Recent market performance
Energy Transfer Equity (ETE) and Energy Transfer Partners (ETP) have been very volatile since the start of this year. Both ETE and ETP have offset their January gains due to the recent weakness. ETE has lost 5.8% since the start of this year, while ETP is up 1.8%. The recent weakness in both the GP (general partner) and limited partnership could be attributed to the global sell-off and volatility in crude oil prices.
Overall, ETE and ETP have lost 14.7% and 30.1% over the past one year. ETP’s peers, MPLX LP (MPLX) and Targa Resource (TRGP) have lost 9.5% and 18.1%, respectively. At the same time, the Alerian MLP ETF (AMLP), which consists of 25 midstream energy MLPs, has fallen 20.2%. ETP has underperformed AMLP by ~1,000 basis points over the past one year.
ETP recently went below its short-term moving average. The partnership was trading 3.0% and 4.5% below the 50-day SMA (simple moving average) and 200-day SMA as of February 21, 2018, respectively, which might indicate a bearish sentiment in the stock. However, strong 4Q17 earnings, gains in crude oil prices, and strong drilling activity could push ETP above its historical moving averages, resulting in a bullish sentiment.
ETE could continue to trade below both its short-term and long-term moving average. GP was trading 6.6% and 6.2% below its 50-day SMA and 200-day SMA as of February 21, respectively. This might indicate a bearish sentiment in the stock. However, gains in crude oil prices might push ETE above its short-term moving average, resulting in a bullish sentiment.
Energy Transfer Equity’s and Energy Transfer Partners’ 30-day implied volatility was 35.0% and 31.4%, respectively, as of February 21, 2018. Based on their respective implied volatilities, ETE and ETP might trade in the range of $15.47–$17.05 and $17.45–$19.03, respectively, in the next seven days. The two publicly traded partnerships are expected to trade within this range with a 68.0% probability, which assumes a standard deviation of one and a normal distribution of prices.