Conclusion, Investment Implications, Strategy

Kinder Morgan, Inc. (KMI) appears to be making a major bullish trend change amid recent relative outperformance versus the benchmark S&P 500 (SPX).  A sustained rise above the 14.33 area amid continued relative outperformance would confirm this and target a potential 22% rise to $17.97 per share.

Analysis and Rationale

Kinder Morgan, Inc. (KMI) operates as an energy infrastructure company in North America. The company operates through Natural Gas Pipelines, Products Pipelines, Terminals, and CO2 segments. The company was formerly known as Kinder Morgan Holdco LLC and changed its name to Kinder Morgan, Inc. in February 2011. Kinder Morgan, Inc. was founded in 1936 and is headquartered in Houston, Texas.

Chart 1 below plots KMI daily since August in the upper panel along with its 200-day moving average (major trend proxy), with an accompanying chart of KMI’s relative performance versus the S&P 500 (SPX) and its 21-day (monthly, our Tactical time frame) moving average in the lower panel.

The chart shows that KMI is currently edging above its 200-day MA, suggesting an emerging major bullish trend change.  Meanwhile, KMI has already outperformed SPX by 23% since Nov 6th.  A sustained rise above the 200-day MA, currently at 14.33, amid continued monthly relative outperformance over SPX would target a potential 22% rise to $17.97 per share.

Chart 1

Table 1 below shows that considering the aforementioned upside target and a protective stop placed below the $14.00 area, a long entry price of $14.74 would provide a 1:4.4 risk/reward ratio (risking $1.00 to make $4.40) with an initial risk of 5.0%.

Table 1


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