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JEC $94.08 +10.31 Jacobs Engineering Group

Another outstanding week for JEC. Business is breaking out all over and so is JEC with a new high. Another normal week in the news with JEC winning major contracts worth $160 million in India and lead vendor on a 360 million Euro development in Belgium.


Breakdown target: $80.00 Hit 11/12

Position: APR 2008 $90 Call JEC-DR @ $6.50


COP $83.30 +3.26 Conoco Phillips *** Stop Loss $74.00 ***

Conoco broke out of initial resistance on favorable crack spreads and lots of news in the oil sector. The OPEC decision not to hike production suggested oil prices will go higher and that is always good for Conoco. Also, the current attempt at an energy bill has a carbon sequestration component that would make coal less desirable and natural gas more valuable. Conoco has the largest reserves of natural gas in North America much of which they got with the Burlington acquisition two years ago. $85 will be the next resistance test.

Breakdown target: $80 hit 11/12

Position: 2009 $90 LEAP Call OJP-AR @ $8.60


CNQ $67.30 +1.83 Canadian Natural Resources

CNQ is finally starting to recover from the Canada tax news and their announcement they would drill far fewer wells in Canada because of the new taxes. $65 appears to have formed as decent support but we need a few positive days to show some conviction.

Entry 11/29: $66

Position 11/29: 2009 $90 LEAP Call OKR-AR @ $6.50


CLB $119.52 +2.27 Core Labs

Oppenheimer initiated coverage of CLB on Wednesday with a buy rating. CORE is still clinging to the 100-day although from the bottom. We need to see a move back over $122 and the 90-day average for buyers to return. Core is not tied directly to the price of oil. The selling by funds appears to have ended but caution prevails.

Breakdown Trigger: $130 11/12

Position: 2009 $140 LEAP Call ZYM-AH @ $21.30


FTI $58.21 +2.63 FMC Technologies *** Stop Loss $49 ***

FMC finally starting to gain momentum after news broke on Wednesday that they had been picked to supply 15 deepwater subsea trees for Petrobras. The single order was worth more than $34 million. That tells you how expensive deepwater development really is. Each tree, named for all the various pipes splitting off of it, is worth more than $2 million. This is very high tech stuff that must not only operate but survive under 10,000 feet of water.

Breakdown Trigger: $57 hit 11/12

Position: APR $65 Call FTI-DM @ $4.75


PBR $106.71 +10.41 Petrobras *** Stop Loss $92 ***

PBR announced a light crude and natural gas find off the coast of Espirito Santo in 2500 feet of water and about 10,000 feet under the ocean floor. The news broke PBR out of its consolidation phase and propelled it back to recent resistance. With things looking up for PBR in almost every exploration effort this could be the start of the next big move.

LEAPs Alert Entry 11/12 @ $95

Position: 2009 $90 LEAP Call VDW-AR @ $17.10

Position: 2009 $110 LEAP Call XVQ-AB @ $10.00

Alert on 11/2 recommending an immediate entry into the $110 LEAP. The prior recommendation had been calling for an entry into the $90 LEAP on a dip to $80. The correct LEAP for the current position is the $110 LEAP.


SGR $67.19 +3.77 Shaw Group *** Stop Loss $55 ***

Shaw reported a troubled quarter where they took a non cash currency loss of $52 million for an investment in Westinghouse. Without the charge revenue rose +40% and the backlog now up +57% from the same period last year to $14.3 billion is nearly triple the $5 billion market cap of the company. The charge knocked the stock for a -$3 loss at the open on Thursday but it rebounded to gain +$2. Now we need to see those gains extended. We had a nice positive trend for the last seven days so lets hope that continues.

LEAPs Alert Entry 11/12 @ $61

Position: 2010 $70 LEAP Call YCW-AN @ $20.40


FWLT $165.48 +16.48 - Foster Wheeler

FWLT has soared +35 in the last two weeks and hit a new all time high this week. There was no specific news but we are definitely not complaining.

The board approved a 2:1 split subject to shareholder approval around January 8th.

Breakdown trigger: $135 hit 11/06

Position: 2009 $150 LEAP Call ZHF-AW @ $29.10


PTR $202.93 +11.19 - PetroChina *** Stop Loss $170 ***

PTR finally broke out of its consolidation phase and back over $200 once again. With fuel shortages in China the government is considering letting prices rise to current market levels. That would end current subsidies and help to promote conservation. China is still reluctant to do it ahead of the Olympics for fear it will cause civil unrest. It seems certain that PTR will benefit from the rise in fuel prices and with the Asian markets rebounding we could move higher from here.

Breakdown trigger $194.32 Entered on rebound from $190 on 11/08

Position: 2009 $220 LEAP Call ZJK-AZ @ $32.20


XOM - $91.50 +2.34 Exxon Mobil

Exxon hit a new 4-week high last week and is approaching its all time high of $95. Most of the gain was due to rising crack spreads but Exxon is also seen as a must own Dow stock and with the Dow spiking traders go for the relative safety of Exxon.

Breakdown trigger: $88 Hit 11/01

Position: 2009 $100 LEAP Call ODU-AT @ $7.90


CAM - $98.68 +5.45 Cameron International *** Stop Loss $90 ***

CAM broke resistance at $96 and is knocking on the new resistance door at $100. If it were not for a couple insider sales reported this week I think it would have already broken out. The sales were trivial with two officers exercising options on a total of 8,333 shares but it still made the news. No change in play.

