ICE - Short Idea

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ICE - a way to play the financial and energy markets as a short.

Appealing offer on the table despite missing out on today's negative action.

Even thought stock was down big there is further opportunity to short.

Clearly, markets were overbought coming into 2007, therefore yesterdays action is not surprising. Certainly, timing and magnitude is always adventurous.

Earlier this week, I was looking for 'rate related" catalyst for a downside move and the market has found an event driven spark. (China raising rates)

Out of brokers, into semi's ; gold postive /broad market sluggish...

Macro Picture:

There is a growing risk of inflation and many writers, pros and investors are taking note. Recent CPI numbers are showing those signs. Conversely, the bulls in gold are gaining momentum, and the stocks look attractive. HUI broke out of a multi-month trading range.

The risk of inflation might deal with perceptions just as much as reality. In essence, given the strong market run up since July lows -the market participants are looking for excuses to sell. Clearly rate related theme is key topic to watch as downside catalyst. .

Fed was supposed to cut earlier this year. I continue to take a stance on a higher 10 year yield, higher dollar and gold. A story since the start of the year.


Actionable -

The rate worry glooms louder for the financial stocks. Again, few more casualties in lenders wait. Many of the discussed meltdown is worth a look. Again FED and AHM - are shorts following bounces from recent heavy selling. There might be slight buyers but heavy downside pressure from many angles.

Brokers can offer trading shorts as the rate and overbought condition increase odds for decline.

Example: XBD - broker/dealer index: The peak on Jan 19 at 259 serves as a key resistance level. Therefore, would trim in this space and look for short opportunity.



Tech/ Semi's --

If it all sounds negative - tech sector continues to be an area of interest. For many weeks, I have highlighted the communication/networking groups offering solid pricing for a rewarding upside move. Examples include - ntgr,.sons,nrtl, jdsu, and tlab.

Check out chart of the Goldman Sachs Networking Index Fund (IGN) : For detail stocks that make up the index check out this link:
http://www.ishares.com/fund_info/holdings/holdings.jhtml?period=d&symbol=IGN

Perhaps an optimistic view on many names with attractive risk/reward in the tech sector. Clearly, having a positive tech view does not exclude the semis. A sluggish group in tech just as much as the market. The group traded sideways since July and now breaking out. Stock selection is key as many scramble foe exposure.

Got in early with AMD in Q4- but now AMD is way below 20 (an exit level) and below 15 while attempting to stabilize.

Semi’s are attractive here. Check out chart below of semi etf.