Unprofitable:  I lose money on this trade if FXE closes above $125.25 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 $.25 for a total of $.75.

Reason I Like This Trade:  I like to sell premium on the weekly options and I will sell the Euro and FXE on any rally.  The best part of this trade that I do not lose money until this Stock .8% to the upside.  So, I can make money on the trade, if the stock is flat, down, or even higher. 

UPDATE 6.13.2012  The FXE is rallying above $125, but I still think it is a sale on any rally.  This Spread is currently only worth $.45, but if it expired right now it would only be worth $.30.  I will leave this trade on until Friday.

UPDATE 6.27.2012  This Spread expired worth $.60 and I took this trade off and moving on to the next trade.

Read more about total by www.keeneonthemarket.com

Overnight and into the morning the Euro hovered around the $1.2540 level and is currently trading at $1.2497.

Crude is down over $0.75 cents on the day and trading at $83.34, -0.9%, on slower growth expectations in the U.S.A. and China, as well as gains in the EUR/USD and lower stocks. Gold futures were relatively unchanged on the day, trading at $1591.10, down 30 cents.

Major US stock indices are down on the day. The Dow Jones Industrial Average futures are trading at $1,2431, down 72 points (-.58%), the S & P 500 futures are trading at 1314.75, down 7.25 points (-.41%), and the NASDAQ 100 futures were trading at 2546.50, down 10.5 points (-.68%).

Diamond Foods Inc. (DMND) is trading at $18.67, down $1.49 (-7.39%) after the snack maker was not able to meet today’s earning’s deadline. Volkswagen AG (VLKAY) is trading at $29.79, up 32 cents (1.09%) and is considering taking a stake in Navistar International Group (NAV), a commercial truck and engine maker.

ZaZa Energy Group was a big mover this morning, trading at $4.25, up $1.00 (30.77%) after ending its’ partnership with Hess Corp. (HES) to explore shale formations in Texas and France.

Apple is up on the day at $587.09, up 43% year-to-date on the positive outlook that they will announce new products the annual Worldwide Development Conference. Updated versions of the iPhone, Apple TV, iPads and MacBooks are expected.

While no party is expected to gain an absolute majority in Greece, coalition governments take their place and have a significant effect on legislature and country leadership. The leader of the party with a relative majority in Greece is appointed as Prime Minister, regardless of district voting. Essentially, a vote a member of a party in your district is the equivalent of a vote for the leader of the party for Prime Minister. In turn, the President of Greece is elected by members of Parliament every five years. The next Presidential election is scheduled for 2015.

Per Greek law, opinion polls on the election cannot be released within 14 days of an election, so the last available data is from Friday, June 1 and could be slightly outdated. Despite the restrictions on polls, with an expected 22.7% of the vote and 121 seats in Parliament, the New Democracy party is expected to lead a relative majority. The New Democracy party has backed the country’s international bailout and would be a significant force in Greek’s economic future. In contrast to the New Democracy Party, second place goes to The Coalition of the Radical Left with 16.78% of the vote for 69 seats. The Coalition of the Radical Left opposes the international bailout and advocates unilaterally canceling the austerity measures demanded for a bailout, with an agenda of re-negotiating the terms of the rescue. To put the austerity measures into perspective, the cuts required for 240 billion euros, or $306 billion, of aid have driven Greece into the worst recession since World War II. Finally, the bronze medal goes to the Panhellinic Socialist Movement with 13.18% of the vote for 35 seats. Overall, eight parties are expected to gain seats in the election with no party gaining an absolute majority.

In a nutshell, the Greek elections are a referendum on their place in the euro. If Greece stays in the euro, the US economy could stabilize in the coming months and sustain Obama’s concept of the US economy slowing improving. However, if Greece leaves the euro, the buzz around the Spanish bank bailout could lead to fears of another global crisis.

