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BHI $79.61 -2.99 - Baker Hughes

Back to support at $80 on no news.

01/04 North American active rig count rose +51 to 2,093
http://www.bakerhughes.com/investor/rig/rig_na.htm

Earnings schedule: Jan 30th

Breakdown target: $80 Hit 12/17

Position: 2009 $90 LEAP Call VBH-AR @ $8.40

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DNR $31.16 +1.05 - Denbury Resources

Positive moves to another new high. Minor dip on Friday still left us with a gain. Still no complaints here.

Breakdown trigger: $53, post split $26.50 hit 12/17

Position: June $30 Call DNR-FF @ $2.25

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VLO $64.14 -6.41 - Valero Energy

Valero was knocked for a major loss after Conoco complained about lower margins in Q4. Valero also said it was going to sell two refineries, one in Memphis and the other in Louisiana. The combined capacity of the two plants is 260,000 bpd. Analyst Fadel Gheit said there would be no shortage of buyers and whoever bought them would spend and equal amount of money fixing them up. Valero bought a dozen refineries at bargain basement prices over the last ten years and is now pruning the ones with the most expensive maintenance and getting huge prices in return. Gheit said the refinery Valero sold in Lima Ohio in May went for $13,000 per barrel of capacity. Using the same metric Valero could expect to receive about $3.4 billion for the pair.

Position: $70 LEAP Call VHB-AN @ $9.20

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FLR $147.26 +1.00 - Fluor Corp

Little of no tax selling on FLR and they announced on Friday a $1.6 billion deal with Marathon to expand a refinery. Early Saturday morning Kuwait Oil signed a new deal for $334 million to manage several unidentified projects over the next five years. No selling and positive news is a trend I can enjoy.

Breakdown trigger: $145 Hit 12/13

Position: 2009 $160 LEAP Call XOB-AL @ $22.30

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RIG $142.46 -3.56 - Transocean Inc

Minor decline after a strong $10 gain the prior week. No news and the trend is intact with minimal tax selling.

Breakdown trigger: Hit 12/4 @ $130

Position: 2009 $140 LEAP Call VOI-AH @ $15.80

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JEC $96.61 -1.47 Jacobs Engineering Group

Rock solid! JEC announced on Friday that a company it owned 40% of in Finland, Neste Jacobs, was buying Rintekno, a local engineering company in Espoo. This makes Neste Jacobs the regions leading provider of engineering services in the chemical and biotechnology industries. Normally an acquirer sinks on the news but the -$5 JEC gave back was only what it gained the day before.

No LEAPS

Breakdown target: $80.00 Hit 11/12

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

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COP $85.56 -3.57 Conoco Phillips *** Stop Loss $81.00 ***

Conoco's preview of their Q4 operations knocked -$2.50 off the stock price but the +60,000 bpd of new production should help keep the price firm. Support is $82, stop $81.

Breakdown target: $80 hit 11/12

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

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CNQ $74.24 +.18 Canadian Natural Resources

No news but another 4-week high. No complaints.

Entry 11/29: $66

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

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CLB $125.09 +1.14 Core Labs

No news, holding at two-month highs.

Breakdown Trigger: $130 11/12

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

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PBR $109.89 -7.73 Petrobras *** Stop Loss $97 ***

Petrobras was knocked for a 5% loss on the back of a -3% loss in the Brazilian stock market. Brazil was hit hard by the U.S. economic reports on Friday but you can bet Petrobras will bounce back. Sell stops were hit in the decline but this is a buying opportunity for new investors.

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.

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FWLT $159.69 +3.42 - Foster Wheeler

Foster hit another new high on Thursday and then declined -$10 on Friday. That left it with "only" a +3.42 gain for the week. It does not get any better than this. The split is supposed to be approved by shareholders next week and we should get a split date soon.

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

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PTR $176.00 +0.10 - PetroChina *** Stopped $170 ***

The dip on Thursday took us out of the play when PTR traded at $170 on the gap down open. Friday's rebound of +$5.36 was no help since it came too late.

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

Position: 2009 $220 LEAP Call ZJK-AZ @ $32.20, exit $11.10, Ouch!

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XOM - $92.08 -2.92 Exxon Mobil

Tax selling finally appeared on Exxon or was it Conoco sympathy that knocked a couple bucks off the giant? Probably a combination of both but we are still way ahead of the game on Exxon.

