After hitting a one-year high of $714.48 in December, the stock hit a one-year low of $399.01 in March. This morning, CME opened at $487.00. So far today the stock has hit a low of $476.27 and a high of $487.65. As of 12:40, CME is trading at $481.03, down $8.32 (-1.7%). The chart for CME looks neutral but improving, while S&P gives the stock a positive 4 STARS (out of 5) buy rating.
For a bearish hedged play on this stock, I would consider a June bear-call credit spread above the $550 range. A bear-call credit spread is an options position that combines the purchase and sale of call options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 9.9% return in six and a half weeks as long as CME is below $550 at June expiration. CME would have to rise by more than 14% before we would start to lose money. Learn more about this type of trade here.
Once thought to be extremely safe, action rate securities have proved difficult to sell in this credit crisis. Tech companies are big holders of them and are taking charges left and right, including MetroPCS Communications Inc (NYSE: PCS), Palm Inc (NASDAQ: PALM) and Earthlink Inc (NASDAQ: ELNK), according to the Wall Street Journal.
NYSE Euronext Inc (NYSE: NYX) will look to increase its stakes in India's National Stock Exchange and the country's Multi Commodity Exchange, the Business Standard reported, once foreign ownership rules are eased. NYSE Euronext also intends to partner with the two Indian exchanges in order to help them develop their business.
WEB SITES:
Business Week reported that Brian Marckx of Zacks Investment Research said Bristol Myers Squibb Company (NYSE: BMY) may be an attractive takeover candidate for a larger pharma such as Pfizer Inc (NYSE: PFE) or France's Sanofi-Aventis SA (NYSE: SNY), both of which have been partners with Bristol on some of its products.
The exchange stocks have been hot issues in the past few quarters as investors have been betting on increased trading activity from hedge funds, higher volatility, and so on.
But just this week, exchange stocks have received a beating harder than the markets as a whole. I believe that if a snapback rally occurs next week, these stocks should bounce back harder than the overall market. Two particular exchange stocks have appealing charts: CME Group (NYSE: CME) and NYSE Euronext (NYSE: NYX). Both of these charts display similar characteristics, as you can see below:
New York Stock Exchange Chief Executive John Thain has been picked by Merrill Lynch & Co. (NYSE: MER) to be its next CEO, according to media reports.
The New York Post, which broke the story, writes "The move is a huge coup for Merrill and board member Alberto Cribiore, who has led the search for a new CEO after (Stan) O'Neal resigned on Oct. 30."
But Merrill's quick move is bad news for CItigroup Inc. (NYSE: C), which had wanted to hire Thain to replace its unpopular (and now ex) CEO Chuck Prince, the Post says.
The move is unexpected, according to the Wall Street Journal [subscription required], which said "insiders on Wall Street" had speculated that BlackRock Inc. CEO Larry Fink would get the job. CNBC is reporting that Fink was offered the job but turned it down.
Thain's departure from NYSE Euronext (NYSE: NYX) isn't a shock. He viewed the job, which he got after the departure of Richard Grasso, as a public service, according to the Journal. Shares of Merrill Lynch, down more than 35% this year, rallied on the news, rising $2.82, or 5%, to $59.75. NYSE Euonext and Citigroup were little changed.
The reshuffling of Wall Street's top management is far from over. Watch this space.
Due to accelerating losses at its American consumer-lending unit, HSBC Holdings PLC (NYSE: HBC) said it would take $3.4B in charges during its Q3, the Wall Street Journal reported. Despite the charges, the company said its Q3 operating income was up compared with the prior year due to revenue growth in the group.
Lululemon Athletica Inc (NASDAQ: LULU), a standout performer on Wall Street, is reportedly under fire for potentially false claims of its VitaSea clothing line, which the company says is made from seaweed fiber supplied by SeaCell. According to lab tests, the New York Times reported there was no significant difference in the mineral levels between regular cotton T-shirts and Lululemon's VitaSea fabric.
This year has been a stock picker's market extraordinaire! This month's review provides ample evidence of this, as you'll note that Google (NASDAQ: GOOG), which I included for fun because of its popularity, beat all else as a portfolio of one. The average of my seven picks came in second, beating James Cramer's average based on his nine picks. Both Cramer and I beat each of the three indices I am tracking, and therefore beat the average as well, with the largest and most stable, the Standard & Poor's 500 coming in last.
Of course, this could easily change given recent market volatility. A sharp downturn in the market could reverse our fortunes. A lot can happen in the remaining two months -- I take nothing for granted.
While Google shined brightly this year, Cramer and I have each made one pick that shined brighter. Cramer's best, Apple (NASDAQ: AAPL) has gone into orbit this year on the wings of the iPhone, iPod, and growing Mac sales. Benefiting from rising oil prices, shortages in China and the Chinese government allowing a 10% price hike, my PetroChina ADR (NYSE: PTR) has rocketed, becoming the second-largest capitalized company in the world. PTR has done this even in the shadow of Berkshire Hathaway (NYSE: BRK.A)selling its shares and Warren Buffett questioning the huge appreciation of the Chinese stock market and stocks overall.
