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schizas’ mailbag

Ships are moored in the Strait of Georgia off of Vancouver. The National Energy Board has come under fire for restricting the number of people permitted to participate in the review process for the proposed Trans Mountain pipeline expansion project in British Columbia.GRAEME ROY/The Canadian Press

Hi Lou,

I wonder what you think of Kinder Morgan. They have three different offerings (KMI, KMP, KMR) so if you like the company, which one would you consider the best investment?


Hey Scott,

Thanks for the assignment. I'll run the charts of Kinder Morgan Inc. (KMI-N) today and the others later in the week.

KMI owns and manages a diversified portfolio of energy transportation and storage assets. The specific units of the company operate as toll roads collecting fees for services and avoiding the price volatility associated with energy production and refining. The yield on the dividend is 4.77 per cent which will attract investors looking to beat the low interest rate environment.

A survey of the charts will identify what might be expected in terms of direction.

What is immediately noticeable on the three-year chart is the double top that formed in the spring and summer of 2013. A double top is a reversal pattern indicating that the uptrend, that had started in November of 2012 when the shares were trading close to $30.00, was coming to an end. What is also evident is that the downtrend line that started last summer has finally been broken.

The shares hit a 52-week low of $30.81 in March of 2014 where they caught a bounce and started a new leg up. Worth mentioning are the buy signals generated by the MACD and the RSI in the same time period. Finally the break above resistance along the 50- and 200-day moving averages indicates that buyers have taken control of the market. The next question that needs to be answered is if KMI can break above resistance at $36.00.

The six-month chart provides a close-up of the bounce off the March lows and the move through resistance along the moving averages. What is also noticeable is the pennant that has formed in June of 2014 indicating that we can expect more to this advance. The last pattern that you should focus on is the pending formation of a golden cross. We are not there yet but it would appear that it is in the offing.

Make it a profitable day and happy capitalism!

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