Jump Back Into Oil

Play January Calls on HES

By Bryan Bottarelli
Tuesday, November 28, 2006 9:50 AM EST
Tue, 28 Nov 2006 14:50:00 GMT

Dear Bottarelli Research Member,

Two events happened yesterday that caught my attention. First, oil prices rallied back above $60 a barrel but the major oil and oil service stocks sold off, most likely taken down with the Dow’s 156-point sell-off. Second, one oil company managed to shrug off yesterday’s extreme selling pressure and trade higher on the day, and that company was Hess Corporation (HES – NYSE).

HES engages in the exploration, production, and sale of crude oil and natural gas. As of December 31st, their proven reserves included 692 million barrels of crude oil and 2,406 million Mcf of natural gas. In addition, HES currently operates 1,354 gasoline stations in the United States, the United Kingdom, Norway, Denmark, Equatorial Guinea, Algeria, Gabon, Indonesia, Thailand, Azerbaijan, Russia, and Malaysia.

HES

From the looks of the chart, HES is about to break through its 200-day moving average, which is always a bullish signal that points to continued upside momentum. Plus, if the stock can rally on a day when 95% of stocks are trading lower (like yesterday) that proves the stock has a very strong level of support. Let’s play the continued upside in HES using January calls. Here’s the play:

PLAY: Buy the HES January 45 Calls (HES AI) at or under $3.80, good for the day. Current bid/ask spread is $3.40 to $3.60. Place a protective stop loss at $2.20.

Lock and load

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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