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PBR $111.57 -1.49 Petrobras *** Stop Loss $88 ***

British Gas, a 25% owner in the Tupi discovery offshore Brazil, raised the estimates on the fields potential to between 12 and 30 billion BOE. This is an increase from the original Petrobras claim of 1.7 to 10 BBOE. British Gas expects production to begin in 2009 in a range of 680,000 to 710,000 BOEPD with production rising 6-8% per year through 2012. Petrobras holds a 65% interest and Portugal's Galp Energia owns 10%. Petrobras is probably being more conservative because they are listed on the NYSE and have the more stringent SEC rules on reserves holding them back. Either way this field is going to provide some major bucks to Petrobras in the not too distant future.

Breakout trigger: $101.50, hit 1/24

Position: 2009 $110 LEAP Call XVQ-AB @ $12.70

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VLO $58.89 -1.28 Valero *** Stop Loss $47 ***

VLO turned in the strongest earnings of the group as expected. The rest of the refiners suffered from higher crude prices shrinking margins and caused a decline in the sector as a whole. VLO recovered from that decline over the last 2-days and is inching back to resistance at $61. Call activity in Frontier rocketed high on Thursday to 28,000 calls compared to 2464 puts as speculation grew that VLO would acquire FTO. Moody's said it was reviewing VLO for an upgrade due to its conservative debt levels and the potential to sell off more non core assets.

Breakdown trigger: $50.00, hit 1/23

Position: 2009 $60 LEAP Call VHB-AL @ $5.00

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FLS $94.57 -1.83 Flowserv *** Stop loss $74 ***

No news on FLS and despite the market drop it remained within $3 of its recent highs. No complaints here.

Breakdown trigger: $77.50, hit 1/22

Position: July $90 Call FLS-GR @ $6.00

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FLR $111.65 -14.52 - Fluor Corp *** New Stop $105 ***

FLR has been massively volatile on no news. The market drop knocked another $14 off FLR and pushed it back to support at $110. I am adding a stop loss at $105 to stop the bleeding. Even with the remediation plan in place it will not do us any good if FLR does not establish a positive trend very soon.

Earnings schedule: Feb 28th

Breakdown trigger: $145 Hit 12/13

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

Remediation plan: 1/20
LONG: April $110 Put FLR-PB @ $9.20
SHORT: Jan $170 LEAP Put XOB-MN @ $58.40

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RIG $125.18 -.26 - Transocean Inc

RIG is still holding its ground above support at $120 while we await earnings on the 20th. Their recent fleet update report (www.deepwater.com) shows the majority of their day rates are still climbing and contracts are being extended.

Earnings schedule: Feb 20th

Breakdown trigger: Hit 12/4 @ $130

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

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JEC $71.84 -7.38 Jacobs Engineering Group *** Stopped $70 ***

JEC was dropped for a $10 loss on no news and fell to hit our $70 stop loss exactly to the penny on Thursday. I still like it and I would have no problem putting it back into the portfolio once the market recovers.

Earnings: Jan 22nd, +61%

Breakdown target: $80.00 Hit 11/12

Position:
Jan-2009 $90 LEAP Call VJE-AR @ $10.40, exit $7.50 2/7

Closed: APR 2008 $90 Call JEC-DR @ $6.50, exit 1/20 @ $3.10

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CLB $109.56 -4.98 Core Labs

No news but CLB made another round trip from two week highs at $117 to support at $105 as the market beat traders without mercy. Hopefully earnings next week will give traders in CLB something to cheer about.

Earnings schedule: Feb 14th

Breakdown Trigger: $130 hit 11/12

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

Remediation addition:
Position: June $130 Call CLB-FF @ $6.10

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FWLT $65.23 -6.52 - Foster Wheeler

Back to back weeks of nearly identical gains and losses of +6.23, -6.52 continues to drive traders nuts. No specific news and like other stocks it was beaten back from four week highs to support at $63. Earnings on the 26th remain the hope for traders caught in this volatility web.

Earnings schedule: Feb-26th

2:1 split on Jan-22nd.

Breakdown trigger: $67.50 hit 11/06 (post split)

Position: (2) 2009 $75 LEAP Call ZHF-AO @ $14.55

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XOM - $81.71 -4.24 Exxon Mobil *** Stopped $82.00 ***

Even $11 billion in quarterly earnings cannot protect XOM from a drop with the market.

