Don't Sweat the Sudden ICE Pullback

ICE just slipped down to a historically bullish trendline

Managing Editor
Feb 5, 2020 at 2:12 PM
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Exchange operator Intercontinental Exchange Inc (NYSE:ICE) was in focus this morning, after a Wall Street Journal report indicated the company made a $30 billion bid to acquire e-commerce icon eBay (EBAY). Earlier today, news surfaced Intercontinental did manage to acquire loyalty program provider Bridge2 Solutions. In response, ICE shed 7.5% yesterday when the news first broke, and is now edging higher to trade at $92.87  today. This sudden drop may be short-lived, though, as data from Schaeffer's Senior Quantitative Analyst Rocky White suggests the stock may be flashing a buy signal as it nears a historically bullish trendline.

Specifically, ICE has come within one standard deviation of its 200-day moving average following an extended period above the trendline, defined for this study as having traded north of the moving average 60% of the time in the past two months and in eight of the last 10 trading days. The equity has seen seven similar pullbacks within the past three years, which has resulted in an average 21-day gain of 5.98%, with all five of the returns positive.

ICE Daily Chart

A move higher of similar magnitude would go a long way to erasing what's already an 7.8% February deficit. Just before yesterday's pivot lower, ICE was trading at a record high of $101.93, and despite the struggle the last two days, the equity is still up 19% year-over-year.

Longer term, there isn't a lot of pessimism surrounding the security that could unwind. Not a single analyst carries a a "sell," toward ICE, while a slim 1% of its total available float is sold short. 

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