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New Calls

CNOOC Ltd - CEO - close: 81.90 change: +1.29 stop: 79.45

Company Description:
We are a Hong Kong-incorporated public company that engages primarily in the exploration, development and production of crude oil and natural gas offshore China. We are the dominant producer of crude oil and natural gas .The Company is also one of the largest offshore crude producer in Indonesia. (source: company press release or website)

Why We Like It:
CEO is another oil stock to our growing list of oil-stock bullish candidates. However, this one is a bit different as CEO is the ADS shares traded in the U.S. for the Chinese oil conglomerate CNOOC. The stock has been consolidating lower in a descending channel for the last ten weeks but Thursday's gain might just be a breakout over resistance. The stock is challenging technical resistance at the 50-dma and the $82.00 level. We want to see more confirmation before initiating call plays so we're suggesting a trigger to go long at $82.26. If triggered we will target a run towards the February highs in the $87.50-88.00 range. We do note additional overhead resistance in the $84 range so be aware of it. Another point to consider is the company's earnings report is due out around April 29th. We do not want to hold over the report.

Suggested Options:
We are suggesting the May calls.

BUY CALL MAY 80.00 CEO-EP open interest= 32 current ask $4.50
BUY CALL MAY 85.00 CEO-EQ open interest=107 current ask $1.70

Picked on April xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 04/29/06 (unconfirmed)
Average Daily Volume = 193 thousand


Cummins - CMI - close; 106.75 chg: +0.66 stop: 104.99

Company Description:
Cummins Inc., a global power leader, is a corporation of complementary business units that design, manufacture, distribute and service engines and related technologies, including fuel systems, controls, air handling, filtration, emission solutions and electrical power generation systems. Headquartered in Columbus, Indiana, (USA) Cummins serves customers in more than 160 countries through its network of 550 Company-owned and independent distributor facilities and more than 5,000 dealer locations. Cummins reported net income of $550 million on sales of $9.9 billion in 2005. (source: company press release or website)

Why We Like It:
CMI has been consolidating against rising support at its 50-dma for the last couple of weeks. The technical picture is finally starting to turn positive again and this looks like a relatively low risk entry point to buy calls with CMI near support. We are going to suggest calls with CMI above $106.00 and we'll try and keep our risk to a minimum with a stop loss under the simple 50-dma at $104.99. Conservative traders can plan an exit in the $109.85-110.00 range (our conservative target). We're going to bet on a breakout over resistance at $110 so our more aggressive target will be the $112.00-112.50 range. We don't want to hold over the late April earnings. If you have a longer time frame you may want to aim even higher.

Suggested Options:
We are suggesting the May calls. FYI: at this time we could not get the current ASK price and what we have listed is the last trade.

BUY CALL MAY 105.00 CMI-EA open interest= 422 current ask $4.60
BUY CALL MAY 110.00 CMI-EU open interest=1445 current ask $2.35

Picked on April 16 at $106.75
Change since picked: + 0.00
Earnings Date 04/28/06 (unconfirmed)
Average Daily Volume = 804 thousand

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