Jim Cramer's second recommendation in the pipeline space Friday night on his Mad Money program on CNBC was Kinder Morgan Inc. (KMI) , which has two new pipelines coming online soon to help propel its growth. So with the U.S. now topping 12 million barrels of oil a day, Cramer concluded that these two pipelines are the best ways to win.
Let's check out the charts and technical indicators for a strategy that balances risk and reward.
In the daily bar chart of KMI, below, we can see that prices broke out to the upside last month and surged to yet another new high last week. Prices are above the rising 50-day and bullish 200-day moving average lines. The 50-day average just crossed above the 200-day line for what is commonly called a golden cross. This (belated) signal is bullish and can be successful in trending markets.
The daily On-Balance-Volume (OBV) line has moved up with prices and rose even when prices declined in October-December. A rising OBV line tells us that buyers of KMI have been more aggressive. The Moving Average Convergence Divergence (MACD) oscillator crossed above the zero line in January for an outright go long signal.
In the weekly bar chart of KMI, below, we can see that prices have broken a downtrend from 2016. KMI is above the rising 40-week moving average line and the weekly OBV line has turned up the past two months to a new high going back at least a year.
The weekly MACD oscillator has crossed the zero line to the topside for a weekly go long signal. The first upside price target looks like $22 from the twin lows at $15.
In this Point and Figure chart of KMI, below, we can see an upside price target of $22.75 being projected.
Bottom-line strategy: An attractive yield and an upside price target. Traders could go long KMI at current levels risking a close below $18.50 the breakout point. The initial price target is $22.75.
