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InterContinental Exchange, Inc. (ICE +$11.34 or +7.28% to $167.07) surged above its latest pivot point on nearly two times average volume, triggering a new technical buy signal on Wednesday. This stock was first featured on Wednesday, January 03, 2007 in the CANSLIM.net Mid Day Breakouts Report (read here).  Later that day, ICE appeared in the Featured Stock Update section of the CANSLIM.net After Market Update (read here) which highlighted its admirable traits. Within two short months, the stock had surged nearly +50%!  After such an impressive run, ICE started to consolidate.  It gapped down on February 27th with a considerable loss on high volume, right as the market's steep China-induced correction began.  Soon thereafter it sliced under its 50-day moving average (DMA) line and spent the next four and a half months building a cup-with-handle type base. Also note that in March, ICE had announced interest in acquiring CBOT Holdings Inc. (BOT +3.90%) by outbidding a competitor.  However, earlier this week, BOT accepted the Chicago Mercantile Exchange's (CME +3.43%) latest bid.

Bullish action helped ICE appear in today's CANSLIM.net's Mid Day Breakouts Report with $162.57 pivot point and a $170.70 maximum buy price.  ICE triggered a new technical buy signal when it surged above the high of its recent handle with gain on heavy volume as rumors spread that it has become a prime buy-out candidate. ICE sports very strong ranks however it resides in the Financial Services- Misc group, which is currently ranked 76th out of the 197 groups covered in the paper, placing outside the much coveted top quartile needed to meet the ''L'' criteria.  Disciplined investors would not chase the stock and make purchases beyond the $170.70 "max buy" price. Concerns would be raised by any loss leading to a close back under most recent high close of $158.88 on June 21st, 2007, as that would technically negate the latest breakout.  As always, it is of the utmost importance to sell a stock if it drops 7-8% below your purchase price.

Volume is a vital component of technical analysis.  Prudent investors that incorporate volume into their stock analysis have often benefited several fold. Ideally, healthy stocks will more often tend to rise on higher volume and pullback on lighter volume.  Volume is a great proxy for institutional sponsorship.  Conversely, high volume declines can be an ominous, as this usually signals distribution and further price deterioration are more likely to follow.

InterContinental Exchange, Inc. (ICE -$13.33 or -9.36% to $129.10) sliced under its 50-day moving average (DMA) with a considerable loss today on over three times its average volume.  The 50 DMA violation triggered a clear technical sell signal, especially due to the fact that today marked its largest point loss on the largest volume spike. This stock was first featured on Wednesday, January 03, 2007 in the CANSLIM.net Mid Day Breakouts Report (read here) with a $113.95 pivot point.  Later that day, ICE appeared in the Featured Stock Update in the CANSLIM.net After Market Update (read here) which highlighted its admirable traits. Within two short months, this stock surged nearly +50%! After such an impressive sprint higher, ICE began pulling back towards its 50 DMA line.

A few important lessons can be derived from studying the volume patterns behind ICE's recent decline. It is important to note that healthy stocks typically pull back on light volume and advance on heavy volume. Unfortunately, the converse was true in this scenario. Volume swelled considerably in recent sessions as this stock pulled back, which was a negative sign. Of course, weak market conditions (the "M" criteria) contributed greatly to the stock's weakness.  Technially, another worrisome sign was seeing ICE gap lower on Tuesday, February 27, 2007 for a considerable loss on above average volume as it began pulling back. Finally, on Tuesday March 6, 2007, it appeared to be finding support near its 50 DMA line, but weak market conditions and the extent of the distribution occurring in ICE made it inappropriate to entertain thoughts of buying or adding more shares to existing holdings.  When a stock (and the broader market) is showing clear signs of distribution, investors should not be hoping for a bounce at the 50 DMA line, they should be fearing a violation. Therefore, the bias should have been toward protecting any gains, rather than taking on greater exposure.

Group action plays a very important role, and experienced investors learn that they can increase their odds of picking a great winner by always focusing their buying efforts in the market's leading groups.  The "L" criteria in CAN SLIM(TM) tells us to choose leading companies in leading industry groups, thus it is suggested that investors choose from the top quartile of the 197 Industry Groups (listed in the paper most days on page B4). A classic example of the success enjoyed by many CANSLIM.net readers usually starts when an investor reads a CANSLIM.net report and buys a featured stock before it has risen above the pivot point by greater than 5%.  After a stock breaks out above its pivot point, there is only a +5% window that investors have to purchase the stock under the proper guidelines. Once a stock rises above the "maximum buy price" the risk of a shake out balloons, meaning that even a normal retracement in the stock might force you to employ the 7-8% loss cutting rule.  Much can be told by the stock's daily action in the weeks and months that follow a breakout. Typically, a light volume and orderly pullback suggests that the bulls remain in control.  However, high volume pullbacks that violate support paint a totally different picture.

InterContinental Exchange, Inc. (ICE +$7.82 or +7.25% to $115.72) surged to a fresh 52-week high with gains on nearly twice normal turnover, triggering a new technical buy signal. This stock was first featured in today's CANSLIM.net Mid Day Breakouts Report (read here) with a $113.95 pivot point.  InterContinental Exchange sports a very healthy Earnings Per Share (EPS) rating of 96. It is also encouraging to see the company earn a very healthy Relative Strength (RS) rating of 98.  The company has managed to increase its earnings by triple digit percentages in the past four quarterly comparisons versus the year earlier, satisfying the "C" criteria. ICE resides in the Financial Services-misc group which is currently ranked 11th of out the 197 Industry Groups covered in the paper, placing it in the much preferred top quartile and satisfying the "L" criteria. The fact that ICE jumped above its pivot point on the necessary volume to trigger a proper technical buy signal is a very reassuring sign of institutional buying demand (the "I" criteria).  As always, it is of the utmost importance to sell a stock if it drops 7-8% below your purchase price.  It is of some concern that the stock's latest basing period was short, and this was a breakout from a later stage base, which are considered signs that it may be more failure prone than other examples.

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