THE NOT BAD...THE HORRIBLE...AND THE HIDEOUS!

That pretty well describes last week in MLP land. I've been reading anything and everything i can get my hands on with regards to everything that has happened last week and i think we need to step back for a few minutes and realize a few facts.

1. The rally in MLPS took us to a place of overvaluation. The MLP index ran from 270 to 340 in 10 months with barely a pullback. That is a 26 percent gain plus 4 distributions giving you an annual return of over 32%. Now at 298 we're up 8% plus distributions or annual return of 15%...much more reasonable.

2. All through this selloff there has not been a single corporate developement that i could find that has driven any of this selloff. In fact we've seen good earnings, distribution increases, buy recommendations by some of the brokerages etc etc. Only Natural Resource Partners reduced its Distributable cash flow estimates for the next few quarters due to some snags.

3. Much of last Mondays' 25 point crash debacle had to do with some hedge fund having to liquidate into a spooked market with no buyers...hence 6 point gap collapses in many MLPS...most of the damage was repaired by Wednesday.

4. The overall market is dictating the pace so until the credit crisis gets resolved we are going to be subject to occasional blow ups. Traders should tread cautiously...investors for the long term are getting a prolonged MLP sale to buy into.

I bought some Atlas Resource Partners (ATN) on Friday. With the distribution going to 2.40 next year I think this one is cheap and playable.

Meanwhile the MLP index chart looks like a bomb hit it but sharp rallies may come at anytime.

Meanwhile last week Crosstex (XTXI) broke out to new all time highs on good earnings and the prospect for a resumption of distribution increases going foward. Chart is one of the few in the group that looks good.

Linn Energy also doesn't have a half bad looking chart as they are going to a 2.52 distribution in the fourth quarter which has already been pre-announced. This of course assumes there recent 2 billion dollar deal goes through...have no reason to think it won't since they did a private equity placement already to finance it.

So some things to ponder here on a rare Sunday post. I'm back to normal tomorrow so i will be posting as usual. So far no headlines in Europe and nothing on the wire here indicating a major blowup. The fed drew the line in the sand Friday so if things stay calm overnight we could see a nice relief rally tomorrow...at least i hope so!