As no party will gain a complete majority in Parliament, a coalition government will be dependent on the willingness of parties to cooperate and should be led by the New Democracy party. Once the new Parliament takes effect, their first moves must be to return Greece to business as usual and focus on getting their economy back in line.

Thomas Doherty is an undergraduate at Villanova University majoring in Finance and Economics.

Centene Corp. is an operator in two major markets: Medicare Managed Care and Specialty Services. Their stock plunged when they forecasted a loss led by unexpected rising costs and claims in May, as well as possible additional write-downs in Kentucky, Texas, and their Celtic branches. A week ago, Molina Healthcare (MOH), one of Centene’s largest competitors, withdrew its’ earnings report due to high margin pressure for it’s Texas division, foreshadowing CNC’s outlook.

CNC’s 1202 earnings outlook fell from $1.45 to $1.65 a share, down from its original outlook of $2.64 to $2.84 a share. CNC has a market capitalization of $1.83 billion and a P/E ratio of 16.81. Although Centene’s current outlook is dimmed by its’ Kentucky, Texas and Celtic divisions, it is confident that will return to profitability by the end of the year.

David Cornes holds a degree in Economics from the University of Montana.

The Nikkei gained 2% sparked by the news. Among gainers were Sharp adding 8.2%, recently
inconsistent Canon adding 3.5, TDK with 4.8 and Mazda up 3%.

The Hang Seng added 2.5% with every stock in the index gaining except Want Want China Holdings who
lost .75%.

All indexes in Europe are currently up, hitting 4 week highs, with the FTSEurofirst 300 up 1.4%. Spanish
banks, the target of the bailout, all rose with Banco Santander adding 3.9%, Bankia adding 8, UniCredit
up 1.5 and Credit Agricole putting up 3.7%.

In commodities crude is up while gold and silver are pretty flat and natural gas down around 1%.

Apple may be a stock to watch for the week with the Apple conference kicking off today where they will
unveil the next iOS operating system for the iPad and iPhone and updates for the MacBooks.

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

Reports surfaced that Spain could seek aid from the European Union as early as Saturday. A spokeswoman for the Spanish government quickly refuted that, but a euro-zone official said leaders would discuss potential support for the country’s banks Saturday morning. Spain’s IBEX 35 rallied 1.8%.

Despite gains in Spain, European markets were mostly lower as data showed German exports declined for the first time this year in April. The Stoxx Europe 600 fell 0.3%, its first drop in four days. Asian markets also fell, with Japan’s Nikkei Stock Average shedding 2.1%, and China’s Shanghai Composite losing 0.5%.

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

In addition to the update on the the MacBook Pro, Apple is rumored to be improving upon all of their Mac computer lines with a potential exception to either the Power Mac or the Mac Mini. Finally, they are expected to improve on their line of accessories, including their keyboard, mouse, and airport products.

While the iPhone 5 is rumored to not come out until October, an updated iOS will be improved with an iOS 6. The new iOS will allow for more photo and link sharing, as well as a potential marriage between Facebook and Apple. Additionally, Siri software should be updated and expanded to the iPad. The Siri software came out to great fanfare but was a critical flop among consumers who cite its lack of capability and slow speed as major concerns.

Now, the question of the day is what will happen to Apple’s stock post WWDC. Looking at previous announcements of the same products, Apple’s stock has improved consistenly near 2% from the week before each announcment to the week after it. However, as over 42% of Apple’s business comes from the iPhone and less than 6% comes from their Mac computer business, the impact of an improved product on Apple’s bottom line will be less than a new iPhone. Moreover, the Mac growth has been incredibly slow, yet steady, over the course of its product lines. So will Apple (AAPL) improve next week? Possibly, but unless Tim Cook wows the crowd, don’t expect a major market movement.

