1. The wait, and the debate, are finally over. Kinder Morgan (KMI) slashed his dividend after Tuesday's regular session close. The old rate of $2.04 has been cut to roughly $0.50. Since news of this 75% reduction in KMI's dividend hit the wires, I've heard nothing but how bullish it will be when shares rally off the news. Note I said will, and not if. The bottom line is everyone is under the assumption KMI is destined to rally back to life now that the company has taken steps to preserve its cash and, presumably, its credit rating.
Could the stock rally? Absolutely. Is it guaranteed to do so? Absolutely not. And even if the stock does rally, should we assume it'll be trading in the low $20s in the near futures? Probably not.
From an investment standpoint, the stock is still broken. But thanks to the intraday volatility, it's a fantastic stock for day timeframe scalpers to keep on their screens. Tuesday's after-hours selling notwithstanding, the first level I'll be watching at Wednesday's open will be $15.20. A sustained trade above that level puts $16 and $16.50 back on the table.
2. Those wanting to make a bet on a near-term rebound in the MLP space should consider following the JPMorgan Alerian MLP ETN (AMJ). We discussed AMJ in Tuesday's Trader's Notebook, and I offered a teaser to the idea in Columnist Conversation on Monday. As much as I love the added volatility KMI brings to the table, I am more comfortable holding a sector-wide fund if staying exposed beyond the day timeframe.
3. I received a reader email concerning Mosaic (MOS) and Potash (POT) the other day, but I'm afraid neither stock looks particularly enticing to me at the moment. Short term, I suppose one could look to see if MOS can hold the $30 level and perhaps trade back above $33 (prior resistance and the 50-day simple moving average). Longer-term though, MOS is still in a cut-and-dry bear trend.
As far as POT is concerned, this stock trades as bad as many independent oil and gas stocks. The stock spent all of October and November churning between roughly $19.50 and $22.25. But having shattered the lower end of that range, the next area of potential interest would be the late-2008 swing low of $15.85. Realistically though, POT looks to be nothing more than another stock trapped in its own private bear market hell.
Any trading or volume profile related questions can be posted in the comments section below, emailed to me at firstname.lastname@example.org or posted to my twitter feed @ByrneRWS.