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Tuesday’s rise in the broader market failed to boost Facebook, FB -9.62% which slid below $30 for the first time. Declines coincided with Facebook’s debut in the options market and amid speculation the company may be considering a takeover of Norway’s Opera Software OPERA.OS +19.53%. The stock is trading 24% below its initial-public-offering price of $38 a share.

In the U.S., housing prices continued falling in March but not as sharply as earlier months, according to the S&P/Case-Shiller home-price index. Elsewhere, U.S. consumers were less confident in May than the previous month, according to the Conference Board. Tuesday’s unexpected drop in consumer confidence marked the measure’s third monthly decline in a row.

Crude-oil prices fell 0.1%, to $90.76 a barrel, while gold prices declined 1.3%, to $1,548.60 a troy ounce. The dollar rose against the euro but fell versus the yen. The yield on the 10-year Treasury note fell to 1.731% as demand rose.

Chesapeake Energy CHK +3.42% rose after activist investor Carl Icahn reported a 7.6% stake in the company on Friday and called for a shake-up on the natural-gas company’s board. The company said it would “carefully review” his request.

Overall, the Dow, NASDAQ, and S&P all finished positive, each +1% on the day.

Thomas Doherty is an undergraduate student at Villanova University majoring in Finance and Economics. For comments and questions, email Thomas@KeeneOnTheMarket.com

Last month, Barron reported that Facebook will likely join the widely watched Nasdaq 100 and the $30 billion PowerShares QQQ (QQQ) as soon as the end the fall. Futhermore, analysts expect Facebook to become “friends” with the iShares Russell Top-2oo Index Fund (IWL), Russell Top-200 Growth Index Fund (IWY), plus the funds tracking the Russell 1000 (IWB, VONE), and the Russell 1000 Growth (IWF, VONG) at the next rebalancing, in late June. With regards to the Standard & Poor’s 500 index, Facebook should be much slower in joining the index and will likely follow Google with an 18 month waiting period.

With the difficulties in Facebook joining an index, they will likely look to join an ETF in the near future. Two ETFs that should “like” Facebook are Global X Social Media ETF (US:SOCL) and First Trust US IPO Index (US:FPX). Launched last November, the Global X Social Media Ind. ETF tracks the equity performance of the largest and most liquid companies involved in the social media industry, including companies that provide social networking, file sharing and other web-based media applications. This ETF is not for the faint-hearted. Price volatility is well above average relative to North American equity indices. Since launch, the fund has traded in a range between $12.50 and $16.00

Finally, Facebook will look to join the Nasdaq 100 when it is eligible for acceptance. Originally, a company had to trade for two years, but recently, NASDAQ slashed their requirments and now only requires securities to trade on the NASDAQ, NYSE, and NYSE AMEX for at least three full months. Assumably, this move is to allow Facebook to join the index earlier than previously allowed.

Will Facebook be a good buy at $28? Only time will tell.

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

For more information, Follow Andrew on twitter at https://twitter.com/#!/KeeneOnMarket or like us on facebook: https://www.facebook.com/KeeneOnTheMkt

Unprofitable:  I lose money on this trade if FB closes under $26.50 or above June 15, 2012.  The most I can lose on this trade is the amount I paid for it $1.60.

Reason I Like This Trade:  The above levels are approximate levels based on the June ATM Straddle price.  The question about Facebook’s valuation is a difficult question to answer right now.  How much is a company worth that has over 900 million users that average 14 minutes a day?  Well, right now it isnt valued as much as others thought it would be 2 weeks ago.  I agree I thought it would surge to the upside, but after it dropped under $38, the IPO price, we see more pressure and the stock is now down almost 25% since then and 35% from the $45 highs.  I still think that Facebook has potential, but it is hard to stand in the way of this downward trend.  I bought the August-June 30 Call Spread for $1.60.  I like this strategy, bc even if Facebook goes lower, I can only lose what I paid for this Spread, $1.60.  With only 13 trading days left, FB is implying a 11% move between now and June expiration.  Also, if this strategy I am buying the earnings month and I think the stock could rally on earnings.  The weeklies get added on Thursday, so I will look to trade those as well.  This is a neutral to bullish trade.  Hope this helps.

UPDATE 5.30.2012 I want lack of movement in the next 12 trading days and the closer the stock moves to $30 the better.  This spread is currently worth $1.70, but I will leave it on until at least June expiration.

UPDATE 5.31.2012  Even with the stock selling off under $27, this Spread is still worth $1.60.  I will leave this trade on and hope for any upside move higher.

UPDATE 6.4.2012  This Spread is still worthh $1.60 and this actually is a Bullish Spread, so the closer that Facebook closes to $30, the more this Spread will be worth.

UPDATE 6.5.2012  This Spread is still worth $1.60, and I would like a nice soft landing on June expiration as $29.95

UPDATE 6.7.2012 The Spread is worth $1.60, but I will leave it on until at least June expiration

UPDATE 6.11.2012  With FB rallying today, this Spread is worth $1.75, but I am leaving on until Friday.