UPDATE 6.11.2012: Well everyone, the WWDC went exactly according to plan. As predicted, Apple announced an updated MacBook Pro, iOS 6, and a new operating system for their mac computers. While Apple has improved their product line, it comes as no surprise to KOTM that their stock fell after the annoucement through current after market trading. Without a major iPhone annoucement, the conference lacks substantial “wows.” As such, I’ll chalk Apple’s stock to the classic, “Buy on the rumors, sell on the news” strategy. 

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

The Hang Seng dropped just under 1% with the Industrial and Com bank and the Bank of
Communications being their biggest losers at 4.91 and 4.69 respectively.

Europe has also snapped their gains this week with the FTSEurofirst 300 down 1.3% with mining shares
down 3.2% and banks down 2.5% due to concerns of the economic environment.

The ugly numbers from Asian have hit the commodity market with crude slammed to 82.31 an almost
3% loss, natural gas, gold and silver also taking the hit.

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

The Nasdaq and S&P 500 both finished lower as the Nasdaq fell 14 points, -.48%, to $2,831.02 and the S&P barely skidded below zero at -.01% to $1,314.99.

Thursday’s market action pivoted around central banks, said John Canally, an economic strategist at LPL Financial. “It’s not off to the races because we didn’t get more details,” Mr. Canally said, noting the Fed appears to “still be on a path to do more.”

The European markets were broadly higher after finishing strong. The Stoxx Europe rose 1.1%, gaining for the third session in a row. In Asia, Japan’s Nikkei increased 1.2% while Hong Kong’s Hang Seng gained 0.9%.

Crude-oil futures fell 0.2% to $84.82 a barrel, while gold futures slipped 2.8% to $1586.60 a troy ounce. The U.S. dollar fell against the euro but gained ground against the yen. The yield on the benchmark 10-year Treasury note rose to 1.654%.

Medicaid insurer Molina Healthcare (MOH) tumbled -31.02% after suspending full-year earnings guidance while it sorts out problems in new Texas markets. Navistar International dropped 14% after the commercial-truck maker swung to a surprise fiscal second-quarter loss, pegged in part to restructuring charges and slower-than-expected revenue growth. Finally, Men’s Warehouse (MW) sank as high overhead costs weighed down its quarterly earnings and the retailer announced a downbeat view for the current quarter.

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

There’s absolutely no doubt that when it came to the financial sector, JP Morgan was considered the head of the class. They knew how to manage risk and didn’t make all the same mistakes the other large financials did before the last crisis. Even Warren Buffett sang the praises of Jamie Dimon saying that is shareholder letters were must reads.

Boom!

Everything was chugging along fine and then: Boom, along comes JP Morgan with the announcement of what is being described as a poorly managed hedge had lost the company at least two billion dollars and could be more.

When there are still risks in the financial and economic system and the company who is believed to be above the fray comes along and can be surprised with a loss of this magnitude it makes you step back and really think about what is considered safe anymore.

Can It Happen Again?

The financial meltdown in 2008 brought us to the brink of collapse. However most feel that safeguards and changes have been put in place so this doesn’t happen again. Just to be safe you invest in the best in breed like JP Morgan and Wells Fargo. But what happens when the best in breed falter or succumb to an unexpected event?

If JP Morgan can lose two to five billion on a hedging strategy, what does that mean for the weaker players? We’ve seen MF Global collapse on a bad bet on European bonds and now the JP Morgan loss. What’s the next shoe to drop?

There are MANY factors out there that can give us cause for concern:

1. European Debt Crisis
2. Burgeoning US Deficit
3. Possible Chinese Slowdown
4. Shaky US Economy

Throw these things into the mix along with a financial system that is highly leveraged and you have the recipe for a problem. The derivatives exposure to banks is unknown. JP Morgan apparently didn’t even know about a two billion dollar problem less than a month before they announced it.

What to Do?

The best course of action is to stay nimble and don’t let a bad trade turn into an even worse investment. You couldn’t get me to invest in the financial sector. There are just too many unknowns within the highly leveraged system. If I could give someone one piece of advice it would be to avoid financial stocks like the plague.