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New Calls

Goldman Sachs - GS - close: 146.90 chg: +4.86 stop: 141.79

Company Description:
Goldman Sachs is a leading global investment banking, securities and investment management firm that provides a wide range of services worldwide to a substantial and diversified client base that includes corporations, financial institutions, governments and high net worth individuals. Founded in 1869, it is one of the oldest and largest investment banking firms. The firm is headquartered in New York and maintains offices in London, Frankfurt, Tokyo, Hong Kong and other major financial centers around the world. (source: company press release or website)

Why We Like It:
If the markets can build on Monday's rally then the XBD broker-dealer index could breakout past significant resistance at both its 50-dma and 200-dma near the 208 level. A breakout for the XBD could help push GS past resistance at its own 50-dma and the $148 mark. We are going to suggest a trigger to buy calls at $148.05, which is above resistance at the 50-dma (147.65) and today's high (147.50). More conservative traders may want to wait for a move past the $150 mark before considering call positions. If triggered our target will be the $154.00-155.00 range. If you look at the chart below GS has broken out past its bearish channel and just recently bounced from a test of the old channel in addition to its 200-dma. This could be a change in trend for the stock but the Point & Figure chart is still bearish and points lower.

Suggested Options:
We are suggesting the August or September calls. You choose which month and strike best suits your trading style.

BUY CALL AUG 145 GS -HI open interest=2656 current ask $5.40
BUY CALL AUG 150 GPY-HJ open interest=7405 current ask $2.65
BUY CALL AUG 155 GPY-HK open interest=3862 current ask $1.05

BUY CALL SEP 145 GS -II open interest= 0 current ask $7.40
BUY CALL SEP 150 GPY-IJ open interest= 0 current ask $4.60
BUY CALL SEP 155 GPY-IK open interest= 0 current ask $2.65

Picked on July xx at $xxx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 09/21/06 (unconfirmed)
Average Daily Volume = 5.2 million

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The Houston Exp. - THX - cls: 61.87 chg: +1.52 stop: 59.99

Company Description:
The Houston Exploration Company is an independent natural gas and crude oil producer engaged in the development, exploitation, exploration and acquisition of natural gas and crude oil properties. The company's operations are focused in South Texas, the Arkoma Basin, East Texas, and the Rocky Mountains. (source: company press release or website)

Why We Like It:
The oil stocks are finally seeing some buying interest again and this has fueled a strong bounce in THX from the bottom of its trading range near $60.00. If the markets see any follow through on Monday's rally then we expect the oil stocks to participate. That could lead to a bullish breakout in THX above significant resistance at the $62.50 mark. We're suggesting a trigger to buy calls at $62.60. If triggered our target is the $67.50-70.00 range. We do not want to hold over the early August earnings report. FYI: The Point & Figure chart is bullish and points to a $76 target.

Suggested Options:
We are suggesting the August calls.

BUY CALL AUG 60.00 THX-HL open interest=2233 current ask $3.50
BUY CALL AUG 65.00 THX-HM open interest=2010 current ask $2.00

Picked on July xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 08/03/06 (unconfirmed)
Average Daily Volume = 667 thousand
 

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