NYMEX Holdings, Inc. (NMX)

[teraflop]

Thoughts, ideas, and cheerleading...ok let's go.

My time horizon is longer on NMX and I am in pain on this trade so can feel for your own pain. I hate dead money but sometimes you get a pleasant surprise if you can afford to wait.

That being said, the risk to NMX as a stock is fund pullouts prior to the New Year. However, it still is in a solid business with, yes, tough competition, but NYMEX is a dominant player.

For the record, I ran some correlation matrices to see where we may be going. Based on the statistics (lies, more lies, etc), NMX only really correlated with the NDAQ since November 17th (IPO day) and NDAQ's own correlation with the S&P 500 was very low over the same period. It wasn't correlated with the other exchanges we compare it to. In the longer-term, the 1-year correlations show that the exchanges are very little correlated with the S&P and as a group they're not very correlated either. So I think NMX should still be valued on its own merits and its own story.

Here's the matrix for Nov 17, 2006-Nov 29, 2006:
NYX, NDAQ, CME, ICE, NMX, S&P
NYX : 1.0
NDAQ: .56, 1.0
CME : .64, .32, 1.0
ICE : .71, .27, .53, 1.0
NMX : .37, .75, .27, .25, 1.0
S&P : .25, .21, .72, .05, .22, 1.0

Here's the matrix for Dec 30, 2006-Nov 29, 2006:
NYX, NDAQ, CME, ICE, S&P
NYX : 1.0
NDAQ: .44, 1.0
CME : .25, .36, 1.0
ICE : .26, .31, .35, 1.0

S&P : .34, .53, .45, .34, 1.0

By taking the differences you can get an idea of where we are relative to peer movements based on correlations. Correlations change over time so this is subject to periodic review. But you can see where spikes in correlation (NMX-NDAQ, CME-S&P, and ICE-S&P) are typically temporary.

Long & strong