According to a person briefed on the situation, Merrill Lynch & Co Inc's (NYSE: MER) CEO Stan O'Neal was negotiating the terms of his forced departure on Sunday and the departure is expected to be announced on Monday. The top contenders for the CEO position are said to be BlackRock Inc's (NYSE: BLK) CEO Laurence Fink and NYSE Euronext Inc's (NYSE: NYX) CEO John Thain, the Wall Street Journal reported.
The WSJ also reported that Alibaba.com raised $1.5B after the company priced its IPO at HK$13.50, at the top-end of the HK$12-$HK13.50 range. Yahoo! Inc (NASDAQ: YHOO) holds a 39% stake in Alibaba Group.
OTHER PAPERS:
Ness Technologies Inc (NASDAQ: NSTC) was awarded a contract worth NIS 5 Million to convert the pension fund data managed by Opal Future Technologies, Globes reported.
Indian company Dr. Reddy's Laboratories Limited (NYSE: RDY) is set to attempt to raise its share of the U.S. over the counter drug market by partnering with at least six more U.S. retail chains; the company plans to launch up to 10 drugs over the next 12 months that could become OTC offerings in the U.S., the Economic Times reported.
WEB SITES:
According to TechCrunch, IAC/InterActiveCorp (NASDAQ: IACI) may have submitted a letter of intent to acquire movie-centered social network Flixter over the last week or so.
NYSE Euronext, Inc. (NYSE: NYX) is surging today after Standard & Poor's announced that NYX will replace Hilton Hotels Corp (NYSE: HLT) in the S&P 500 after the market closes Oct. 24. S&P also announced that NYX will replace Limited Brands (NYSE: LTD) in the S&P 100. Joining these indices means that any mutual funds that track the index will need to buy shares, which should cause much higher demand over the next few months. If you think that the company won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on NYX.
After hitting a one-year high of $112.00 in November, the stock sagged to a 52-week low of $64.26 in August. NYX opened this morning at $86.20. So far today the stock has hit a low of $84.93 and a high of $86.39. As of 10:40, NYX is trading at $85.07, up $2.43 (2.9%). The chart for NYX looks bullish and steady, while S&P gives the stock a positive 4 STARS (out of 5) buy rating.
For a bullish hedged play on this stock, I would consider a December bull-put credit spread below the $65 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 4.2% return in just 2 months as long as NYX is above $65 at December expiration. NYSE would have to fall by more than 23% before we would start to lose money. Learn more about this type of trade here.
NYX hasn't been below $65 by more than a few cents in the past year and has shown support around $80 recently. This trade could be risky if the company's earnings (due out on 11/2) disappoint, but even if that happens, this position could be protected by the increase in demand for shares as well as strong support around $70, where the stock bounced in September.
The Nasdaq Stock Exchange (NASDAQ: NDAQ) is close to a deal with the exchange in Dubai, Borse Dubai, that would have the Middle East operation buy 19.9% of Nasdaq and all of Nasdaq's 31% ownership in the London Stock Exchange. It turn, The Dubai investment in Nasdaq would allow the US exchange to buy the Swedish OMX exchange. Dubai and Nasdaq have been rivals for the Swedish deal.
If the arrangement sounds complicated, it is because it is. Nasdaq has spent two years trying to match the deal made by NYSE Euronext (NYSE: NYX) to buy European exchange Euronext to create a transatlantic powerhouse. Nasdaq tried to buy the London Stock Exchange, but was rebuffed, but ending up owning 31% of the British stock market company.
The deal between Nasdaq and Dubai may be an elegant but complex way to end their rivalry over buying OMX. It allows Dubai to be a powerhouse in the global exchange business by owning a huge piece of of the Nasdaq/OMX combination. And, Dubai also ends up with a big stake in England's largest exchange. But, to close the deal will require this complex four-way link-up.
Nasdaq has been viewed an an operation that could not seal a deal to get an overseas presence. With the current cross ownership plan, it may have created a set of partnerships so complex that they cannot be managed. It is not clear whether Nasdaq and Dubai may eventually have competing interests in place like London where Dubai is becoming a major player.
But, the entire set of purchases seems like a mess bound to get worse over time.
Douglas A. McIntyre is a partner at 247wallst.com.
No surprise the volatile James Cramer of TheStreet.com carries the burden of having made the best and worst picks for the year among those I've been tracking monthly. Apple Inc. (NASDAQ: AAPL), the best performer among all the stocks and indices in this review, has saved his rear throughout the year. In general, it has been a good year for energy and tech stocks. It has been a poor year for the financial sector, and as of August, for most of the Wall Street investment firms.
