Exchange Stocks Tumble

CME, ICE Clobbered on Report

By Bryan Bottarelli
Wednesday, February 06, 2008 10:55 AM EST
Wed, 6 Feb 2008 15:55:00 GMT

Dear Bottarelli Research Member,

In a brief report that has not been fully disseminated by the major news networks, The Wall Street Journal has revealed that the U.S. Justice Department is calling for a change in the financial futures exchanges, saying they should not own the trade clearing business as it inhibits competition. The Justice Department’s recommendation could affect the potential merger of CME Group (CME – NYSE) and Nymex Holdings (NMX – NYSE), and that’s why each stock is getting clobbered today. Shares of CME are down over $50.00 as I write. In fact, the ripple effects of this announcement are pushing every exchange stock lower today, and this could be a classic case of a Wall Street over-reaction. As you know, CME and NYX each reported blockbuster earnings this week, but Wall Street failed to properly reward each stock. And on today’s news, shares of InterContinental Exchange (ICE – NYSE) have officially hit a new 52-week low.

ICE

I’ll keep a close eye on these developments and try to sort everything out, but in the meantime, that’s the reason for these massive exchange-stock losses. As far as the major market averages are concerned, they’re trying to rally after yesterday’s substantial drop, but I’m still not ready to take sides yet. Therefore, the prudent thing to do here is continue to monitor the movements and strike when the timing is right. Until then…

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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