adbrite ads

Your Ad Here
Your Ad Here




Thursday, October 13, 2011


Since we seem to make a years worth of moves in a week these days i thought it would be a good idea to take a look at the charts up close and personal so we can figure which way we are going in the short term (1 week) and the intermediate term (1 month).

The mlp index has been trading in a range between 330 and 360. The moving averages lie right above current prices and has marked the top. Closing lows are around 330 with intra day adventures under 320 which have turned around on both occasions. So in the context of this range we have a double bottom (bullish) and a double top with a potential triple top if it fails here (bearish).
The dow chart is in a range of 1000 points from 10600 to 11600. Yesterday we got to the top of the range and we did it in 6 trading days...1200 dow points. And here too we have a double bottom and a double (or triple) top. One of these trips is going to lead to a breakout or a breakdown but trying to figure out which has been a nightmare.

Here is the look on the chart going back 6 months. The negative for an upside break is the fact that volume on this rally has decreased on the way up. Usually not good. Also the shear speed of the move has been mind boggling considering that nothing really has changed here nor in Europe. In the end i think it boils down to the fact that the market will break higher and out of the range for one short! So watch today to see if yesterday's stall was the sign of another move down. My guess is if we go down to the bottom of the range, there is a real chance we will take it out and do it decisively. And perhaps it will happen even faster than the rise up. But it again since i'm positioned to profit from this, the dow will head to 13000. MLPS will move along as the dog tail relationship. If markets rally strongly and the 10 year yields start to rise rapidly we could see this hold mlps back a bit. On the other hand the yield spreads are still pretty wide that 10 year yields could probably climb 100 basis points and not impact mlps too much.

In news this morning Enterprise Products Partners (EPD) ups the payout for the 29th consecutive quarter. No other news this morning and no upgrades or downgrades. Stock futures are lower ahead of the open. Europe is down. The euro is down. Gold is down. Oil is down. So the big question is whether the rally to the top of the range will be like the last 2 rallies. If they are it will be another fast trip down to the edge of the abyss.

1 comment:

Josef said...

I wish u luck on your trading decisions. I gave up trying to time the mkt. I was a net looser whenever I tried it. IMO, the small fry has zero chance to compete against the compterized traders. In this type of mkt, only recourse for the small investor is to buy and hold mlps.