NEW YORK (Real Money) -- Williams Partners (WPZ) has the master limited partnership exchange-traded fund on the move over the last few days. This one is a bit tricky here. WPZ held a place in the top 10 holdings for several MLP ETFs, and now there are a few of those ETFs threatening to break out higher after they looked ready to roll over.
So, is WPZ masking a bigger concern here or is this the turn these ETFs, like the UBS E-Tracs Alerian MLP Infrastructure ETF (MLPI), needed?
Looking at the short-term chart on MLPI, it is clear to see the pullback that started in early March. The juice from WPZ gave MLPI a push higher into resistance, but the reason I don't think WPZ is masking a bigger problem is that the bounce for MLPI started a day earlier. The ETF came down to the lower Bollinger band, and unlike past trips there, it bounced on the first try. We haven't seen that in over seven months, so that means something to me here.
Furthermore, we had a bullish cross in the slow stochastics from a sub-30 area. This too has been bullish in the past. Now, it appears the price action was the setup for a cup-and-handle pattern, which is a consolidation pattern. This would be a consolidation of the move higher, which began in mid-March.
What I find most appealing here is you don't have to wait long to learn if WPZ was a smokescreen. In fact, you don't even have to buy yet. The breakout area is $40. A close over $40, or preferably consecutive closes over $40, should indicate a breakout. However, if MLPI falls back under $39, then it is time to just sit and wait. A close under $38 and I would actually be looking short MLPI, as I believe we'd retest $36.