Unprofitable:  I lose money on this trade if AAPL closes above $601.55 July 15, 2012.  The most I can lose on this trade is the amount the Spread can be worth $5 minus the price I sold it for $1.55 for a total of $3.45.

Reason I Like This Trade:  I like this trade, because I can make money if AAPL sells-off, is flat, or goes up by less than 5.5%.  I think that AAPL will not have too much exciting news next week at their Conference on San Fran and I want to take advantage of this.

UPDATE 6.8.2012  With AAPL rallying a little higher, this Spread is currently $1.55, bc the premium has come in.  I think AAPL will sell-off after the WWDC.

UPDATE 6.9.2012  With AAPL rallying higher, but time is on my side, This Spread is now worth $1.90.  I might add if the stock moves higher from here.

UPDATE 6.13.2012  With AAPL selling back off after the WWDC this Spread is back to being worth $1.55.  I will leave this on until further notice.

UPDATE 6.27.2012  With lack of conviction in AAPL this Spread is worth $.90, but I am leaving it on for more future profits.

UPDATE 7.2.2012  This is why I am a premium seller, because this stock is moving higher, but the Spread is decaying away.  This Spread is still only worth $1.70.

The Spanish 10 year benchmark bond auction led the day with a higher than expected bid to cover ratio and an average yield of 6.044%. The Spanish auction, coupled with China’s first cut in benchmark interest rates since 2008 helped spark the bullish move in US stocks.

WTI crude oil is up 2 cents and 0.02% at $85.04, while gold and silver futures have been exceptionally bearish. Gold is trading at $1593.50 and down $40.70 or 2.49%, and Silver at $28.56, down 93 cents or 3.15%.

Tempur-Pedic International Inc. (TPX) continued its drop that started yesterday due to its gloomy outlook and is trading at $21.40, down 4.42%, or 99 cents on the day. TPX reached a high of 43.88 on Tuesday before the release of it’s’ earnings report.

Lululemon (LULU) released stronger than expected quarterly earnings, however their projected outlook brought bearish sentiment. Lulu was down 12% in afterhours trading and is trading at $63.88, down $6.14 or 8.77%.

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

Dave@KeeneOnTheMarket.com

The yoga apparel company topped Wall Street analyst’s projections by beating last quarter’s earnings by 40%. They posted a profit of $46.6 million, or 32 cents a share up from the previous quarter’s $33.4 million profit, or 23 cents a share. Revenue beat expectations at $285.7 million, up from $186.8 million a year earlier after bolstering inventory to boost sales. Although earnings estimates reached new highs, Lululemon had a weaker than expected outlook for the next quarter with an expected net revenue of $273 million, compared to analysts’ estimates of $290 million. Lululemon expects its previous sales growth rate of 25% to slow to low double digits. Chief Executive Christine Day said, “Our strategy to increase inventory levels led to strong revenue growth and earnings performance in the first quarter as our guests responded well to our spring styles and colors,” contrary to low inventory levels in the past, leaving some stores unable to meet customer’s demand.

David Cornes holds a degree in Economics from The University of Montana.
Dave@KeeneOnTheMarket.com

The Hang Seng added close to 1% with Wharf Holdings being the index’s biggest gainer jumping
4.87%. China made a surprise 25 basis point cut in interest rates today, helping stocks and in hopes of
bolstering the struggling economy.

Euro stocks are gaining this morning in hopes of upcoming policy action, helped out by Spain selling
2.1b worth of medium and long term bonds. Eyes are now looking to the US and Bernanke who will be
addressing the state of the economy later today.

Smucker’s (SJM) gains 2% in pre-trading after their EPS beat expectations by $.12.

FEI approved a quarterly cash dividend and declared the company’s first of $.08/share.

Crude is back in a downswing, as is natural gas and gold with silver posting up in green close to 3%.

Down is the Euro this morning, compared to the dollar, while the pound gained.

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

Unprofitable:  I lose money on this trade if TLT closes between $123.34-$126.66 June 8, 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 this trade, because the TLT and 10 year interest rates have been moving so much.  This trade will be profitable in either direction of stock as long as the stock moves and it has been moving a lot in the last couple of days.  Also, we have HUGE economic data today including Beige Book, Jobless Claims tomorrow, Ben Bernanke speaking tomorrow, and International Trade on Friday

UPDATE 6.7.2012  With a suprise and lack of movement after the Bernanke comments, this Spread is now only worth $1.30 and I am debating to take it off and punt it or leave it on for one more day.

UPDATE 6.8.2012  I sold stock against my Straddle at $126.72 and then when stock sold off I sold the Puts for $.05 locking in profits at $1.82 on the Straddle.  Took a little sweat on this one, but another winner at #KOTM.

All of the Dow components and all 10 sectors of the S&P 500 were trading in positive territory. Fewer than 15 of the S&P 500 components traded lower. Leading the gains were energy and financial stocks, which have suffered the most in recent weeks amid rising concerns about an economic slowdown. Bank of American, JP Morgan Chase and Caterpillar are among this morning’s best performing stocks.

The Fed’s Beige Book report on economic conditions across its 12 districts, is due out at 2 p.m., and on Thursday, Fed chairman Ben Bernanke will appear before Congress. Homebuilder stocks also leaped higher after Hovnanian Enterprises (HOV) reported strong quarterly earnings and said it believes the industry is in the early stages of a recovery.

Crude-oil futures rose nearly 2% to about $86 a barrel. Gold futures rose 1.3% to about $1,640 an ounce. The U.S. dollar rallied against the yen.

With stocks, Tempur Pedic has lost nearly 50% of their stock price after the mattress maker said that their quarterly earnings would be halved compared to the previous year. Tempur Pedic cited poor sales and increased competition as a major concern for growth. Facebook has once again dipped below $26 continuing its poor performance. Finally, Iron Mountain (IRM) climbed 10.67% to lead the S&P 500 components after the company said it would pursue conversion to a real-estate investment trust, which is expected to lead to the distribution of accumulated earnings and profits of $1 billion to $1.5 billion to its shareholders. The storage-space renter also said it increased its quarterly dividend by 8% to 27 cents a share.

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 joined the Nikkei in the green adding 261.5 points to 18,520.53. It was led by New World
and Henderson Land Development Co. up 6.13 and 4.91% respectively.

Europe began today with a jolt with investors expecting ECB talks could lead to a stimulus. The
FTSEurofirst 300 is currently up over 1.6% with the Eurozone banks helping out up 2.9%. The Eurofirst
was led by Basic resources stock, up 3.8% while Ahold stock, a Dutch supermarket, drug the average
down with its 4.4% loss.

In PreMarket matress stocks are being watched after Tempur-Pedic cut its earnings guidance on
weak US demand. Select comfort and Matress Firm both took huge hits in pretrading of 12.8 and 13.3
respectively.

Commodities are enjoying the morning with crude above the $85 mark, gold and silver also in the green
and natural gas slacking in the red.

The MBA Purchase application made its appearance this morning showing the purchase index down
1.8% for the week of June first putting it back to mid-April level.

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