Key Highlights

  • MPLX's (MPLX) Bollinger Band width has compressed to 4.0% of price; ADX is only 16.4.
  • The Partnership yields about 7.43% and has raised its distribution for 12 straight years.
  • MPLX is up 7.6% year-to-date; Q3 results are due Nov. 3.

MPLX (NYSE:MPLX) fell 1.4% to $57.98 as its Bollinger Band width compressed to 4.0% of price, leaving the Midstream partnership resting just above its 200-day average. With a 7.43% distribution yield, a 12-year record of increases and oil above $100 a barrel, income investors are watching whether the squeeze ends with a breakout or a breakdown.

MPLX's Bollinger Band width has narrowed to 4.0 percent of price. Bollinger Bands measure how widely price swings around its 20-day average, and a narrow band means Volatility has dried up. After quiet stretches like this, stocks often make a sharp move once a catalyst arrives.

MPLX, a pipeline and processing partnership sponsored by Marathon Petroleum, collects fees on moving and processing oil, gas and Natural Gas liquids, which makes its Cash Flow steadier than oil prices. It recently priced $2.25 billion of senior notes, Morgan Stanley and RBC raised targets to $66 and $64, and Stifel resumed coverage at Hold. Higher Treasury yields, now near 5%, are a headwind for all high-yield income stocks because bonds offer more competition.

MPLX (MPLX) Lags Energy Peers

MPLX's 1.4% drop compared with a peer median of -0.2%: Targa Resources rose 0.3% and Cheniere Energy fell 0.6%. The $0.83 decline equaled about 0.8x the 14-day average true range of $1.05, and about $69.06 million traded versus $71.35 million typical. MPLX traded in a narrow $57.91 to $59.08 range and closed near the low. The Market Value is about $59.9 billion, and the 52-week range is $47.80 to $60.95.

MPLX Technical Levels: Resting on Support

MPLX trades below its 20-day Moving Average of $59.14 and 50-day of $58.79, but above its 200-day of $56.75. Holding the 200-day keeps the long-term uptrend intact.

The 14-day RSI is 42.3. RSI measures buying versus selling pressure on a 0 to 100 scale, and a reading in the low 40s shows mild weakness.

MACD is -0.05, below its 0.08 signal line. MACD tracks momentum, and dipping below the signal line shows the short-term trend has softened.

ADX is 16.4. ADX measures trend strength, and readings under 20 mean no strong trend, a hallmark of a squeeze.

First support is $57.56, just below the price, and resistance is $60.86 near the 52-week high.

Distribution and Analyst View

MPLX pays $4.31 a year, about 7.4% at the current price, with a payout of about 93% of earnings. As a limited partnership, it issues a K-1 tax form rather than a 1099. The consensus is Buy with an average target near $62.85, about 8% above the current price.

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