Stock Market Exchanges: A Powerful New Investing Trend
By Bryan Bottarelli
In this article
There are only a handful of companies that can offer this service to the public.
Exchanges can withstand any market downturns because they make money no matter if the markets are moving up or moving down.
Right now, the biggest bang for your buck comes in the form of the NASDAQ Stock Market (NDAQ).
Stock Market Exchanges: A Powerful New Investing Trend
One of the most powerful investing trends in recent months is the popularity of publicly traded exchanges.
One look at the performance of Chicago Mercantile Exchange Holdings (CME:NYSE) and it's easy to see why. CME went public on December 24, 2002 at $43.60 per share -- and today it trades for $557 per share, good for an incredible 1,177% gain.
There are a number of reasons why publicly traded exchanges are experiencing such remarkable growth. First, there are only a handful of companies that can offer this service to the public -- making the barriers to entry impossible to penetrate. As a result, you have a lot of investment dollars flowing into a small pool of available stock candidates.
Second, it's becoming clear to the investing public that exchanges can withstand any market downturns because they make money no matter if the markets are moving up or moving down. You see, these companies make money off trading volume -- so any volatility increases -- oil price shocks -- or dramatic sell-offs spark increased volume. And that just means more commissions for the exchanges.
One name that I'm particularly bullish on right now is the NYSE Group (NYX), operator of the New York Stock Exchange (NYSE).
Stock Market Exchanges: Trading at a Discount
Another name that I'm particularly bullish on right now is InterContinental Exchange (ICE), which is an Internet-based futures exchange that plays contracts on crude and refined oil products, natural gas and power, sugar, cotton, coffee, cocoa, and orange juice (to name a few).
But right now, the biggest bang for your buck comes in the form of the NASDAQ Stock Market (NDAQ). Trading at a discount to other exchanges (NDAQ has a PE ratio of 17 compared to ICE P/E of 25 and NYX P/E of 27), I consider the stock a good buy at current levels. The stock currently trades underneath both its 50-day and its 200-day Moving Averages -- and a simple pop above the 50-day average would result in a $3-4 up-move.
I've been invited to Baltimore this week to shoot a film segment on the publicly traded exchanges, so I'll get more into detail later this week.
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Bryan Bottarelli is the head trading tactician for the WaveStrength Group, and is a contributing editor for Taipan Financial News. Coming off the floor of the Chicago Board Options Exchange (CBOE), Bryan uses WaveStrength chart forecasting to develop wining options plays for his service called WaveStrength Options Weekly. Bryan is also the lead editor of BottarelliResearch, an elite membership service that he independently publishes himself.
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