UPDATE 6.13.2012  I would this Spread would be worth more, but it is still only worth $1.65

UPDATE 6.27.2012  I took this trade off at $2.20, man I wish I would left this on a little more, oh well, on to the next trade.

The Stoxx Europe 600 rose 0.9%. Europe’s debt issues continue to roil markets in Spain. The country’s IBEX 35 index slid 1.8% after the government’s effective nationalization of Bankia sparked investor fears that more bailouts of lenders might be needed.

A series of muted U.S. economic reports did little to hinder Tuesday’s gains. Data showed U.S. consumers were less confident in May that the previous month. Confidence has now fallen for three months in a row. In other U.S. economic news, home prices fell in March, ending the first quarter at the lowest levels since the housing crisis began in mid-2006, according to Standard & Poor’s Case-Shiller home-price indexes.

In corporate news, Vertex Pharmaceuticals VRTX -14.59% slumped after the company revised the success rate of clinical trial testing a cystic-fibrosis treatment. Initial results earlier this month exceeded expectations, boosting hopes that the treatment could have blockbuster potential. While the majority of stocks increased this morning, the rally failed to boost Facebook, FB, and Zynga, ZNGA. Mark Zuckerberg and his 900 friends have lost nearly 21% of the IPO price of $38 a share, and are now trading below $30 at $29.76. Similarly, Zynga, has declined -7.11% to $6.11, a major loss from its all-time high of $15.91 after their IPO in December. As stated in this article, you can browse your selection of available deals on smartphones and top brands and explore the service plans that best suit your needs.

In today’s economic reports, two major reports were the Case-Schiller index and the Consumer Confidence report. Consumer confidence finished lower than expected at 64.9, with an expected value at 69.4. On the other hand, the Case-Schiller index fell -2.6%, but this was lower than the analyst expected value of -2.8%.

Crude-oil futures fell 0.23% to $90.45 a barrel, while gold futures lost 0.89% to $1,557.20 a troy ounce.

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

For more information, Follow Andrew on twitter at https://twitter.com/#!/KeeneOnMarket or like us on facebook: https://www.facebook.com/KeeneOnTheMkt

However, Vertex reduced their percentage of improved patients, from 45% down to 35%, marking a significant loss in patient improvement. In addition, Vertex said the trial showed 19% of patients experienced a 10 percentage point improvement or more, below the 30% it had first seen. Vertex shares remain above their price of $37.41, where they were trading when the company originally reported the data on May 7.

Chairman and Chief Executive Jeffrey Leiden told analysts on a conference call that the discrepancy stemmed from a misinterpretation of data provided by an unidentified third-party vendor. Vertex’s earlier release judged patients’ relative improvement rates compared with a placebo rather than reporting improvements on an absolute basis. Leiden called the misstep “disappointing” but said final data from the combination’s Phase II study, slated for release mid-year, “will trump all of this.” With aims of treating a broader population of cystic-fibrosis patients, Vertex conducted the midstage trial of its approved drug Kalydeco and an experimental drug, VX-809, in adults with two copies of the most common mutation in a gene dubbed F508del. While the lower report has caused the stock price to drop significantly, many analysts still have high hopes for Vertex and view VX-809 to have blockbuster multibillion dollar potential in the future. The initial results were significantly above Wall Street expectations and brightened prospects for Vertex, whose shares were under pressure late last year as it appeared the company was losing ground in the race to bring the next generation of hepatitis C treatments to market.

Vertex Pharmaceuticals posted a net income of $296.06 million in April 2012 with earnings at $.14 per share. Currently, EPS estimates for Q2 2012 sit at $.63 with the next earnings report out at on July 27. Based in Cambridge, Massachusetts, Vertex is an American biotechnology firm focusing on viral infections, inflammatory and autoimmune diseases, and cancer research.

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

For more information, Follow Andrew on twitter at https://twitter.com/#!/KeeneOnMarket or like us on facebook: https://www.facebook.com/KeeneOnTheMkt

Panasonic Corp gained 3.9% on announcement that the company plans to drop 50% of the 7000 strong workforce at its headquarters.

The worst hit of equities was the Renesas Electronic Corp dropping 16.4% to a record low after announcement that the company plans to raise 100b yen for a restructuring.

The FRSEurofirst 300 is up .1% being held by Spanish concerns. The Spanish 10 year bond yield remains at close to 6.5% where they see 7% as being unsustainable. The Spanish IBEX dropped 1.9%.

Commodities are looking alright this morning with crude, gold and silver up while natural gas remains a laggard.

Amazon is one stock to keep your eye on; regardless of being put on Goldman’s top 50 short positions they are making moves. They announced a deal last week with paramount to bring movies to their Prime Instant Video service over the next few years. They also plan on offering prepaid internet service for smart phones and tablets in Japan, which could shortly thereafter be launched in the US.

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