ICE

[David Randolph]

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 , 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.

[garyaross]

Down quite abit in premarket.  Do you short at the open or wait and see?

[David Randolph]

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.

[David Randolph]

There was news out:

• NYBOT Electronic Trading Reaches New High of 98,249 Contracts on March 2
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.

[David Randolph]

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.

[David Randolph]

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.

[realcoolhead]

ICE slicing through its 50-SMA, hopefully for good. 

[lancefur]

Any double inverse for this one or ultra short share?

[rickjust]

Any double inverse for this one or ultra short share?

hi lancefur,
what does your post mean? head and shoulders?
max

[realcoolhead]

I think he meant something like SDS for S&P 500... I guess no.

Any double inverse for this one or ultra short share?

hi lancefur,
what does your post mean? head and shoulders?
max

[lancefur]

I think he meant something like SDS for S&P 500... I guess no.

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!   

[David Randolph]

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. 

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

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!

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.

[lancefur]

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. 

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. 

[David Randolph]

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. 

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.   

[David Randolph]

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.