Trade of the Day: Kinder Morgan Inc (NYSE:KMI)

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Stocks rambled higher Monday in light trading as investors continued to shrug off the weak payrolls growth reported by the Labor Department on Friday. Equities were supported in part by the macroeconomic environment, as the U.S. dollar fell and crude oil rose, both of which are considered to be bullish developments.

The key news item on the wires was a speech by Fed Chair Janet Yellen at a meeting of economists. She expressed optimism about the economy despite the super-soft jobs report, and said she still expects to initiate gradual interest-rate target increases. She gave no sense of the timing of those bumps higher, though when she failed to say “in coming months” in reference to a hike, it was seen to be a subtly dovish signal.

The futures market put the likelihood of a June rate hike at near-zero, and the likelihood of a hike later in the summer at less than 30%. Public comments today from Atlanta Fed President Dennis Lockhart and St. Louis Fed President James Bullard suggested that both consider a rate increase at the July meeting a possibility.

With crude oil gaining a bit of momentum, I’ve found a nice short-term play for us to pull the trigger on.

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Kinder Morgan (NYSE:KMI) is a $41.4 billion energy infrastructure giant which operates natural gas and crude oil pipelines, terminals, and storage facilities primarily in the Southwest. The Houston-based company is one of the most storied and respected in Texas, but was bombed by the plunge in crude oil prices just as much as any weakly financed wildcatter. Shares that were going for $42 as recently as early 2015 sank through $11.50 in early January, and they are still trading at around $18.50.

The stock has flat-lined in recent weeks as bulls and bears duke out the valuation, but it looks like buyers are finally getting the upper hand.

Buy KMI at $18.55 limit, good till canceled. 

Jon Markman operates the investment firm Markman Capital Insights. He also offers a daily trading advisory service, Trader’s Advantage, and CounterPoint Options, a service that helps individual traders make steady, consistent profits with volatility-related instruments. Follow him on Twitter for his latest take on markets and innovation.


Article printed from InvestorPlace Media, https://investorplace.com/2016/06/trade-of-the-day-kinder-morgan-nyse-kmi/.

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