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Schlumberger - SLB - close: 123.02 chg: +2.92 stop: 118.99

Company Description:
Schlumberger is the world's leading oilfield services company supplying technology, project management, and information solutions that optimize performance in the oil and gas industry. The company employs more than 60,000 people of over 140 nationalities operating in more than 80 countries, and comprises two business segments. Schlumberger supplies a wide range of products and services from formation evaluation through directional drilling, well cementing and stimulation, well completions and productivity to consulting, software, information management, and IT infrastructure services that support core industry operational processes. WesternGeco, jointly owned with Baker Hughes, is the world's largest seismic company and provides advanced acquisition and data processing services. In 2005, Schlumberger operating revenue was $14.31 billion. (source: company press release or website)

Why We Like It:
We are going to increase our exposure to the oil sector. The OSX oil services sector looks ready to breakout over resistance after forming what looks like an inverse or bullish head-and-shoulders pattern over the last few weeks. SLB looks to be part of the vanguard leading the services industry higher. We like the bounce from $119 and its 50-dma as a new bullish entry point. However, more conservative traders may want to wait for a move over $125.00 or $125.50 before initiating positions. We are targeting a rally into the $129.75-130.00 range. The P&F chart is bullish and points to a $144 target. Please note that SLB is due to split 2-for-1 on April 10th. Our post-split target will be the $64.87-65.00 range. We do not want to hold over the April 21st earnings report.

Suggested Options:
We are suggesting the May calls although more aggressive traders might want to try April strikes.

BUY CALL MAY 120 SLB-ED open interest=5605 current ask $8.20
BUY CALL MAY 125 SLB-EU open interest=5524 current ask $5.50
BUY CALL MAY 130 SLB-EZ open interest=5470 current ask $3.50

Picked on March 23 at $123.02
Change since picked: + 0.00
Earnings Date 04/21/06 (unconfirmed)
Average Daily Volume = 6.2 million
 

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