TECHNICAL DOUBLE TAKE: $KMI

I blogged about $KMI yesterday and got traders in 12631 into some calls yesterday at a pretty nice price. However, there’s something about today’s action that should be noted.

Some of the biggest winners I’ve blogged here for you over the years were a couple earnings surprises. $X, $YRCW, $LULU, $APOL, etc. What made them unique was their volume structure, and overhead profile. Here’s another look at $KMI today:

In each earnings trade, what set the trade off and gave us an uninterrupted trend move through the pocket was a gap up into the overhead pocket, similar to what $KMI has done here today. In each instance, there was a quick move after the open in which profit takers drove prices lower, but found buyers on the retest of the trading range.

After that initial move, in each ticker I mentioned, there was consolidation or acceptance of new prices on the day, which served as a base for prices to move away from, like you see here in $KMI on the lower time frame. This is quite the arrangement for a trend style move here. Follow through on this gap tomorrow should spark a trend style move back up through the overhead pocket.

After the failed move up in stocks back in late January, market participants stopped buying into the idea that stocks could rally at all. The majority of the crowd has conceded to a bear market, as discussed yesterday. Now all I read is those that suggest the market is still a bear until xxxx level is hit.

Think about this for a moment…but what do you do in this situation? You are riding an opinion that is under pressure, and the market knows this, and it forces you into a tough spot to have to flip a script at elevated prices.

Anyway, the analogue from last week continues to work here and should pause again at 1940. The reaction there should be enlightening.

Not adding anything here, just letting it ride. Stalking some $AMZN puts for a quick trade later today.

OA

As reported after market close, Berkshire reports in their 13F that they have purchased 26.5 million shares in Kinder Morgan.

I’ll take it.

Thus far, the patterning of these last few months is remarkably similar.

Aug-Sept 2015

Jan-Feb 2016.

We’re back above 1880 here. That’s a pretty big deal, IMO.

If you didn’t start buying last week, this totally sucks. Everyone is deciding here that rather than chase up, they’ll pass and wait to short this move.

OA

A couple weeks ago, we came up with a buy list in After Hours with Option Addict that included Kinder Morgan. After looking over Appaloosa’s 13F, it made sense to really look at this idea a little closer.

According to the fund’s latest 13-F filing made on Friday, Tepper bought 9.4 million shares of energy company Kinder Morgan, whose shares are roughly flat this year even as commodity prices have fallen. The fund bought 4.3 million shares of natural gas and oil exploration company Southwestern Energy Co. who’s shares have climbed 25 percent this year.
He also bought 2.3 million shares of Williams Partners LP, which has tumbled 50 percent, and added 3.5 million shares of natural resource company Freeport-McMoRan, whose stock has dropped 18 percent this year.

The stock has built a multi-month base down here, and did not follow many energy stocks to low lows as of late. I’m a big fan of that type of relative strength.

What intrigues me most about so many plays in this space, is the profiles that have been made with these sharp moves lower over the years. Fast moves down leave very little history in terms of price and volume, and technical analysis focuses a lot on the memory of price.

This stock has very little price history going all the way up to $20, should it decide to break out of this range it’s been in.

Disclaimer: I nibbled in March 15 calls today.

The fear driven environment sparked a massive rally in Gold prices. One that we had discussed quite a bit in the old 1998 analogue.

Here’s a look at how that analogue played out again.

Take a look at the weekly chart on $GLD.

The massive gap up followed by today’s gap lower left last week traders on an island of price above.

I’m now a watcher of weakness in $GLD.

OA