Breakdown trigger: $88 Hit 11/01

Position: 2009 $100 LEAP Call ODU-AT @ $7.90, exit $3.70 2/6

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NOV $57.27 -5.42 - National Oilwell Varco *** Stop $52 ***

NOV reported earnings that rose +57% and a $9 billion backlog but the market weakness still knocked it back close to support. Orders increased over $1 billion from the previous quarter. Margins narrowed slightly as drilling slowed in North America. Nobody had anything negative to say about NOV earnings and their guidance was strong. Read the entire earnings call transcript here.

NOV and GSF are merging to create an even larger company with even more opportunities. The Justice Dept still had questions at the end of the investigation period so NOV refilled the application to give them more time to get their questions answered.

I am still very positive on NOV but I did add a stop in case the market is still in punishment mode.

Earnings: Feb 6th +57%

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

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

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HP $41.32 +1.00 Helmerich & Payne *** Stop Loss $33 ***

HP is continuing to rebound from the January lows and is very close to a new high just over $42. This is the most bullish chart in the portfolio. No specific news.

Earnings: Jan-31st $1.02

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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Non-Energy Positions
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TEX $60.50 -5.64 Terex Corp

Terex fell from a new 4-week high on Monday to initial support at $54 on market weakness and recession fears. Also, some of the weakness could be attributed to an acquisition approval for ASVI for $480 million. The waiting period expired clearing the acquisition. This could have added pressure to the stock price although the acquisition was announced several weeks ago.

Earnings schedule: Feb 21st

Position: Jan 2009 $70 LEAP Call VXQ-AN @ $8.60

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SGR $56.11 -2.73 Shaw Group

Shaw gave up a couple bucks for the week but only because it was at a two week high the previous Friday. It is still showing a steady chart in a crappy market. No complaints.

Breakdown trigger: $55 Hit Jan-16th

Position: 2009 $60 LEAP Call OWA-AL @ 11.50

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MOS $96.22 +2.75 - Mosaic Co

Mosaic was upgraded to a buy at Citigroup and continues to hold very close to its 4-week highs. The record wheat prices last week should also contribute to bullish sentiment on Mosaic. No complaints and no other news.

Breakdown trigger: $85 Hit Jan-10th

Position: 2010 $100 LEAP Call LXW-AT @ $24.20

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Covered LEAP Calls
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AAPL $125.48 -8.27 Apple Inc *** Covered LEAP Call ***

I don't know how much of this pain I can take. However, we just experienced the worst week in the markets since March 2003. Apple's strong attempt to cling to support at $130 was torpedoed by the Cisco earnings meltdown. Friday may be an omen with a +$4 gain but we need to string a lot more days together to get whole again.

When Apple starts to post a new positive trend we will do a put spread to recover some more money. First we wait for the trend.

Position:
Long: AAPL @ open of $177.52 (Jan-14th open)
Short: 2009 $150 LEAP Call VAA-AW @ $20.80
Breakeven: AAPL @ $136.12

Position changes:
Closed $200 LEAP Short @ $9.40 ($30.00 - 9.40 = gain +20.60)
Replaced with $150 LEAP short @ $20.80
AAPL cost basis $177.52 - $41.40 (20.60 + 20.80) = 136.12
Breakeven: AAPL @ $136.12

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RIMM $89.71 -2.53 Research in Motion - Covered Call Stop Loss $80

Actually it was a decent week for RIMM. The -$13 intraweek drop was erased to give up only $2.53. It appears on the chart that RIMM could have made a nice double bottom at the January lows with its dip back to $82 last week. Time will tell!

See the Jan-13th LEAPs newsletter for the description of the change in the options.

Alert entry 11/12 @ $102.60

Covered LEAP Call:

LONG RIMM @ $102.60 (cost $102.60 -9.10 $150 LEAP = 93.50)
SHORT 2009 $110 LEAP Call VHO-AB @ $18.30 on 1/14/08

Closed: 1/14
SHORT 2009 $150 LEAP Call XTB-AJ @ $18.50, close $9.40 +9.10
 

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