Previously, European and Federal Reserve leaders have turned markets around with stimulus measures and bailouts for deeply indebted institutions. Investors also worry that the economic and financial mess could get tangled up in the building U.S. election campaign. Politics could prevent Congress from acting, leaving the problem to the Fed and Europeans.

Investors again are calling for the Fed to pump billions of fresh dollars into the financial system by purchasing massive amounts of bonds, an approach known as quantitative easing. It would be the third such bond-buying program since 2008, so investors call the idea QE3. The problem is that central banks’ main method of stimulating the economy is to lower interest rates. With rates already at historic lows, some economists question how much good more intervention can do.

With the potential of QE3 on the horizon, stocks continued to lose ground for the fourth consecutive day after factory orders slowed in economic reports. The Dow retreated 17 points, or -0.14%, to $12,101.46 in late-afternoon trading. The Standard & Poor’s 500-stock index was up barely at 0.01% to $1, 2748.16. Meanwhile, the Nasdaq Composite increased 13 points, or 0.46%, to $2760.01. Industrial and financial stocks fell the most among the S&P 500’s 10 sectors. J.P. Morgan Chase (JPM) slumped -2.82%, while Caterpillar, (CAT) stock closely tied to growth prospects, also fell. The Stoxx Europe 600 fell -0.5% in choppy trading, while Germany’s DAX slipped -1.2%.

Chesapeake Energy (CHK) rose 6.10% and was the biggest gainer on the S&P 500 after the company agreed to replace four members of its nine-member board with candidates proposed by the embattled oil-and-gas company’s two largest shareholders, Southeastern Management Co. and activist investor Carl C. Icahn. Facebook (FB) also fell after analysts projected a target price of $25 and expected the stock to underperform for the year. Auxilium Pharmaceuticals (AUXL) jumped +16.02% after the company announced positive test results from a trial of its treatment for Peyronie’s disease.

Thomas Doherty is a student at Villanova University majoring in Finance and Economics. All questions and comments can be sent to Thomas@KeeneOnTheMarket.com

Unprofitable:  I lose money on this trade if DG closes above $49.40 by June 15, 2012.  The most I can lose on this trade is the amount the Spread can be worth $1 minus the price I sold it for $.40 for a total of $.60.

Reason I Like This Trade:  I like this trade, because I can make money if DG rallies, is flat, or goes lower.  It tested to $49.50, but saw some selling pressure at those levels.  This is a good risk vs reward in my opinion for earnings.

UPDATE 6.5.2012  With the sell-off in DG this Spread went from $.40 to $.10.  I took off half of my position for a double and leaving the other half on for more potential profits.

UPDATE 6.7.2012  I took this trade off completely at $.05 and $.10, good for more than a quadruple.  Taking profits and moving to the next trade.

Stocks opened flat to positive after some positive information out of Europe for a “master plan” from their central banks but quickly fell as the Commerce Department reported that manufacturing goods fell in April and once again, disappointed with respect to analyst predictions.

Industrials, materials, and financial stocks continue to underperform significantly as firms with the most international exposure have been hit the hardest in recent weeks.

Lightening the mood were reports that Germany is signaling that it would eventually be willing to lift its objections to ideas such as common euro-zone bonds or mutual support for European banks. In addition, Portugal said it would inject €6.65 billion, or $8.27 billion, into three of its largest lenders to help strengthen the banking sector.

Despite its large online following, not investor wants to be “friends” with Facebook (FB) as its stock price fell -3.1% following reports that Bernstein analysts announced a $25 target price and an “underperforming” rating. Separately, Facebook is rumored to be developing technology to allow young children to use the site. Currently, children under 13, per age restrictions on the internet, cannot join Facebook but with their new development, Facebook hopes to keep a safe environment for children with parent friendly settings. Auxilium Pharmaceuticals (AUXL) jumped 9.61% after the company announced positive test results from a trial of its treatment for Peyronie’s disease.

In deal news, Vanguard Natural Resources (VNR) fell 1.2% after the company said it had agreed to buy natural-gas and liquids assets from Antero Resources for $445 million.

Crude-oil futures rose 0.1% to $83.32 a barrel, while gold futures declined 0.3% to $1,616 a troy ounce. The U.S. dollar slipped against the euro but rose versus the yen. The yield on the benchmark 10-year U.S. Treasury note rose to 1.506%.

Thomas Doherty is a student at Villanova University majoring in Finance and Economics. All questions and comments can be sent to Thomas@KeeneOnTheMarket.com

Despite Sony’s weak sales over the past few years, the coming days will be incredibly important for the financial growth of Sony and a potential increase/decrease in their stock price. For those who are unfamiliar with the gaming industry, E3, or the Electronic Entertainment Expo, begins tomorrow showcasing the newest and best in all things gaming. While Sony, like Microsoft, is unexpected to announce its upcoming Playstation 4, any rumors will have a dramatic shift on the market price. However, despite the hype around the next generation of gaming consoles, many analysts remain bearish as retail sales of video games have declined for the past three years and is down -27%, compared to the same period in 2011. According to analysts, Sony’s expected Playstation 4, or PS4, will sell only half of the PS3 volume as competition increases from other handheld and mobile phone devices.

Thomas Doherty is a student at Villanova University majoring in Finance and Economics. All questions and comments can be sent to Thomas@KeeneOnTheMarket.com

Auto makers were part of the problem today with Mazda dropping 7.3% and Nissan, Toyota and Honda each losing over 3.5%
After being downgraded by JP Morgan, Canon managed to shed 5.2%, the company said it would buy back 50b Yen worth of its own shares after market close today.
Sony lost 1.7% and found itself at a 32 year low.

The Hang Seng lost 2% with China Unicom the frontrunner losing 5.64%, the only stock in the index closing green was HonkKong Electric Holdings Ltd.
European Stocks are flat so far, however auto makers took a hit on the continent as well with Volkswagen losing 3.2, BMW losing 2.5 and Daimler down 2.2%.
Commodities are mixed this morning with Natural gas and silver futures up while crude and oil remain down.
Contributer Chris Rygh is currently pursuing his MBA in Wisconsin and has a passion for the Market. Comments can be directed to ryghcw19@uww.edu