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SD $51.58 -9.88 - SandRidge Energy *** Stopped/reentered ***

The $20 drop over the last two weeks is extremely overdone as is the monster drop in natural gas itself. I think both will reverse any day now. We were stopped out of SD at $54 but after looking at the chart again I want to reenter SD here at the $51 level. I am going to put a tight stop on it at $46.

Company info:

SandRidge Energy, Inc. (SandRidge) is an independent natural gas and oil company with its principal focus on exploration, development and production activities. The Company also owns and operates drilling rigs and a related oil field services company operating under the name Lariat Services, Inc.; gas gathering, marketing and processing facilities, and, through its wholly owned subsidiary PetroSource Energy Company, carbon dioxide (CO2) treating and transportation facilities and tertiary oil recovery operations. The Company is focused on exploration and exploitation of its significant holdings in West Texas that it refers to as the West Texas Overthrust (WTO), a natural gas prone geological region that includes the Pinon Field, and its South Sabino and Big Canyon prospects. SandRidge operates in four segments: exploration and production, drilling and oil field services, midstream gas services and other.

New position: 7/20
Buy 2010 $60 LEAP LWE-AL currently $13.40

Old Position:
Breakdown trigger: $60 Hit 7/07
2010 $70 LEAP LWE-AN @ $13.00, exit $11.70 7/16

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MOS $127.13 -14.68 - Mosaic Industries

That drop was painful but at least we are still in the play. It was reported on Friday that the price of potash has risen +21% in recent weeks and the exporter for MOS, POT and AGU has told customers that all further sales in 2008 will be at the new price or higher. There is simply not enough product and too many people increasing their food consumption. As the world moves towards 7 billion people in 2012 this problem is only going to get worse. There were only 6 billion in 1999. Adding a billion mouths to feed every 12 years will require a lot more fertilizer.

Mosaic also initiated a quarterly dividend of 5-cents on Thursday.

Earnings July 28th

Breakdown trigger: $125 hit 7/08

Position: 2010 $160 LEAP Call KCA-AL @ $27.45

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FLR $84.25 -3.12 - Fluor

It is always a shock to wake up and see a stock trading for half the price of just the day before. Fluor split 2:1 on Thursday. I went back to see how I missed this event and the closest mention of it was on June 9th in an article about stock splits. The company itself announced it on May 7th. That was a week before their last earnings report. You would think this kind of event would get more press. Now we have two $100 leaps instead of one $200 leap.

Earnings August 11th

Breakdown trigger: $175 hit 7/07 (2:1 Split = $87.50)

Position: 2010 $200 LEAP Call LLF-AZ @ $35
Converted to (2) 2010 $100 LEAP Call LLF-AT @ $17.50

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ANR $94.27 -$2.53 - Alpha Natural Resources *** Dropped ***

Just a week after our entry Alpha Natural announced it was being acquired by Cleveland-Cliffs (CLF) for $8.3 billion. The deal calls for 0.95 shares of CLF plus a cash payment of $22.23 for every share of ANR. When the deal was announced that equated to $128.12 per share of ANR. We have a $100 LEAP. Unfortunately it is not that simple. As CLF declines on acquisition worries so does the value of the deal. As of Friday it had declined to $118.03. If you stay in this deal your LEAP will convert to some combination form of CLF LEAP and cash. I would prefer just to take our beating now and exit the play with a minor profit. It will be up to you to chose your game plan.

Earnings July 29th before the open

Breakdown trigger: $80 hit 7/08

Position: 2010 $100 LEAP Call WDB-AT @ $23.40, exit 25.40, 7/20

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TS $60.48 -$7.52 - Tenaris *** Stopped ***

This is crazy. The $17 drop in oil prices will not impact the need for oil pipe. There is currently a shortage of pipe and prices are going up. Unfortunately a bear market and the oil implosion knocked us out of Tenaris at our stop of $63. I would make a good case for $60 being strong support for TS but we are also getting news about inflation in Latin America depressing the stock exchanges and TS is the biggest stock on the Argentine exchange.

