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EOG None None
LMT    

New Calls

EOG Resources - EOG - close: 72.06 change: 1.09 stop: 67.99

Company Description:
EOG Resources, Inc. is one of the largest independent (non-integrated) oil and natural gas companies in the United States with proved reserves in the U.S., Canada, offshore Trinidad and the United Kingdom North Sea. (source: company press release or website)

Why We Like It:
Oil stocks were the hot spot on Wednesday and we're adding more exposure to the group. There were plenty of bullish candidates available after today's big rally but we wanted to find something that didn't look too extended. EOG has a bullish trend of higher lows and today's breakout to a new three-month high was fueled by strong volume, which is a positive sign. The company is in the midst of a two-day analyst meeting that concludes tomorrow. This morning EOG said its 2007 production target was for 10% growth. We are suggesting call positions with the stock above $70.00. Our target is the $78.00-80.00 range. The P&F chart has a very bullish pattern called a bullish triangle breakout that points to a $94 target.

Suggested Options:
We are suggesting the January calls.

BUY CALL JAN 70.00 EOG-AN open interest=3587 current ask $5.00
BUY CALL JAN 75.00 EOG-AO open interest=4739 current ask $2.45
BUY CALL JAN 80.00 EOG-AP open interest=3555 current ask $1.05

Picked on November 29 at $ 72.06
Change since picked: 0.00
Earnings Date 10/25/06 (unconfirmed)
Average Daily Volume = 3.6 million

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Lockheed Martin - LMT - cls: 90.62 change: 1.32 stop: 87.65

Company Description:
Headquartered in Bethesda, Md., Lockheed Martin employs about 140,000 people worldwide and is principally engaged in the research, design, development, manufacture, integration and sustainment of advanced technology systems, products and services. The corporation reported 2005 sales of $37.2 billion. (source: company press release or website)

Why We Like It:
Defense stocks turned in a strong performance today. The DFI defense index rose 1.9% and broke out to a new six-month high. Helping lead the way were shares of LMT, which broke out to their own all-time high above resistance at the $90 level. The relative strength in LMT is encouraging and the technical indicators are turning higher again. The P&F chart looks very promising with a bullish triangle breakout buy signal that points to a $110 target. We do have a couple of concerns. Volume on today's and yesterday's rebound/rally was below average. Furthermore LMT clearly has a bearish divergence between its rising price and its MACD indicator. Given the market strength and sector strength we're still willing to suggest calls above $90.00. Our short-term target is the $94.85-95.00 range. More aggressive traders may want to aim for the $99-100 region.

Suggested Options:
We are suggesting the January calls.

BUY CALL JAN 85.00 LMT-AQ open interest=1464 current ask $6.90
BUY CALL JAN 90.00 LMT-AR open interest=1550 current ask $3.20
BUY CALL JAN 95.00 LMT-AS open interest=2150 current ask $1.00

Picked on November 29 at $ 90.62
Change since picked: 0.00
Earnings Date 01/23/07 (unconfirmed)
Average Daily Volume = 2.1 million
 

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New Strangles

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