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Mohawk Ind. - MHK - close: 89.60 change: 2.62 stop: 85.90

Company Description:
Mohawk offers a complete selection of tufted and woven broadloom carpet, ceramic tile, laminate, wood, stone, vinyl, rugs and other home products. These products are marketed under the premier brands in the industry, which include Mohawk, Karastan, Ralph Lauren, Lees, Bigelow, Quick Step, Dal-Tile and American Olean. Mohawk's unique merchandising and marketing systems assist our customers in creating the consumer's dream. Mohawk provides a premium level of service with its own trucking fleet and over 250 local distribution locations. (source: company press release or website)

Why We Like It:
The market rally in the last two hours of trading, fueled by an optimistic interpretation of the FOMC minutes released today, helped push shares of MHK above its month-long trendline of lower highs (a.k.a. resistance). The move was fueled by stronger than average volume, which is bullish, and its technical picture improved significantly. The P&F chart is already bullish but if shares can trade over $90 it would produce a new triple-top breakout buy signal. It's also noteworthy that today's rally appears to have broken through MHK's resistance dating back to the February 2005 peak. However, we want to see more confirmation. Therefore we're suggesting a trigger to go long at $90.25. If triggered we'll target a rally into the $94.85-95.00 range by its early February earnings report.

Suggested Options:
If triggered we're suggesting the February strikes.

BUY CALL FEB 85 MHK-BQ open interest=366 current ask $6.40
BUY CALL FEB 90 MHK-BR open interest=186 current ask $3.10
BUY CALL FEB 95 MHK-BS open interest=143 current ask $1.15

Picked on January xx at $ xx.xx <-- see TRIGGER
Change since picked: 0.00
Earnings Date 02/02/06 (unconfirmed)
Average Daily Volume = 355 thousand

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Petrochina Co - PTR - close: 83.50 change: 1.54 stop: 79.99

Company Description:
PetroChina is one of the largest companies in the People's Republic of China. Established as a joint stock company with limited liabilities under the Company Law of the People's Republic of China in 1999 as part of the restructuring of state-owned China National Petroleum Corporation, PetroChina is engaged in a broad range of activities relating to its exploration, production, refining, marketing, and chemical and natural gas businesses. (source: company press release or website)

Why We Like It:
We did not have the best luck with energy stocks in the second half of December. Today's rally in energy looks tempting but we're going to add new positions in the sector very carefully. Today's candidate (PTR) displayed some relative strength in December by not declining. Instead shares of PTR traded sideways between $80 and $83 almost the entire month. Today's 1.8% gain is a very bullish breakout through the top of that trading range. The volume today is also bullish since it came in above the daily average. The P&F chart for PTR is bullish and points to a $100 target. PTR is also a tempting investment since more money flowed into foreign equities than U.S. equities last year and many analysts expect that trend to continue. We are going to suggest call positions here with PTR above $83.00. There does appear to be some resistance in the $84.50-85.00 range so we expect some give-and-take for the next couple of points and patient traders may get another opportunity to buy a dip near $83.00, which should now act as support. Our end of February target is the $89.50-90.00 range.

Suggested Options:
We have an eight-week target near $90.00. We're going to suggest the March options but more aggressive traders may want to play Februarys instead.

BUY CALL MAR 80 PTR-CP open interest=6643 current ask $6.10
BUY CALL MAR 85 PTR-CQ open interest=7619 current ask $2.90
BUY CALL MAR 90 PTR-CR open interest=1594 current ask $1.30

Picked on January 03 at $ 83.50
Change since picked: 0.00
Earnings Date 03/00/06 (unconfirmed)
Average Daily Volume = 488 thousand
 

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