Profile for ICE: IntercontinentalExchange, Inc., through its subsidiaries, owns and operates an Internet-based global electronic marketplace for trading in futures and over-the-counter (OTC) commodities, and derivative financial products in the United States and internationally. Its products include contracts based on crude and refined oil products, natural gas and power, and emissions, as well as sugar, cotton, coffee, cocoa, and orange juice along with foreign exchange and index products.
ICE's market cap is $9.54 B, which compares to the NYSE Group's market cap of $12.8 B.
ICE has a price to sales ratio of 30 :o, as 2006 sales were $313 M. The price to earnings ratio is 58. The price to book value is 21.
I think commodities will just collapse in the face of a global economic slowdown, and people won't trade these commodities futures all that much going forward.
Commodities had a superb bull market, but I think that it is coming to an end, or at least it will have a sharp 30 - 40% correction as I forecast for the global equity markets.
ICE's derivative exchange growth will slow or stall and the stock will need to adjust to more realistic expectations. That means the share price will be cut in half, from Friday's close of $138.58 to something like $70.
Nice liquid stock to short in my opinion.
Trading Plan:
Sell ICE shares short, 6.66% of capital as always.
Down quite abit in premarket. Do you short at the open or wait and see?
Quote from: garyaross on March 05, 2007, 08:10:57 AM
Down quite abit in premarket. Do you short at the open or wait and see?
It's down about 2.8% over the pre-market, I'll short it at the open.
The yen's rise (the unwinding of the carry trade Tokyopua's has been referring to) also is an indicative that this stock should tank: speculative money is going home.
There was news out:
• NYBOT Electronic Trading Reaches New High of 98,249 Contracts on March 2 (http://biz.yahoo.com/prnews/070305/clm156.html?.v=7)
PR Newswire (Mon 8:30am)
I hope the news helps the price recover a bit of the pre-market losses, but I'll short it anyway, the news is past, the future (and stratospheric valuation) is what makes me a bear on the stock.
ICE touched the 50 days simple moving average and closed with a white candle. Since today's open will probably be positive, I would say the chart is saying a rebound is due.
As when I was a bull, I don't make decisions based solely on technical analysis or short term indicators. To me this stock is terribly overvalued and should be cut in half.
Yesterday an analyst from Credit Suisse said the most amazing thing, as he upgraded the CME and CBOT: «these exchanges should benefit from the recent market volatility». He obviously has never traded through a bear market.
Of course, over the first days there's a lot of volatility and huge volume, but if the market continues to trade down as I think it will happen with most commodities, the volume will dry. People don't trade more in a bear market, they trade less, as most lose money.
ICE is a $9.44 B company with just $313 M in 2006 revenues. I think it is time to bring that valuation down to earth. I'll continue holding ICE short, despite the chart suggesting a rebound is about to happen.
ICE can go up some more to make an head and shoulders top formation and close the gap at $156.06. But it can also just breakdown below the 50 days simple moving average on the chart.
I'm losing 4.73% on this trade, I believe not because I'm wrong, but because my short term timing was poor (as usual).
I can't take out of my head that this is a $9.8 B market cap company with 2006 revenues of just $313 M. It is just too overvalued in my opinion.
I'll continue holding ICE short.
ICE slicing through its 50-SMA, hopefully for good. 8)
Any double inverse for this one or ultra short share?
Quote from: lancefur on March 07, 2007, 01:11:20 PM
Any double inverse for this one or ultra short share?
hi lancefur,
what does your post mean? head and shoulders?
max
I think he meant something like SDS for S&P 500... I guess no.
Quote from: rickjust on March 07, 2007, 01:23:26 PM
Quote from: lancefur on March 07, 2007, 01:11:20 PM
Any double inverse for this one or ultra short share?
hi lancefur,
what does your post mean? head and shoulders?
max
Quote from: realcoolhead on March 07, 2007, 02:20:51 PM
I think he meant something like SDS for S&P 500... I guess no.
Quote from: rickjust on March 07, 2007, 01:23:26 PM
Quote from: lancefur on March 07, 2007, 01:11:20 PM
Any double inverse for this one or ultra short share?
hi lancefur,
what does your post mean? head and shoulders?
max
That is what I meant. It seems ICE has a more definitive down trend than these other indexes and I cannot short in a IRA account so alot of this stuff is something I cannot do. >:(
Seems like the market has no idea what it wants to do and in the meantime, it's way too difficult to find longs out here since the majority of the members are busy looking for shorts. Just feel a little left out of more success here.... :'(
Good trading everyone! 8)
QuoteThat is what I meant. It seems ICE has a more definitive down trend than these other indexes and I cannot short in a IRA account so alot of this stuff is something I cannot do. >:(
As a trader I would never put myself in that position, of not having the freedom of doing what I want to do in the marketplace. Anyway, perhaps that is ultimately a good thing, because there are a lot more of possible mistakes to make if one has that freedom :)
QuoteSeems like the market has no idea what it wants to do and in the meantime, it's way too difficult to find longs out here since the majority of the members are busy looking for shorts. Just feel a little left out of more success here.... :'(
Good trading everyone! 8)
There will be longs soon, they just take more time to find. I've been looking for them and already have some sectors that I like, but still didn't see the right stocks to own in those sectors.
As we've been talking, ICE is extremely overvalued and should be cut in half. I don't want to be that greedy, so say I'll buy to cover it at a normal retraction to the 50% Fibonacci retracement level, standing at $106.
I'll continue holding ICE short.