Breakdown trigger: $88 Hit 11/01

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

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CAM - $50.37 +1.20 Cameron International *** Stop Loss $44 ***

Stock split 2:1 after the close last Friday. After settling at $48 CAM rebounded to $52.75 on Thursday but declined on profit taking for only a small gain for the week. Our $100 LEAP became (2) $50 LEAPS.

2:1 Stock split 12/28 to holders of record on 12/17

Earnings schedule: Jan-31st

Breakdown target: $95 Hit 10/30 (47.50 post split)

Position: Post split (2) 2009 $50 LEAP Call OKA-AJ @ $9

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SLB $98.00 -.80 - Schlumberger *** Stop Loss $87 ***

No specific news but SLB held its gains.

Earnings schedule: Jan-18th

Breakdown target: $95.00 hit Oct-22nd

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

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CVX $93.35 -1.51 - Chevron

Chevron saw a $4 decline from the week's highs after Atwood announced it won a contract to build and lease a semisubmersible offshore drilling rig to Chevron for at least 3-years. The contract price is $470,000 per day and Chevron has a week after the rig is delivered to bump the contract to 6-years at $450,000 per day. That would pay out to $985,500,000 to Atwood. Atwood has contracted with Jurong Shipyard in Singapore to build the vessel for an estimated cost of $580 million. It will be delivered in 2011. That seems like a very good deal for Atwood since even after costs they can pay out the cost of the rig in 6-7 years and be highly profitable thereafter. This should solidify prospects for RIG, HP and NOV in the rig market. I suspect Chevron dropped on the high price as well as the Conoco refinery warnings.

Breakdown trigger: $87 hit Oct-22nd

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

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NOV $74.31 -.06 - National Oilwell Varco

Same story as the first dozen positions. No material decline and no news.

Earnings schedule: Feb 6th

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

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

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MDR - $58.00 -1.44 McDermott Intl *** Stop Loss $45 ***

No news for McDermott but it continues to hold at support at $58.

Earnings: Nov 8th, +37%

Breakout trigger: $53, hit 9/20

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

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CHK $39.32 -.21 Chesapeake Energy

A new two-month high on news they sold some non-core gas assets for $1.1 billion. The CEO said it was part of a plan to reduce debt by selling assets and reinvesting part of the proceeds into their low risk drilling plays. CHK expects 30% annual return on the invested cash.

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

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HP $40.11 -.17 Helmerich & Payne *** Stop Loss $29.50 ***

Very low volatility despite a +$2 move intraweek. Still holding the high ground on no news and no tax selling. I am surprised.

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

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BHP - $69.29 -2.07 BHP Billiton ** Stop Loss $65.00 **

The drop in markets related to the U.S. recession woes took BHP back to just over support at $68. No news on Rio Tinto.

Breakdown target: $55 hit 8/15/07

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


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Non-Energy Positions
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CSR $19.81 -2.68 - China Security *** closed ***

That was painful! CSR broke down after they posted notice of a shareholders meeting to authorize increasing the stock by 200% and authorizing the board to grant up to 10 million shares of preferred stock in any one transaction. Run, don't walk to the exit.

Breakdown trigger: $21.00 hit 12/20

Position: Jun-08 $25.00 Call CSR-FE @ $3.00, exit $2.10, -.90


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Covered LEAP Calls
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RIMM $103.35 -13.59 Research in Motion *** Covered Call ***

I said last week I expected some selling as tax holdouts change positions in 2008 but this was serious! Right back to support at $100 ahead of CES next week. I am still a believer over support at $98-100.

Alert entry 11/12 @ $102.60

Covered LEAP Call:

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

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ETFC $3.23 -0.31 E*Trade Financial *** Covered Call ***

E*Trade said the CEO, Mitchell Caplan, who resigned when E*Trade had to admit they were writing down massive subprime loans and taking a $2.55 billion cash investment from Citadel, will get $10.9 million in severance. Not a big deal in today's CEO world but a nice round number for helping crater the largest Internet broker.

LONG: ETFC @ $4.13
SHORT: Jan-2009 $5 LEAP Call OYN-AA @ $1.45

Profit if called: Premium 1.45 + appreciation .87 = $2.32
Cost of entry: $4.13 - 1.45 or $2.68
Profit = $2.32 / $2.68 or 86%
 

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