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Both our watch list entries were triggered but the dip also wiped out 15 of our current plays. Tough to complain about a profit but it was very bloody.

I am adding back to the list several of the prior positions with new triggers. Some will trigger in either direction, some only on a further dip.

I am not going into great detail describing them since they just came off the play list.

While I would like to get one more drop to washout any remaining weakness I fear it could taint the sector for several weeks to come. I find myself wanting a move in both directions at the same time. Stranger things have happened.

I am also adding some coal stocks. I believe coal will begin to take on added importance as natural gas prices soar over the winter. There is no off-season for coal as it produces 50% of the electricity in America. In intentionally left out BTU as it appears top heavy.

Good luck!
 

Dropped Entries

None


New Watch List Entries

Current Watch List

UPL $39.38 Ultra Petroleum

** Breakout target $40.00 **
** Breakdown target $38.00 **

Company info:

Ultra Petroleum Corp. is an oil and gas company engaged in the development, production, operation, exploration and acquisition of oil and gas properties. The Company's operations are focused in the Green River Basin of southwest Wyoming and Bohai Bay, offshore China. During the year ended December 31, 2004, it owns interests in approximately 166,974 gross (92,997 net) acres in Wyoming covering approximately 260 square miles. The Company owns working interests in approximately 241 gross productive wells in this area and is operator of 41.5% of the 241 gross wells. Through Pendaries Petroleum Ltd., it is active in oil and gas exploration and development in Bohai Bay, China. The Company also owns interests in 15,518 gross (14,652 net) acres in Pennsylvania, as well as interest in approximately 720 gross (320 net) acres and interests in three productive wells in Texas.

Breakdown Target:
BUY Jan 2007 $45 LEAP CALL OZH-AI
Alternate short term entry: March $40 Call UPL-CH

Breakout Target:
BUY Jan 2007 $45 LEAP CALL OZH-AI
Alternate short-term entry: March $45 Call UPL-CI

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MRO - $60.17 Marathon Oil

** Breakdown Target $58.00 **
** Breakout Target $61.00 **

Marathon Oil Corporation (Marathon) is engaged in worldwide exploration and production of crude oil and natural gas. It operates through three segments: exploration and production (E&P), which explores for and produces crude oil and natural gas; refining, marketing and transportation (RM&T), which refines, markets and transports crude oil and petroleum products, and integrated gas (IG), which markets and transports natural gas and products manufactured from natural gas, such as liquefied natural gas (LNG) and methanol. The Company's principal operating subsidiaries are Marathon Oil Company and Marathon Ashland Petroleum LLC (MAP). During the year ended December 31, 2004, the Company's worldwide liquid hydrocarbon production averaged 170,000 barrels per day (bpd) and sales of natural gas production, including gas acquired for injection and subsequent resale, averaged 999 million cubic feet per day (mmcfd).

Breakdown Target
BUY JAN 2007 $60 LEAP CALL VXM-AL
Alternate short-term entry: Jan-06 $60 Call MRO-AL

Breakout Target
BUY JAN-2008 $65 LEAP Call WXM-AN (no 2007 $65 strike)
Alternate short-term entry: Jan-06 $65 Call MRO-AM

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COP - $63.12 Conoco Phillips

** Breakdown Target $61.00 **
** Breakout Target $63.50 **

ConocoPhillips is an integrated energy company. The Company's business is organized into six operating segments. The Exploration and Production segment primarily explores for, produces and markets crude oil, natural gas, and natural gas liquids on a worldwide basis. The Midstream segment gathers and processes natural gas produced by ConocoPhillips and others, and fractionates and markets natural gas liquids. The Refining and Marketing segment purchases, refines, markets and transports crude oil and petroleum products. The LUKOIL Investment segment consists of the Company's equity investment in LUKOIL, an international, integrated oil and gas company. The Chemicals segment manufactures and markets petrochemicals and plastics on a worldwide basis. The Emerging Businesses segment encompasses the development of new businesses, including new technologies related to natural gas conversion into clean fuels and related products, technology solutions, power generation and emerging technologies.

