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New Plays
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COP None
XLE  

New Long Plays

ConocoPhillips - COP - close: 59.53 change: +0.60 stop: 57.93

Company Description:
ConocoPhillips is an integrated petroleum company with interests around the world. (source: company press release or website)

Why We Like It:
Warranted or not the sell-off in crude oil and the oil stocks has been very steep. The sector and the commodity have done a relatively convincing job of producing a short-term bottom over the last several days and the next move looks like it will be up. Shares of COP have the added benefit of bouncing from support after testing its December 2005 lows. Technical indicators for COP are bullish although the P&F chart is bearish due to the two-month decline. More aggressive traders may want to consider opening positions now with COP above $58.00. We are suggesting a trigger to go long at $60.15. If triggered our short-term target is the $63.85-64.00 range. Our time frame is less than four weeks because we want to exit ahead of COP's late October earnings report (around Oct. 26th).

Picked on October xx at $xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 10/26/06 (unconfirmed)
Average Daily Volume: 9.0 million

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S&P Select Energy SPDR - XLE - cls: 53.45 chg: +0.22 stop: 51.90

Company Description:
Energy companies in this Index primarily develop and produce crude oil and natural gas, and provide drilling and other energy-related services. Leaders in the group include ExxonMobil Corp., ChevronTexaco Corp, and ConocoPhillips. (source: company press release or website)

Why We Like It:
There were several potential bullish candidates in the energy sector. We did choose to add COP (see above) but instead of adding a bunch of individual equities we're going to pick the XLE as a way to play the group. The pull back in crude oil has weighed on the XLE and the SPDR fund dipped toward the bottom boundary of its trading range a few days ago. The dip, near $50, was bought and more aggressive traders may want to go long now with the XLE above $52. We are concerned about resistance at the $54.00 level. Therefore we're suggesting a trigger to go long XLE at $54.11. If triggered our target is the $58.00-60.00 range near the top of its trading range.

Picked on October xx at $xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 00/00/00 (unconfirmed)
Average Daily Volume: 19.3 million
 

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