SLB - $66.25 - Schlumberger Ltd
Schlumberger found support at $62 and traded sideways above that level over the past week. Friday's close at $66 represents resistance but a pattern of higher lows suggests it is about to break. The decline in prices removed a lot of the excessive premium from SLB options that we saw earlier in the year. Once this resistance breaks and the new trend begun I believe that premium will return.
S&P upgraded SLB to a buy from hold citing rising demand for oilfield services in regions like the Middle East, Africa and Europe. S&P put an initial target of $76 on the shares.
Schlumberger Limited (Schlumberger) is an oilfield services company, supplying technology, project management and information solutions. Schlumberger consists of two business segments: Schlumberger Oilfield Services and WesternGeco. Schlumberger Oilfield Services is an oilfield services company supplying a range of technology services and solutions to the international oil and gas industry. WesternGeco, 70% owned by Schlumberger and 30% owned by Baker Hughes, is an advanced surface seismic company.
Buy Jan $70 Call VWY-AN currently $6.10
Insurance put: Buy Jul $60 Put SLB-SL ONLY if SLB trades at $63.
Entry $66.25 (6/04)
ACI - $47.43 - Arch Coal Inc
Arch continues to creep higher and appears ready to challenge resistance at $50. The post split depression from the 2:1 split back on May 16th has eased and momentum is increasing.
Arch surprised investors back on April 21st when it beat the street and raised guidance for the full year. Arch said they expected higher margins, earnings and cash flow during the second half of the year. This triggered a +$14 run that culminated in a new historic high the day the correction began. That entire $14 run was retraced back to $42 and after a couple false starts the buyers are finally coming back.
Arch Coal, Inc. operates as a coal producer in the United States. The Company's primary business is the production of steam and metallurgical coal from surface and underground mines throughout the United States, for sale to utility, industrial and export markets. Its mines are located in southern West Virginia, eastern Kentucky, Virginia, southern Wyoming, Colorado and Utah. As of December 31, 2005, it operated 21 mines, and controlled approximately 3.1 billion tons of proven and probable coal reserves. During the year ended December 31, 2005, the Company sold approximately 140.2 million tons of coal. The Company has three business segments, which are based on the low-sulfur coal producing regions in the United States, in which the Company has operations. These segments are the Central Appalachia region, the Powder River Basin and the Western Bituminous region. On December 31, 2005, the Company sold its 100% interest in Hobet Mining, Inc., Apogee Coal Company and Catenary Coal Company.
Insurance put: Buy July $45 Put ACI-SI only if ACI trades at $47
Entry $48.36 (5/31)