distribution cuts - has been priced into MLPs.

Market efficiency? Long term, maybe, but in the short run, markets are anything but efficient. And that's the key to making a boatload of money. I like Jim Rogers' attitude about trends. While he has phenominal talent as a marco trend spotter, he repeatedly admits to being the world's worst market timer.

Taking a page from Rogers' play book then, in my opinion MLPs are way oversold and when cooler heads return to the market the worm will turn amply rewarding the patient among us. The question isn't "if," but "when." But while we wait for "when," we'll look back at "now" and wish we'd grabbed these things with both hands at these riduclous prices.