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In just one week we built the portfolio back to 10 positions. While I wish I could say they were all great entries I can't. The oil spike on Sunday night sent all stocks surging higher at the open and for some that was the high for the week. There is nothing orderly about trading oil given the various global events that can cause problems.

I removed SWN and ACI and added Peabody Energy (BTU) and Encana (ECA). I do not plan on adding any more energy plays until after the early September refinery switch away from gasoline. I want to see a new trend develop before putting any more money at risk in the sector. We were planning on exiting our long-term oil plays in September but the market beat us to the exit.

Arch Coal was not triggered last week due to an error on my part. After doing some research on the different coal companies I decided to replace ACI with BTU.

I still expect higher highs on oil before year-end but it may not start until the end of September. We have a full portfolio and can afford to wait.

Good luck!
 

Dropped Entries
SWN Declining performance, analyst downgrade
ACI Replacing with Peabody    

New Watch List Entries
BTU
Peabody Energy
ECA Encana Corp

Current Watch List

ECA - $44.76 Encana

** Breakdown Target $43.00 **
** Breakout Target $46.00 **

EnCana Corporation is an independent crude oil and natural gas exploration and production company. Its key landholdings are in western Canada, the United States Rocky Mountains, Ecuador, the United Kingdom central North Sea, offshore Canada's East Coast and the Gulf of Mexico. EnCana explores for, produces and markets natural gas, crude oil and natural gas liquids (NGLs) in Canada and the United States. EnCana is also engaged in exploration and production activities internationally including production from Ecuador and the United Kingdom central North Sea. EnCana has interests in midstream operations and assets, including natural gas storage, NGLs gathering and processing facilities, power plants and pipelines.

Breakdown Target
BUY JAN 2007 $45 CALL ZBM-AI
Alternate short-term entry: Jan-06 $45 Call ECA-AI

Breakout Target
BUY JAN 2007 $50 CALL ZBM-AJ
Alternate short-term entry: Jan-06 $50 Call ECA-AJ

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BTU - $64.72 Peabody Energy

** Breakdown Target $56.00 **
** Breakout Target $67.25 **

Peabody Energy Corporation (Peabody) is a private-sector coal company in the world. During the year ended December 31, 2004, the Company sold 227.2 million tons of coal. It sells coal to over 300 electricity generating and industrial plants in 16 countries. The Company owns, through its subsidiaries, majority interests in 32 coal operations located throughout all the United States coal producing regions and in Australia. Most of the production in the western United States is low-sulfur coal from the Powder River Basin. In the West, it owns and operates mines in Arizona, Colorado, New Mexico and Wyoming. In the East, it owns and operates mines in Illinois, Indiana, Kentucky and West Virginia. The Company owns four mines in Queensland, Australia. Most of the Australian production is low-sulfur, metallurgical coal. In addition to the mining operations, the Company markets, brokers and trades coal.

Breakdown Target
BUY MAR 2006 $60 CALL BTU-CL
(no leaps)

Breakout Target
BUY MAR 2006 $70 CALL BTU-CN
(no leaps)

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CNX - $63.92 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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