Tag Archives: MLPs

Kinder Morgan: Dead-Cat Bounce Coming – Sell, Do Not Buy

It was inevitable that Kinder Morgan stock was going to bounce at some point.  Nothing goes straight down without a dead-cat bounce.   There has been a lot of money made on the short side of this stock and prudent traders will take at least 70% of it off the table for now.  This catalyst alone could stimulate a $3-4 bounce in the stock.

Untitled1As you can see from this graph, the RSI/MACD momentum indicators are deeply oversold and need to bounce for a bit.  Retail investors “doubling down” and professional short covering will fuel most of the bounce.  Additionally, I am expecting a short bounce in the price of oil, which will help push KMI stock higher.

Again, I am not recommending shorting this stock yet.  I need to complete my research and will be publishing a full-blown report.   I will say that the more I dig, the more I find highly troublesome red flags with its accounting and its business.  To say the least, the idea that this company is strictly a fixed, fee-based revenue model with no risk on either end of its pipelines is completely misleading, if not a fraudulent claim by analysts.

I have introduced a new subscription-based newsletter service called SHORT SELLER’S JOURNAL.  It’s a weekly report delivered to your email inbox with:  1) a brief comment on the previous week’s trading action plus any thoughts on the upcoming week;  2) I will feature 1 or  2 short-sell, trading, or investment ideas – the investment ideas will be primarily junior mining stocks; 3) trading recommendations, charts and put/call option ideas.

Here’s what Enron’s stock did before it completely collapsed.  To reiterate, I am not making a strictUntitled comparison between Enron and KMI.  However, I will suggest there is a strong possibility that the intrinsic value of KMI’s business is below $20, if not $10.  Furthermore, in this era of insane liquidity and insane valuations being paid for anything that moves, there’s always a possibility that KMI will be bought by private equity firm before the U.S. systemic bubble bursts.

A reader left this comment on here last night.  It illustrates perfectly the thought-process of the typical retail investor, reinforcing my assertion that the story-line being pimped by Wall Street that the sell-off is from the irrational behavior of frightened retail investors is pure misleading propaganda:

Dave, good stuff here on Kinder Morgan. My Dad is way overexposed there and he will not sell…..He has rode the market up and now riding it down and downer. Swears he will not sell this cheap.  Oh well…