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FLS $113.65 -18.47 Flowserv *** Stopped ***

After the worst entry in the world Flowserve was crushed with a $28 drop off last Thursday's highs. This was a strong momentum stock and evidently a large position in funds being forced to dump winners along with the losers to cover redemptions. I would be a buyer here at $110 but I am not going to add it back it this week. I want to see more than one day of gains first.

Breakout trigger: $138 hit 8/28

Position: Jan 2009 $150 Call FLS-AU @ $11.00 exit $4.50 9/03

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XLE $68.42 -6.23 - Energy Select SPDR *** Stopped ***

Crush the energy sector and the XLE bleeds. We were stopped out at the open on Tuesday so at least the pain was over quickly and with a minimum loss.

The XLE is a group of 36 companies in the energy sector. Exxon is the largest component and Tesoro the smallest. See the complete list here.

Breakdown trigger: $72.00, hit 8/04

Position: Dec $80 Call XTG-LB @ $3.00 exit $2.40 9/02

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UPL $60.55 -7.60 - Ultra Petroleum *** Stopped ***

When natural gas broke support at $8 on no damage from Gustav the gas stocks were also broken. I would be a buyer here at $60 ut my pain threshold is telling my mind to step aside.

Breakdown trigger: $65, hit 8/05

Position: 2010 $80 LEAP WSS-AP @ $13.50 exit $10.10

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APC $58.28 -3.45 - Anadarko Petroleum

Anadarko announced a $5 billion stock buyback and that insulated them from the majority of the sector weakness. A company with a $25 billion market cap announcing a $5 billion buyback is going to move higher in almost any market. I lowered the stop a buck to try and avoid any minor volatility.

Stop at $55.

Breakdown trigger: $55, hit 8/04

Position: 2010 $70 LEAP Call YPC-AN @ $7.60

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BHP $59.71 -10.80 BHP Billiton *** Stopped ***

BHP suspended iron-ore operations in Australia after two workers were killed less than two weeks apart. The halt is temporary to conduct safety classes and allow the shock to fade. That was not what crushed the stock. BHP was caught in the same selling that knocked 15-20% off several commodity/materials stocks. Somebody was dumping positions and BHP was a position.

Breakdown trigger: $65, hit 8/05

Position: 2010 $80 LEAP Call LPH-AP @ $9.50, exit $6.78 9/04

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COP $75.43 -7.08 - ConocoPhillips *** Stopped ***

No news, no damage to the refineries and a quick restart. No reason for COP to be crushed for a $10 loss in four days except for the liquidation in the markets.

Earnings July 23rd, $3.50 per share

Position: 2010 $90 LEAP YRO-AR @ $11.35 9/02 8.75

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ENER - $66.27 -8.90 Energy Conversion Devices *** Stopped ***

Another momentum stock bites the dust on no news.

Breakout trigger: $68.50 hit 6/16

Position: 2010 $80 LEAP Call KYU-AP @ 23.10, exit $15.60 9/04

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CRR $54.32 -5.78 - Carbo Ceramics *** Stopped ***

Carbo went from a new high last Thursday at $62.50 to a four week low on Friday at $52.10 on no news. Fortunately we escaped with a gain.

Breakout trigger: $48 Hit 5/12

Position: Dec $50 Call CRR-LJ @ $5.80, exit $8.20, 9/04


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Non-Energy Positions
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RIMM $106.95 -14.65 Research in Motion *** Stopped ***

Several analysts were saying the RIMM chart was broken but the four-day market decline only took it back to support at $102. We were stopped out on Tuesday at $119 so we escaped the majority of the decline. This would be a good place for a speculative buy but I am not convinced the market is going to cooperate.

Breakout trigger: $125, hit 8/06

Net debit to open -$6.60, exit +3.16 for loss of $3.44

Long 2010 $140 LEAP Call YKD-AH @ $27.50, exit $24.40 9/02
Short 2010 $110 LEAP Put YKD-MZ @ $20.90, exit $21.24 9/02
 

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