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IntercontinentalExchange, Inc. (NYSE:ICE) is up almost 200% YTD, widely loved, with recent increased price targets by Goldman Sachs (NYSE:GS) and Prudential (NYSE:PRU). BofA added to buy on Friday. With the IPO of Nymex (NMX) popping, ICE moved from $80 to $115.

But looking at the volume of futures contracts, which they post daily on their website, it appears that volume in November was down from October. And I've noticed daily volume the past two days falling dramatically. Particularly Friday, where just over 318,000 contracts traded vs. a daily average closer to 470,000 for prior months.

This with NYMEX aggressively trying to take back share from ICE via their deal with CME and use of the Globex platform.

There has also been notable blow-ups with hedge funds trading oil and gas futures and options, beginning with Amaranth in the summer and now Ritchie Capital out of Chicago. I hypothesize that this trend of getting out of oil and gas trading will continue, and ICE does about 30% of it's revenues from the hedge fund community.

Based on my math, if ICE continues to do 470,000 contracts a day, they earn around $3.00/share, but at a lower volume rate closer to 350,000, then I think the EPS is closer to $2.00/share. Stock at 106 cannot handle a $2.00/EPS and the recent acquisition of NYBOT will increase expenses over the short term and not contribute meaningfully to income for 6-12 months.

Fidelity (OTCQB:FDLB) filed last Monday that they had sold 4,000,000 of their 5,000,000 shares, and most likely has let the last 1,000,000 go. Goldman Sachs and Morgan Stanley (NYSE:MS) have sold their position down below 5% and may be out. So I see the holdings going from solid long term hands to momentum IBD type traders. If I'm right on the trading volume leveling off or falling, then the momentum crowd will turn tail and run.

Disclosure: Author is short ICE.

ICE 1-yr chart

Source: The Ice May Be Melting For IntercontinentalExchange