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We were triggered on the VLO entry last week but Sunoco failed to dip to our $70 target although it came close twice. I looked at dozens of potential targets for this week and lusted over the drop in AHC but I could not make it work in terms of risk/reward.

The drop in oil on Thursday continued the decline we have been seeing for two months. Until that decline channel is broken any long targets contain high risk.

I am going to leave SUN as our only watch list item at $70 because refiners will be the first to recover once winter demand returns. Refinery margins will grow due to the lower cost of oil and the potential rise in the cost of refined products.

Any new play should be short term with a target to be out by the end of December.

Using that scenario I would continue to trade AHC on a very short-term basis. The dip we saw to $122 last week may be a strong entry for the next breakout attempt at $131. Use your own judgment and try to buy the bottom and sell the top of this highly volatile stock.
 

Dropped Entries

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New Watch List Entries

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Current Watch List

SUN - $73.38 Sunoco

Sunoco, Inc. operates through its subsidiaries as a petroleum refiner and marketer, and chemicals manufacturer with interests in logistics and cokemaking. Sunoco's petroleum refining and marketing operations include the manufacturing and marketing of a range of petroleum products, including fuels, lubricants and some petrochemicals. Sunoco's chemical operations consist of the manufacturing, distribution and marketing of commodity and intermediate petrochemicals. The Company's operations are organized into five business segments: refining and supply, retail marketing, chemicals, logistics and coke.

Breakdown Target $70
Buy 2007 $80 LEAP VUN-AP

Insurance Put:
December $65 Put SUN-XM if SUN trades at $68

Breakout Target: NONE
 

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