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Tuesday, June 19, 2012


We have seen no real bounce in MLPS which have been in a downtrend since the late February top and after hitting 350 notice that the rally back has been miniscule. This has come with the dow industrials bouncing from 12,100 to 12,700 and they have nosed above the moving averages which have only just recently crossed and turned down.

Frankly i do not regard this move as a positive. Something is clearly different here then in prior sell offs and rallies in that MLPS are no longer leading. Rates continue to hover near record lows so the price pressure is not coming from that sector. However we may have seen a real collapse in oil prices. Notice the brent chart has really fallen off a cliff here as we have gone pretty much straight down from 125 to 95 with hardly any sort of important bounce. Is the crude oil market signalling are real falloff is coming in the overall economy? Certainly the world oil price is telling us that Europe is in recession. China demand continues to drop. At least all this is good for gasoline prices but it is pressuring energy stocks as a whole. MLPS are probably suffering from the bear market in energy stocks as a whole. But keep an eye on the 10 year yield because if bonds continue to rally and we break below 1.50% it could be a real sign that the economy is headed for a tailspin. Yield spreads in mlp land continue to hold near 2012 highs of around 500 basis points. Anything higher could spell trouble.

Nat gas meanwhile seems to have put in a bottom around 2 bucks and we came back down to just above that last week and now we are rallying rather nicely and with some volume which is good. Nat gas needs to take out 2.80 to make this something more than just a bounce. The chart certainly is beginning to feel like it is trying to put in some sort of meaningful longer term bottom. Certainly the fact that no one believes is a positive.

This morning we have slightly higher stock futures while crude is down and so is nat gas. No news to speak of this morning and no upgrades or downgrades. Yesterday we had Markwest profiled on Mad Money. Its worth a look since Markwest (MWE) has been one of the better performing mlps of the last few years.

Sorry for the lack of posts. Lots of family stuff going on makes regular blogging difficult.

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