Breakdown target: $95 Hit 10/30

Position: 2009 $100 LEAP Call OKA-AT @ $18


SLB $97.19 +3.74 - Schlumberger

SLB blew through 4-week resistance at $95 on Wednesday and $100 is likely to be the next stopping point. No other specific news.

Breakdown target: $95.00 hit Oct-22nd

Position: 2009 $100 LEAP Call VWY-AT @ $15.60


CVX $90.96 +3.19 - Chevron

CVX spiked higher on news they would spend $3 billion more in capex in 2008 than originally planned. The total for 2008 is now expected to be $22.9 billion. Chevron said exploration is now much more expensive than in years past due to the harsher locations and higher cost of equipment and labor. Cambridge Energy Research Associates said exploration is now almost double the prices seen in 2005. Rigs are scarce and there is a rush to develop. Chevron said its Blind Faith field in the Gulf and its Agbami field in Nigeria will begin production in 2008.

Breakdown trigger: $87 hit Oct-22nd

Position: 2009 $100 LEAP Call VCH-AT @ $6.40


OII $71.52 +7.71 Oceaneering International

When I dropped HERO last week I made a decision about the two companies as both were going nowhere fast. There was no reason for the lackluster performance but after reviewing them both I decided to drop HERO and keep OII. Wow, was that the right decision! OII suddenly spiked +$8 and HERO broke support and fell -$2 on Tuesday. I wish I could say it was super human sleuthing on my part but it was more a judgment call based on the fundamentals and market cap of the two companies. I thought OII was the better choice and a strong possibility as an acquisition target. Let's hope this theory continues to hold true.

Earnings Nov-1st: +40%

Breakdown trigger: $72 hit on Oct-22nd

Position: APR $80 Call OII-DP @ $5.40


NOV $73.52 +5.37 - National Oilwell Varco

NOV finally developed a trend and that trend is up! The resistance at $68 was broken and then used again as support last Friday the resulting +$6 gain was on no news although I heard them mentioned several times on CNBC.

Breakout Trigger: $80, hit 10/11/07

Position: 2008 May $90 Call NON-ER @ $7.20


MDR - $55.60 +3.30 McDermott Intl *** Stop Loss $45 ***

McDermott announced it won the contract to build two steam generators for the 889 megawatt Davis-Besse nuclear power plant in Ohio. There was no other news.

Earnings: Nov 8th, +37%

Breakout trigger: $53, hit 9/20

Position: 2009 $60 LEAP Call OYZ-AL @ $9.00


UPL $67.91 +3.01 - Ultra Petroleum *** Stop Loss $62 ***

UPL spiked up on the -88 bcf drop in gas storage levels. This was twice what analysts had expected. They should also benefit from any future energy bill although that could be months away. They will also benefit from the completion of the Rockies Express pipeline that will take the Utah/Wyoming gas to the East Coast for consumption at higher prices than UPL currently is able to get. No complaints. No news.

Breakdown target: $52.50 Hit 8/30

Position: Jan 2009 $60 LEAP Call OZH-AL @ $8.00


CHK $38.37 +.52 Chesapeake Energy

CHK was named the Hydrocarbon Producer of the year at the 9th annual Platts Global Energy Awards program in New York. They were also named the 14th fastest growing energy company of the Platts Top 250 Global Energy Companies. Unfortunately all that positive press failed to push CHK over resistance at $38.50. In fact short interest climbed from 40 million shares to 50 million over the past week.

Earnings: Nov 7th -34%, beat by 3 cents.

Position: 2010 $35 LEAP Call WZY-AG @ $6.60
10/28 Price update: Expired Oct Put +90 cents, $7.50

Insurance put:
Oct $30 Put CHK-VF @ 90 cents. Expired


HP $36.43 +1.88 Helmerich & Payne *** Stop Loss $29.50 ***

HP finally began moving higher from the prior two weeks of consolidation from the mid-November spike. Hopefully this return to its recent highs will result in a new breakout into blue sky territory. No news.

Earnings: Nov-15th, +18%, beat by +6 cents at 93 cents

Position: Jan 2009 $35 LEAP Call ZQA-AG @ $4.50

Insurance put:
Position: Nov $30 HP-WF. @ .50, Stop $28.50


BHP - $77.00 +1.17 BHP Billiton ** Stop Loss $60.00 **

According to Rio-Tinto the BHP bid is dead in the water and they refuse to even discuss the deal with BHP. This may have been the impetus behind a rise to new 3-week highs on BHP. If the deal is dead then the implied confusion would evaporate.

Breakdown target: $55 hit 8/15/07

Position: 2010 $70 LEAP Call LPH-AN @ $9.00

Non-Energy Positions


Covered LEAP Calls

RIMM $103.65 -10.17 Research in Motion *** Covered Call ***

RIMM has returned to where we entered the play but since this is a covered call there is no harm and we continue to bide our time. I believe the RIMM bashers will be proved wrong once again.

Alert entry 11/12 @ $102.60

Covered LEAP Call:

LONG RIMM @ $102.60
SHORT 2009 $150 LEAP Call XTB-AJ @ $18.50


LVS - $118.88 +5.48 Las Vegas Sands *** Covered Call ***

No material news on LVS but Thursday saw a sharp spike to a new 2-week high. No change in play.

Covered LEAP Call

LONG: 100 Shares LVS @ $117
SHORT: 2009 $140 LEAP Call ZAU-AY @ $20.00 No Stop

Leaps Trader Update Archives