Crude oil prices have been up slightly, but down at the pump even through the busy Labor Day weekend and even with continued turmoil in Iraq. All the speculation about a Dow 15,000...16,000...17,000 has come and gone and I have not read about such silliness lately.
NYSE Euronext, Inc. (NYSE: NYX) opened at $72.01. So far today the stock has hit a low of $71.35 and a high of $72.94. As of 11:00, NYX is trading at 72.16, up 1.01 (1.4%).
After hitting a one-year high of $112 in November, the stock has been slipping over the last nine months. The company said today that its U.S. and European trading volumes hit a record in July, up 23% over last year's numbers. Technical indicators for NYX are neutral and improving, while S&P gives the stock a positive 4 STARS (out of 5) buy rating.
For a bullish hedged play on this stock, I would consider a January bull-put credit spread below the $50 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk and leverage returns. For this particular trade, we will make a 7.5% return in just six months, as long as NYX is above $50 at January expiration. NYX would have to fall by more than 32% before we would start to lose money.
NYX hasn't been below $50 at all in the past year and has shown support around $71 recently. This trade could be risky if the unsettled market causes a drop in trading volumes, but even though that may happen, NYX would have to fall by more than 30% before this trade would be in trouble. This stock could find some support around $60 from almost a year ago. Brent Archer is an options analyst and writer at Investors Observer. DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in NYX.
On tonight's Mad Money on CNBC, Jim Cramer talked up his DJIA target of 14,582 at year-end and DJIA components (Cramer did this in batches before with individual targets: A-B group, then some middle names, and another group). He also said he's backing the Chicago Mercantile Exchange, or the CME Group, Inc. (NYSE:CME). He thinks this will benefit hugely from the increased volume and the increased volatility in futures. This is one he thinks that can raise fees because they are so large in market share now that the CME/CBOT merger went through. He even said this may be a secular growth story and even thinks the stock is cheap. The company now has accelerating revenue growth for growth managers, and he thinks estimates could be too low.
Let's hope THIS exchange pick from Cramer does better than his pick of the shares in the New York Stock Exchange, or the NYSE Euronext (NYSE: NYX), which was Cramer's #1 Growth Pick for 2007. This quarter did actually look OK for the NYSE, but at under $75.00 shares are still way off of yearly highs of $112.00. CME has a lot of integration work remaining for the CME/CBOT merger, but after having personally officed in the CBOT Building and spending a lot of time over at the CME Building (and maybe even a few happy hours at each, allegedly) these did create the monster exchange. The combined entity will also force other exchange mergers even if for no other reason than survival or relevance.
I tend to weigh fundamental analysis much higher than technical analysis when it comes to investing predictions. However, I do think technical analysis has value when it comes to looking for shorter-term trading ideas.
My favorite way to approach trades with a technical bias is to look for very low-risk plays, meaning the downside is very limited due to a logical stock, while the upside, on the other hand, could be rather significant. I usually tend to like "bounce" ideas because the downside is often very limited. However, I do sometimes follow and trade breakout stocks.
James Cramer was forced to cave in on his NYSE Euronext (NYSE: NYX) pick for the year after the HUGE buy recommendation tanked more each month since he said to back up the truck six months ago. See earlier blog by Brent Archer Cramer switches sides on NYX (for now) for more detail. Cramer has been in love with this stock since it reached a high of $112 in November, made it one of his 2007 picks at $97.51, only to watch it sink to $73.62 after six months for a 24.5% loss. It is down a few cents more today as I write the post.
He still likes the stock, but at lower levels, and he might get back in at somewhere in the $60s. Why is this better? What are the fundamentals now? Why can't it be $50 or $40 or $30? The current P/E ratio (TTM) is 71.47. Gee whiz -- at half its current price, it would have a P/E way higher than that of Google's? You're kidding, right Jim? What fundamentals? The P/S is 8.57 (LFY), and the P/B is 9.1 (LFY). NYX has no debt, and there is a decent ROE of 13.51 but not in relation to the P/E.
So I continue to wonder about all of the things in the stock market that I do not understand, this being one of them -- and stay away. If this stock appeals to you at any particular price then I hope you develop some understanding of where the value will come from, but for now, there are better places for your money -- and today even Jim Cramer agrees.
Those of you who are new to BloggingStocks can check out my other stories and read Chasing Value or Serious Money to find more potential opportunities and verify my track record as well.
Sheldon Liber is the CEO of a small private investment company and the vice president for design and research at an architecture & planning firm. Check out his other posts for BloggingStocks here.
CME Group (NYSE: CME) shares are falling after competitor NYSE Euronext (NYSE: NYX) reported a first-quarter profit above analysts' estimates. CME's earnings that disappointed investors two weeks ago look even worse in light of NYX's good results this morning. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on CME. .gif){kind=logo}
New York Stock Exchange Chief Executive John Thain has been picked by 
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This year has been a stock picker's market extraordinaire! This month's review provides ample evidence of this, as you'll note that .gif){kind=logo}
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