Quote from: David Randolph on March 08, 2007, 05:53:58 AM
QuoteThat is what I meant. It seems ICE has a more definitive down trend than these other indexes and I cannot short in a IRA account so alot of this stuff is something I cannot do. >:(
As a trader I would never put myself in that position, of not having the freedom of doing what I want to do in the marketplace. Anyway, perhaps that is ultimately a good thing, because there are a lot more of possible mistakes to make if one has that freedom :)
Unfortunately, I am bound by the IRA rules which prevent me from opening a margin account so that I cannot ultimately short stocks. It's not fair but then....who said life was? ;)
I am confident that eventually the bearish tone will cool on this board and that longs will appear. I was bullish for the longest time on ICE and do agree with your statement regarding the retracement. I will want to buy into ICE down the road so as soon as you cover your short position, I will go long since I had held it for 8 months up until 1 week ago or so. ;D
QuoteI was bullish for the longest time on ICE and do agree with your statement regarding the retracement. I will want to buy into ICE down the road so as soon as you cover your short position, I will go long since I had held it for 8 months up until 1 week ago or so. ;D
Awesome trade lancefur, congratulations :)
I guess ICE went down 9% yesterday because the NYSE said it will also enter the derivative's trading market, not just stocks. That will pose competition to NYBOT, held by ICE.
I guess this is a sound reason to cut ICE's stratospheric valuation.
The risk of competition from the NYSE and the clear overvaluation of ICE (it is priced at higher multiples than Google, for example) should be enough to drag it down to the 38.2% or 50% Fibonacci retracement level. I feel comfortable enough with this short position to say I'll hold it whatever happens.
There's no new information about ICE. My motives to be short this stock remain valid (trading at more than 30 times one year's revenues), and the trend is bearish now. I'll continue holding ICE short.
ICE is priced for more than perfection, so I see it having another bear move towards the $106 area or so. I'll continue holding ICE short whatever happens in terms of short term volatility.
ICE's 200 days moving average is coming up just at $89, but I'll be nice and cover for a nice profit at $106 if I get that chance. My hands are strong on this short, the overvaluation this company is trading is almost an insult, it is a patriotic act to sell it short LOL
ICE to Buy Stake in India
Word Count: 85 | Companies Featured in This Article: IntercontinentalExchange, ICICI Bank
Energy and commodities exchange IntercontinentalExchange Inc. agreed to buy an 8% stake in India's National Commodities and Derivative
Thanks for that news yukiii :)
One of my main reasons for this short position, besides overvaluation, was that I was negative on the Chinese economy, and that scenario would make commodities go down and volume on those energy and agricultural contracts to dry.
But I'm not negative on the Chinese economy anymore, as I've written on several places over the last few months. So my bear case on ICE has weakened considerably. I'm going to take my 2.86% profit on this trade and run, my business (capital) is needed somewhere else.
The trading plan is:
Buy to cover ICE.
News just out for ICE:
• IntercontinentalExchange Proposes To Merge with Chicago Board of Trade (http://biz.yahoo.com/prnews/070315/clth113.html?.v=17)
PR Newswire (Thu 7:31am)
Look here:
«CBOT shareholders would own approximately 51.5% of the combined company and, in addition to receiving a premium, would participate in the significant strategic and financial benefits of the combination.»
ICE was a $9.08 B market cap company yesterday, BOT was a $8.78 B, and they're giving 51.5% of the combined company to BOT? It seems like the market was overvaluing ICE, and even ICE agree with that.
This buyout of BOT can only be seen as bad news to ICE's shareholder's because it were the growth rates that gave the stock those lofty multiples of 30 times revenues :o Now, BOT isn't growing nearly as much, so the combined company will have a lower multiple.
I see ICE opening higher on the news, which I believe is a non-sense, I'll continue holding ICE short and will be looking to close it, say, just at around $120 !
As expected the market didn't like ICE's bid for BOT. Why?
Well, at today's close ICE is trading at 28.4 times 2006 revenues. Also at today's close, BOT is trading at 16 times 2006 revenues, even as it went up 17%, a lot higher than ICE's bidding price.
So, the combined company price to sales ratio should be something like 22. To have a sales multiple of 22, ICE should go down to $100.
ICE offered $187.34 for BOT, and BOT closed at $194.95, so the market believes it is possible that ICE and CME will enter a bidding war for BOT, which would also be bad for ICE.
The only flaw to this is speculation. The market might speculate that BOT or even CME will make a counter offer and try to buy ICE.
As I see it, this is all a bit of insane because fundamental numbers don't justify these stratospheric valuations in my opinion.
Anyway, I was about to close ICE's short position before the news was out, but I canceled it (as you've received in your e-mail), because that higher open was a non-sense.
Now I can keep on holding the short position, expecting the market to punish ICE some more, or I can take my 6% or so profit and walk.
My decision is I don't want to be involved in this for a few percentage points more, we never now if there's isn't a counter offer when pride of very influential people is at stake, I'll just take my money out of the table.
Trading plan:
Buy to cover ICE.
ICE Continues its moves up
Hi Tirebldr,
After breaking above $140 on Thursday (I was watching it too...) ICE got slammed with the rest of the market, but made up that ground yesterday, closing above $140. Looks like ICE wants to start stairstepping higher here, and I think it could reach $153 or so in the short term.
This round of price appreciation looks to be spurred by all of this take-over speculation. CME have raised their bid for CBOT, and CBOT have indicated that they believe that the CME bid is a better fit for them. If ICE does not make a subsequent bid (which I hope they don't as the last bid wasn't received very well by the market, as David detailed above), they then become a possible takeover target as consolidation continues in the exchange market industry.
I'd like to see ICE break above $142.50 early next week, which would confirm that this is indeed a breakout from the last 2 months basing.