Breakdown Target
BUY JAN 2007 $65 LEAP CALL OJP-AM
Alternate short-term entry: Jan-06 $60 Call COP-AL

Breakout Target
BUY JAN-2007 $65 LEAP CALL OJP-AM
Alternate short-term entry: Jan-06 $65 Call COP-AM

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CHK - $27.05 Chesapeake Energy

** Breakdown Target - none **
** Breakout Target $63.50 **

Chesapeake Energy Corporation is an oil and natural gas exploration and production company engaged in the acquisition, exploration and development of properties for the production of crude oil and natural gas from underground reservoirs and the marketing of natural gas and oil for other working interest owners in properties that it operates. The Company's properties are located in Oklahoma, Texas, Arkansas, Louisiana, Kansas, Montana, Colorado, North Dakota and New Mexico. The proved oil and natural gas reserves as of December 31, 2004 were approximately 4.9 trillion cubic feet of gas equivalent (tcfe). At December 31, 2004, approximately 89% of the Company's proved reserves (by volume) were natural gas, and approximately 70% of its proved oil and natural gas reserves were located in the primary operating area, the Mid-Continent region of the United States, which includes Oklahoma, western Arkansas, southwestern Kansas and the Texas Panhandle.

Breakdown Target
BUY JAN 2007 $25 LEAP CALL VEC-AE
Alternate short-term entry: Jan-06 $25 Call CHK-AE

Breakout Target - none

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VLO - $87.90 Valero Energy

** Breakdown Target $80.50 **
** Breakout Target $89.00 **

Valero Energy Corporation (Valero) owns and operates 15 refineries having a combined throughput capacity, including crude oil and other feedstocks, of approximately 2.5 million barrels per day. Valero produces environmentally clean refined products, such as reformulated gasoline (RFG), gasoline meeting the specifications of the California Air Resources Board (CARB), CARB diesel fuel, low-sulfur diesel fuel and oxygenates (liquid hydrocarbon compounds containing oxygen). It also produces conventional gasolines, distillates, jet fuel, asphalt and petrochemicals. Valero markets branded and unbranded refined products on a wholesale basis in the United States and Canada through a bulk and rack marketing network. It sells refined products through a network of more than 4,700 retail and wholesale branded outlets in the United States, Canada and Aruba. Valero's retail operations include approximately 1,500 company-operated sites that sell transportation fuels and convenience store merchandise.

Breakdown Target
BUY JAN 2007 $85 LEAP CALL VHB-AQ
Alternate short-term entry: Jan-06 $85 Call VLO-AQ

Breakout Target
BUY JAN 2007 $100 LEAP CALL VHB-AT
Alternate short-term entry: Mar-06 $100 Call VLO-CT

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SWN - $53.81 Southwestern Energy

** Breakdown Target $51.00 **
** Breakout Target $55.00 **

Southwestern Energy Company is an integrated energy company primarily focused on natural gas. Through its wholly owned subsidiaries, the Company is engaged in natural gas and oil exploration and production business. It operates principally in three segments: exploration and production, natural gas distribution and marketing. The Company's exploration and production activities are concentrated in Arkansas, Texas, Louisiana, New Mexico and Oklahoma. It's wholly owned subsidiary, Arkansas Western Gas Company, referred to as Arkansas Western, operates integrated natural gas distribution systems in northern Arkansas. The Company provides marketing services in each of its core areas of operation through its gas-marketing subsidiary, Southwestern Energy Services Company.

