Freeport-McMoRan’s 3Q16 earnings
Before we analyze Freeport-McMoRan’s (FCX) short positions, let’s discuss a few key terms. Short interest shows the number of shares that have been sold short (SPXS) in a company. Exchanges release short interest figures every two weeks.
From a company’s short interest, we can derive its short interest ratio, that is, its short interest divided by its average daily traded volume. Short interest and short interest-to-market capitalization basically standardize short interest. It’s natural that a larger, more liquid company would have higher absolute short interest. Therefore, we standardize short interest to a company’s market capitalization or trading volumes.
Short interest increases
According to the latest update, Freeport-McMoRan’s short interest ratio was 4.3 on September 30, 2016. The ratio increased from its previous update of 3.3 on September 15. Currently, the company’s short interest ratio is the highest it’s been in over five years.
What does it mean?
Short interest expresses the general market mood in regards to a particular security. Higher short positions generally indicate that traders are betting prices will fall. However, higher short positions prior to earnings releases can also trigger short squeezes if earnings surprise on the upside.
In the coming parts of the series, we’ll explore analysts’ estimates for Freeport’s 3Q16 earnings. Before that, let’s take a look at Freeport’s key resistance and support levels ahead of its 3Q16 release.
According to data compiled by Bloomberg, analysts expect Freeport-McMoRan (FCX) to post revenue of ~$4.0 billion in 3Q16 and $4.6 billion in 4Q16.
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