Energy stocks were buoyed by the big vaccine news Monday, and the gains held for the week overall. XOP spiked 20.4% this week, XLE was up 17.1%. Midstream wasn't quite that strong, but posted historically significant gains Monday and for the week (see below).
So What? So, Let's Dance
Oil prices helped this week, but midstream stocks were up Friday even as oil prices fell, which was nice. A rising energy sentiment tide lifted all boats, as not one midstream stock or MLP traded down on the week.
Midstream companies continue to whittle leverage down and take costs out of their systems, but the pace remains slow, as noted here in previous weeks, and large-scale consolidation remains elusive. In the absence of material midstream news, it was a week of re-positioning after strong earnings. This week's price action offered hope of a shorter and less dramatic tax-loss selling season for midstream this year than in recent years.
I hope everyone enjoyed the (hopefully) unique situation of The Masters being played in mid-November. Midstream dusted off its green jacket this week and relived some glory days.
We'll take it even if we've been conditioned to expect downside volatility after such positive inflections. Along with rising sentiment came rising COVID-19 case counts and lockdowns across the country and the world. Caution is certainly warranted, quality names within midstream remain the play. Better to lay up and take par than stretch for the green.
Easier Comps Ahead for Trailing Return
It's worth noting that after big gains this week, AMNA and AMZ returns far this year are no longer on pace to be the worst year ever. To finish ahead of those terrible years would be quite a feat after this year's staggering volatility.
- AMNA (data back to 2014) had its worst annual return ever
