Purpose?

Good morning Folks,

While it was nice to have a gap open yesterday it was an extremely choppy day as volatility continued to decline. We are still flirting with those key levels of resistance and it looks like we may consolidate in this area. A proposed merger between two mammoth Dow components had a positive effect on the markets which was interesting, since all the regulatory hurdles that would have to be cleared make the merger highly unlikely. 

Oil had a nice surge yesterday and managed to hold its gains into the close off some vague chatter about 50 dollar a barrel oil. We don't necessarily need oil to go to 50, all we need is to have oil remain stabilized and that would likely keep the markets calm. BHP is the latest oil producer to slash their dividend reducing it by 75% after the close. Be careful if you are invested in MLP plays.

Debt is also a complicating factor in the oil bust. The massive amount of dollars owed and the terms they come with could force more oil and gas drillers to restructure their businesses in bankruptcy court instead of pursuing cost-saving combinations with competitors, Occidental Petroleum (NYSE:OXY) CEO Stephen Chazen told the IHS CERAWeek conference. Companies typically can combine to reduce costs in times of struggle, but many oil and gas companies already have made deep cuts to overhead, and a number of loans come with terms that could make mergers difficult.

Devastation in the oil patch has caused large losses for investors in MLPs, and in some cases increased their tax burden, NYT's Gretchen Morgenson explained in a weekend analysis.

Some upstream energy MLPs are being forced to restructure their debts to stave off bankruptcy, and when they do, MLP owners must pay income taxes on their share of debt forgiven by creditors, even though unitholders received no actual income as a result of the restructuring; partnership tax expert Robert Willens told Morgenson that a lot of upstream MLP investors will be surprised by such a tax bill in the coming years.

Most of the more widely-held midstream MLPs are holding up, so this particular tax hit is not a risk, Barron's Amey Stone notes, but even some midstream MLPs could need to restructure if energy prices stay low for a long time.

ETFs: AMLP, AMJ, KYN, YMLP, TYG, SRV, KYE, CEM, MLPI, NML, FEN, NTG,MLPA, KMF, EMLP, FMO, FEI, JMF, MLPN, SRF, CBA, MLPG, MLPX, GMZ,EMO, MLPS, MLPY, TTP, CTR, AMZA, GER, ZMLP, CEN, YMLI, AMU, SMM,MIE, DSE, FPL, ENFR, ATMP, JMLP, MLPC, MLPW, IMLP

Gold and gold miners are holding up a bit better than I had anticipated and appear to be consolidating after the recent run. Junior minors may be struggling a bit so if you are going to be involved in the sector you may want to focus on the higher quality names. Gold can be very volatile when people start to get a sense that the party may be over in the shiny metal so keep an eye on the leveraged ETF's for quick hit trading opportunities.

Today's Economic Calendar

8:55 Redbook Chain Store Sales
9:00 S&P Case-Shiller Home Price Index
10:00 Consumer Confidence
10:00 State Street Investor Confidence Index
10:00 Richmond Fed Mfg.
10:00 Existing Home Sales
1:00 PM Results of $26B, 2-Year Note Auction
8:30 PM Stanley Fischer

ETF & ETN watchlist

Volatility                           Oil                                                      Biotech
UVXY XIV VXX TVIX     UWTI DWTI GUSH DRIP                     IBB LABU LABD       
 Gold                                                                  SILVER             Dollar      Financials
GLD NUGT JNUG DUST JDST  GDX GDXJ         USLV          UUP      FAS XLF FAZ

Stocks on my radar premarket
VRX earnings restatement appears not to be as bad as some may have assumed could be a wild child today already snapping back premarket 

EYES EYES - Second Sight to Announce Five-Year Data from Argus II Clinical Trial Program