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Tuesday, December 27, 2011


As the last days of 2011 wind down, we are seeing mlps running toward new all time highs as the year end pile on continues. We are up 6 of the last 7 days in the mlp index and we are just a solid up close away to new all time highs. This recent upleg is being led by Plains All American (PAA) which has been moving parabolic ever since they company went out and grabbed some liquid nat gas assets. The up leg in Plains has evolved after a long sideways move in the stock which until November was going no where. But at least you were paid 6% to hold it in the meanwhile

Since mlps are among the best performers this year, i would expect to see the pile in to continue. However a note of caution is that what comes in to the price on the last few days of one year could easily come out of the price during the first trading days in 2012. Also whenever we've had these consecutive up days like this, it has come at the end of an up move for the stock market and not at the beginning of one. Still the bulls have control in mlp land until further notice.

For every winner in mlp land there is usually a laggard and Nustar (NS) wins that award this year. The stock price has been in a downtrend pretty much all year and its recent pop in price takes us up to a downtrend line. The company has not been able to grow its payout and that is the bottom line. Liquid nat gas is where the money is going and Nustar (NS) is big on gasoline which has seen margins being squeezed to some degree. If we get into a world where margins (crack spreads) widen and gasoline prices rise due to a genuine increase in demand, Nustar could do quite well. But right now it remains a mediocre performer but at least it has a stable payout.

No news this morning on the corporate side, no upgrades or downgrades so we have no drivers there. Stock futures are a little lower as holiday trading continues. Gold is down 10 bucks. Oil is flat. The euro is up a couple of ticks. Europe remains the driver with Italian auctions coming tomorrow. Other than that markets are pretty quiet.

Meanwhile the Market Oracle who predicted a melt down last week (we got a melt up) continues to point out that the market is could possibly collapse this week. He suggests to keep an eye on the nasdaq and the nasdaq 100 which has underperformed badly in the last few weeks. It seems to me that its going to be hard for the market to crash on a week where no one is here to witness it let alone trade it. I will agree however that the charts are not looking good and the 200 day moving average retest is happening right now for the S&P 500.

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