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KMG None
SIE  

New Calls

Kerr Mcgee - KMG - close: 85.99 chg: +2.74 stop: 81.99

Company Description:
Kerr-McGee is an Oklahoma City-based energy and inorganic chemical company with worldwide operations and assets of more than $15 billion. (source: company press release or website)

Why We Like It:
We're going to take another swing at the oil/energy sector by suggesting KMG as a bullish candidate. On August 8th the stock broke out to new all-time highs but the sell-off Wednesday-Thursday of this past week pulled KMG back toward previous resistance, now support in the $82 region. Friday's surge in oil sparked another rebound. It is true that KMG is giving off mixed technical signals but considering the "news" affecting the oil supply these days (just read this weekend's wrap to hear about S. America and Nigeria) we believe crude might surge to $70 short-term before seeing more profit taking. KMG's P&F chart is bullish and currently points to a $112 target. We're going to suggest bullish positions with KMG above the $84 level and target the $89.50-90.00 range.

Suggested Options:
We are suggesting the October calls although Septembers might work well too.

BUY CALL OCT 80.00 KMG-JP OI=1889 current ask $7.90
BUY CALL OCT 85.00 KMG-JQ OI=1633 current ask $4.50
BUY CALL OCT 90.00 KMG-JR OI=2445 current ask $2.20

Picked on August 21 at $ 85.99
Change since picked: + 0.00
Earnings Date 07/27/05 (confirmed)
Average Daily Volume = 2.4 million

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Sierra Health Svs. - SIE - cls: 69.01 chg: +0.75 stop: 66.95

Company Description:
Sierra Health Services Inc., based in Las Vegas, is a diversified healthcare services company that operates health maintenance organizations, indemnity insurers, preferred provider organizations and multispecialty medical groups. Sierra's subsidiaries serve more than 580,000 people through health benefit plans for employers, government programs and individuals. (source: company press release or website)

Why We Like It:
This must be a sure sign of a market top if we're adding two new bullish plays to the list! However, we like SIE as a bullish candidate. Despite an initial sell-off following its earnings news back in July the stock has bounced back and maintained its bullish trend higher. Now SIE looks poised to breakout over resistance at its 50-dma and the $70.00 level and make a charge toward its July highs. We're suggesting a trigger at $70.11 to open the play. Our target is the $75.00-75.25 range.

Suggested Options:
We are suggesting the September calls (only other ones available are December and March).

BUY CALL SEP 65.00 SIE-IM OI=182 current ask $5.10
BUY CALL SEP 70.00 SIE-IN OI=195 current ask $1.85
BUY CALL SEP 75.00 SIE-IO OI=167 current ask $0.50

Picked on August xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 07/25/05 (confirmed)
Average Daily Volume = 426 thousand
 

New Puts

None today.
 

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