Breakdown trigger: $65 Hit 7/08

Position: Dec $70 Call TSW-LN @ $6.00, exit $5.90 7/17

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COP $83.91 -$4.22 - ConocoPhillips *** Stopped/Reentered ***

COP pre announced the week before that production had declined by 60,000 bpd. This week Lukoil, which COP owns 20% said production would decline by 3% this year. Oil dropped $17. It was the perfect storm for Conoco but it looks like they are trying to hold on to support at $82. We were stopped out at $87 but I am going to put them back in at today's numbers with a tight stop at $76.

Earnings are July 23rd

Buy 2010 $90 LEAP YRO-AR currently $11.35

Old Position: Entered at $90, stopped at $87
2010 $100 LEAP Call YRO-AT @ $11.70, exit $9.40, 7/15

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TRN $35.30 +3.97 - Trinity Industries *** Stopped ***

Highly frustrating here! Trinity rebounded +$4 for the week but not before stopping us out on an intraday dip to $29.73 (Stop was $30) on Tuesday.

Breakdown trigger: $35 Hit 6/26

Position: 2010 $40 LEAP Call YJS-AH @ $6.90, exit $4.40 7/15

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GDP $59.12 -15.06 Goodrich Petroleum *** Stopped ***

Big drop in gas prices knocked -$25 off GDP over the last 3 weeks. Stopped out at $58 on no news.

Good article on Goodrich here

Breakout trigger: $66 Hit 6/23

Position: 2010 $80 LEAP Call LP-AP @ $21.00, exit $14.90 7/17

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HK $39.70 -8.20 Petrohawk Energy

Petrohawk took a sizeable hit but remains in the same range as we saw three weeks ago. Support is holding at $37, stop is $34.

Prior commentary:

Chesapeake said it had sold 110,000 acres of its Haynesville Shale acreage to Plains Exploration for $25,600 an acre plus development concessions of $1.65 billion. This price tag on land means HK's current holdings are worth more than $7.4 billion in this play. HK only has a market cap of $9 billion meaning all the other assets are seriously undervalued. It may take several weeks for the news on HK to sink in but it should be going a lot higher even at its current valuation. Revenues are exploding.

Breakout trigger: $40.75 Hit 6/23

Position: DEC $50 Call HK-LJ @ $4.50

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CHK $54.33 -9.19 Chesapeake Energy *** Stopped ***

CHK was crushed by the sell off in gas but the CEO stepped up to the plate and bought another 750,000 shares at $57 each. We were stopped out at $56 but I am putting them back on the watch list with an entry at $51.

Previous commentary:

This is another stock that refuses to pull back but the news is too good to let it continue to run away from us. As I mentioned in the GDP lead CHK paid $178 million to Goodrich for a 50% working interest in some Haynesville Shale acreage. As I read further CHK said the Haynesville Shale could end up being the biggest asset they own and produce more gas than any other CHK property. That is a huge statement given CHK's massive footprint in places like the Barnett Shale in the DFW area. Encana (ECA) is the largest gas producer in North America and they said the Haynesville Shale could be the biggest deposit in North America.

Breakout trigger: $67 Hit 6/23

Position: 2010 $80 LEAP Call WZY-AP @ $8.60, exit $7.00 7/16

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ENER - $67.02 -0.20 Energy Conversion Devices

Definitely no complaints here. Trend is still up and ENER resisted the market drop.

Breakout trigger: $68.50 hit 6/16

Position: 2010 $80 LEAP Call KYU-AP @ 23.10

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BTU $64.10 -12.75 - Peabody Energy *** Stopped ***

Nat gas and coal trade in tandem and the collapse of gas prices crushed coal stocks. It did not make any difference that two different coal companies were on TV last week saying all 2008 production had already been sold and they were already pre-selling 2009 coal at much higher prices.

I am putting BTU back on the watch list with an entry at $61.

Earnings July 23rd

Breakout target: $81 Hit 6/09

Position: 2010 $90 LEAP Call LLW-AR @ $19.92, exit $13.64 7/17

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CRR $52.84 -.95 - Carbo Ceramics

CRR announced a +21% increase in the dividend and resisted the drop in the energy sector. No complaints!

Breakout trigger: $48 Hit 5/12

Position: Dec $50 Call CRR-LJ @ $5.80


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Non-Energy Positions
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