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Monday, May 14, 2012

If the mlp chart was regarded as the leader on the rally that began in December 2008 for mlps and ended January 23, 2012, then its been sending ominous signals for the last 3 months and right now with a 3 point loss on the day, we are sitting at 380 which marks important support in my view and we are just ticks from breaking through that support zone. Its important because it came down to that level back about a month ago and rallied back above 400. That rally failed so now we watch closely for the dam to break this afternoon.

The dow chart meanwhile has put in a double top and we watch this 12,700 level which also looks very dicey and may breakdown here as well. The dow is down 100 at 12,723 right now. Euope is the driver and it looks like they are circling the drain overseas in a big way. And they are apparently going to take us down with them.

A few folks sent me some notes regarding JP Morgain and their recent trading debacle. Some are wondering whether this is Lehman and 2008 all over again. The Lehman unwind brought the mlp index down to 145 in almost cataclysmic fashion. That wound up being a lifetime buying opportunity. At the time Lehman held large postiions in many mlps which had to be sold in a down tape at any price. This made for a blood bath. I dont see the similarities here between Lehman and Morgan. For one thing mlps are now pretty widely owned and no longer thinly traded like they used to be. And while JPM made a big boo boo its not the kind that bring the entire bank down. If it did, i frankly dont think it would matter what you owned..the outcome would not be pretty.

The mlp index as i type is now below 380. Copano (CPNO) is the biggest loser down 1 and change after losing nearly 4 dollars late last week on a not so good earnings and outlook. Energy Transfer Equity (ETE) Atlas Energy(ATLS)and Cheniere (LNG) are also shedding a 1 point and some change each.

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