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Thursday, December 18, 2008

WINDING DOWN HEADING
INTO CHRISTMAS



We have just 9 trading days left in 2008. Good riddance frankly so everything is starting to wind down. We have options and futures expiration tomorrow which means a little more game playing. Otherwise we seem to be just moving along in a sideways pattern lately overall.


The bears however have just ripped apart the energy complex. As hideous as the stock market and MLP drop has been, the charts here for crude and nat gas have really been something to behold. Think back to July when oil was marching toward 150. Did you ever imagine an unrelenting decline that has taken us down to 40 dollars which btw is the lowest price for oil since 2004. And nat gas has been no bargain either as it has been also cut in half and thensome. That plus the equity market demise and you have the MLP mess that we are in. And as one of our regular posters Bruce has pointed out..that nat gas price decline, if it sticks around for awhile does not bode well for distributions come next year and the cutting knife may be out for many mlps. We can only hope that unit prices have already discounted all this.

Clues about this could be coming this morning with a conferecnce call for Constellation Energy Partners (CEP) at 9am to talk about 2009. Those of you interested in listening in...here is the info.

U.S.: (888) 322-9245
International: (773) 756-0253
Password: PARTNERS

This morning we have crude trying to hold 40 dollars. Stock futures a little higher. The dollar getting ripped apart against the Euro. Gold is running to 875 this morning. This is what happens when the fed floods the market with money.

For those of you looking toward some year end action there are 20 mlps and gps that are selling right now for less than 10 dollars. 9 of those sell for under 5 dollars. And many of these sold for 20, 30 and even 40 dollars or more. It could be that many of these might be entitled to a year end/ early 2009 bounce. Its been my view that if credit conditions in junk yield corporates starts to noticeably improve, and if these companies make any indication that their distributions are intact..then those issues could double in a hurry as we just saw happen in DCP Midstream (DPM). Not for the faint of heart but there will be a window of opportunity over the next few trading days to place some bets. I'm not sure which ones i would pick out of this mess quite frankly. Crosstex (XTEX,XTXI) has already cut once and the price tells me they are cutting again. XTXI has a 2 handle. Hiland Holdings (HPGP) has priced in a cut and a sizeable one in my view. Regency (RGNC) and Genesis (GEL) are 2 i find a little interesting especially RGNC as GE holds a stake in that one. Its almost like buying a call option. Again these are plays in the context of an early 2009 bounce after tax loss selling gets done.


1 comment:

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