But stocks fitting that description have seen significant run-ups in the past six months. As I noted in last week’s issue, I’ve recommended lessening exposure to some of my favorites or getting out altogether, such as selling Schlumberger for a nice profit in the summer and taking partial gains in FMC Technologies (NYSE: FTI) in September.

Although I believe that both stocks will ultimately be buys again, I see a rising risk that these stocks could pull back further short term. They’ve simply rallied too far too fast and are pricing in the best possible news. (See the Nov. 7 issue for details.)

As a result, I’m making two recommendations:

First, sell your remaining position in FMC Technologies for a profit of about 90 percent based on my original recommendation back in January. FMC makes subsea equipment that’s used to produce deepwater fields; it remains the leader in that market.

However, the stock is fundamentally far more expensive than it was when I recommended it back in January. And, with earnings season past, I don’t see any near-term catalysts to get investors excited about the stock. Sell FMC Technologies; I will continue to track it in the How They Rate Table.

Second, I highlighted the extreme weakness in the North American services market last week. One stock that still has plenty of exposure to this market is Halliburton (NYSE: HAL). In particular, the company is the largest player in the US pressure pumping market.

Schlumberger, among others, believes that returns in this market will continue to deteriorate into 2008 as a large amount of new capacity enters the market. I’m now adding Halliburton to the Gushers Portfolio as a short recommendation with a stop-loss order at 43.

Recall that shorting, or short-selling, a stock is a way to profit from a decline in the stock. For a basic primer on shorting, check out the June 14, 2006, issue of TES, The Good, The Bad, The Ugly. The relevant section is located near the end of that issue under the subheading “Pair Trades, Shorts and Puts.”

For those unwilling to execute shorts, the Halliburton April 2008 $40 put options (HAL PH) offer an alternative. These puts trade at just under $5 or $500 per contract; each contract covers 100 shares. If you decide to use the puts instead of shorting the stock, consider using a relatively small position size.

As a rule of thumb, I recommend putting about a quarter to a third of what you’d normally invest in a TES recommendation into the puts. This would be the maximum amount to risk with this product.

Options offer a great deal of leverage, so you don’t need to commit much capital. The Halliburton April 2008 $40 put options rate a buy under $580 per contract. 

Finally, I don’t recommend shorting Halliburton or buying the puts unless you’re also already invested in other TES recommendations such as Weatherford (NYSE: WFT) and Chart Industries (NSDQ: GTLS). The Halliburton recommendation is a way to hedge short-term downside risk in these other portfolio holdings.