Breakdown Target
BUY MAR 2006 $55 CALL SWN-CK (no leaps)
Alternate short-term entry: Dec-05 $55 Call SWN-LK

Breakout Target
BUY MAR 2006 $60 CALL SWN-CL (no leaps)
Alternate short-term entry: Dec-05 $60 Call SWN-LL

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XLE - $48.18 Energy SPDR

** Breakdown Target $46.00 **
** Breakout Target $49.00 **

The XLE SPDR is composed of 27 energy stocks and represents about 9% of the SPX. This is the 9% that helped push the SPX to the current levels with the rise in oil over the last year. In fact the XLE has far exceeded the SPX in performance over the past year.

List of XLE components: XLE List

Breakdown Target
BUY JAN 2007 $50 LEAP CALL OJW-AX
Alternate short-term entry: Dec-05 $48 Call XBT-LV

Breakout Target
BUY JAN 2007 $55 LEAP CALL OJW-AC
Alternate short-term entry: Jan-06 $50 Call XBT-AX

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CNX - $64.29 CONSOL Energy

** Breakdown Target $60.00 **
** Breakout Target $66.00 **

CONSOL Energy Inc. is a multi-fuel energy producer and energy services provider that primarily serves the electric power generation industry in the United States. The Company has two principal business units, Coal and Gas. The principal activities of the Coal unit are mining, preparation and marketing of steam coal, sold primarily to power generators, and metallurgical coal, sold to steel and coke producers. As of December 31, 2004, CONSOL Energy produced high-British thermal unit (Btu) bituminous coal from 17 mining complexes in the United States and Australia. The principal activity of the Gas unit is to produce pipeline quality methane gas for sale primarily to gas wholesalers. The Company provides energy services, including terminal services, industrial supply services and coal waste disposal services. It is developing its land assets that it previously used primarily to support its coal operations.

Breakdown Target
BUY JAN 2007 $65 LEAP CALL VTL-AM
Alternate short-term entry: Jan-06 $65 Call CNX-AM

Breakout Target
BUY JAN 2007 $70 LEAP CALL VTL-AN
Alternate short-term entry: Jan-06 $70 Call CNX-AN

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MEE - $48.07 Massey Energy

** Breakdown Target $46.00 **
** Breakout Target $49.00 **

Massey Energy Company (Massey) produces, processes and sells bituminous coal of steam and metallurgical grades of a low-sulfur content through its 22 processing and shipping centers, called resource groups, many of which receive coal from multiple coal mines. Massey operates 34 underground mines (four of which employ both room and pillar and longwall mining) and 15 surface mines (with seven highwall miners in operation) in West Virginia, Kentucky, and Virginia. Its steam coal is purchased by utilities and industrial clients as fuel for power plants. Its metallurgical coal is used to make coke for use in the manufacture of steel.

Breakdown Target
BUY JAN 2007 $50 LEAP CALL VHK-AJ
Alternate short-term entry: Jan-06 $50 Call MEE-AJ

Breakout Target
BUY JAN 2007 $50 LEAP CALL VHK-AJ
Alternate short-term entry: Jan-06 $55 Call MEE-AK

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ACI - $60.01 Arch Coal

** Breakdown Target $58.00 **
** Breakout Target $63.00 **

Arch Coal, Inc. (Arch Coal) operates in the coal mining industry. The Company's primary business is mining and processing of compliance and low-sulfur coal from surface and deep mines throughout the United States for sale to utility, industrial and export markets. Its mines are primarily located in the Powder River Basin, Central Appalachia and Western Bituminous regions of the United States. During the year ended December 31, 2004, Arch Coal operated or controlled 27 mines and controlled approximately 3.7 billion tons of proven and probable coal recoverable reserves. In fiscal year 2004, the Company sold 128.4 million tons of coal.


Breakdown Target
BUY JAN 2007 $60 LEAP CALL OSE-AL
Alternate short-term entry: Jan-06 $60 Call ACI-AL

Breakout Target
BUY JAN 2008 $70 LEAP CALL YEP-AN (no $65/$70 strike in 2007)
Alternate short-term entry: Jan-06 $65 Call ACI-AM
 

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