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Will FXCM Exceed Lowered Expectations? Here's A Technical Recap Of 2015

March 12, 2015 3:50 pm
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Joel Elconin is the co-host of Benzinga's #PreMarket Prep, a daily trading idea radio show.

FXCM Inc (NYSE: FXCM) shares were trading higher by $0.08 (3.7 percent) at $2.20 in Thursday’s session. The company is due to announce Q4 results after the close.

Expectations may be very low, as the havoc in the foreign currency market that was instigated by surprise move by the Swedish National Bank to discontinue the currency’s cap versus the euro on the eve of January 15. As a result, the Swiss franc staged a historic rally versus the euro and just about every other major currency, appreciating anywhere from 20 to 40 percent in a single day.

Many FXCM customers were on other end of these trades and did not have sufficient funds to cover the gargantuan losses that unfolded overnight (while most traders were in sleeping in bed).

Interestingly, there was collapse in the issue’s price three days prior to the SNB move, falling from its January 13 close ($16.70 to $12.63). Following the bombshell by the SNB on the eve of the January 15, the issue was halted for two days and re-opened an astounding $12.00 lower and ended the January 20 session at $1.63.

It was saved from a total collapse by Leucadia on January 19, who loaned the company $279 million to continue operations and try to mitigate some of its losses.

Many Wall Street analysts have abandoned the issue with downgrades and the lowering of price targets. The Street low resides with Citigroup, which maintained its Sell rating and lowered its price to $0.75 on January 20. That announcement sent the issue to its all-time low made on January 21 at $1.28.

However, the move by Leucadia sparked a recovery rally to $3.51 that was further fueled by false takeover rumors. After closing on January 22 at $3.10, it dwindled under $2.00, reaching $1.93. Since that time, it has labored in the lower $2.00 handle.

Even with expectations low, short-sellers are sticking to their guns ahead of the the report with a 30 percent short interest still outstanding.

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