Talk of increasing competition continues to drag on Chicago Mercantile Exchange, with shares down “big” for the second day this week, off $12.00, or 1.7%, to close at $678.00. Today we use history as a rudder to guide us through CME's recent choppy waters.
Q: How has CME performed in the past after being down “big” two days ago (news event day) with a repeat down day, yesterday, that was also down “big”?
A: According to the 18 previous occurrences of this event, CME has shown a strong bullish edge that peaks 51 trading days after the event. CME rallies in 89% of the cases (16 of 18) by an average of 16.8% relative to the close on the event date. The two declines averaged -2.6%. The overall return of the 18 cases is 14.7% projecting a target price of $777.67 by Wednesday, March 12, 2008.
If you would like to see more details of this historical edge, go to www.markethistory.com
Mr. Jay Pasch is a private futures and equities trader based in Minnesota. He may hold positions in the instruments mentioned in his trading ideas.
