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LEAPS Trader Important Watch List Update - August 30th

 

Oil Prices Show Extreme Volatility

The oversupply of oil is catching up to the market and we saw an example of extreme price fluctuation today. The oil inventory report showed a surprise build in oil by +2.5 million bbls and a minor rise in gasoline by 400,000 bbls fueled by imports.

Oil fell to $68.60 after the announcement but recovered to close at $70.05 on expiration related activity. Heating oil and Gasoline contracts for September cease trading on Thursday.

We saw some sharp drops in several stocks on the watch list and with inventory building and demand slowing I think we will see more with a potential for oil to break $65.

I am lowering the breakdown targets on these watch list targets:

CEO $86.01 - Old target $85.99, new target $80

FTI $58.00 - Old target $57.50, new target $55

SUN $73.01 - Old target $70.00, new target $65

VLO $58.15 - Old target $58.00, new target $55

UPL $50.27 - Old target $47.50, new target $45

SLB $62.15 - Old target $60.00, new target $57

Targets left unchanged:

FST $33.50 - target $30

NBR $32.94 - target $30

PBR $89.50 - target $85

PXP $44.21 - target $41

SU  $78.09 - target $70

XTO $46.18 - target $42

Positions triggered:

DO $71.70 entry triggered at $70 on Tuesday

All strike prices remain the same.

We are not out of hurricane season yet but two weeks from now we could see a sharp drop in expectations for 2006 storms. I know oil is out of favor right now but it will come back around once this seasonal dip passes.

Jim Brown

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