AMC and GameStop were halted shortly after the market opened this morning.
AMC stock reached a high of $34.09 and GameStop reached a high $199.24 before plunging.
The halts seized the ‘meme stocks’ from soaring, momentarily freezing momentum.
Shareholders might recall halts occurred last year as well before ‘meme stocks’ reached all-time highs.
Let’s discuss it.
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Momentum triggers gamma halts in AMC and GameStop
Both AMC and GameStop have more than 3 times their average trading volume today.
Could these early gamma squeezes have triggered a short squeeze in both AMC and GameStop had the stocks not been halted?
It’s certainly possible.
Although, it’s no secret these halts play in financial institutions’ favor.
Perpetual momentum could cause significant damage to institutions short on these plays.
The halts are not there for retail to regain composure, it’s for short sellers to regain their composure.
It gives financial institutions time to access the situation as it is no longer in their control.
The only control market makers have during these volatile swings are when to pause the game for themselves.
The thing is, when they resume retail investors will still be there.
So, while market makers might be able to slow down the process, they cannot prevent the inevitable.
Is history about to repeat itself?
AMC and GameStop along with other ‘meme stocks’ were halted in January of 2021.
Not only did these halts prevent these stocks from surging but Robinhood also froze the ability to purchase them.
AMC experienced halts again in May before its price ran up to more than $72 per share.
Retail investors were temporarily prohibited from purchasing the stock like they were in January.
Retail investors should view these halts as confirmation massive gains are coming in the near future.
While minor setbacks such halts might discourage bullish investors, it’s important to zoom out and look at the broader picture.
AMC stock is up more than 57% in the last five trading days.
And GameStop is up more than 36% in the last five trading days.
More than 56% of retail investors own GameStop and more than 90% of retail owns AMC Entertainment.
No one in the community is going to quit the crusade against crime in the markets due to halts.
What to look out for this week
Here’s what we can expect this week for AMC and GameStop.
- Surge in trading volume
- Short and distort campaigns
We can expect the same surges in volume throughout the week for both AMC and GameStop.
Retail investors are not letting off the gas pedal and short sellers know this.
For this reason, we can expect short and distort campaigns to take full flight again.
Corporate media has taken shots at AMC and GameStop for over a year, what’s to stop them now?
Despite the adversity, shorts have not closed their positions which means these two stocks have a lot of room for growth.
AMC currently has a short interest of 20.99% and GameStop has a short interest of 24.62%.
I update a list of heavily shorted stocks here daily so be sure to bookmark the page.
The short interest shows us the percentage of a stock’s float that is shorted.
10% is typically considered to be high while anything above 20% is out of the norm and deemed as ‘extremely high’ short interest.
We can spot some short covering as the short interest begins to decrease.
Are short squeezes on the horizon?
An AMC or GME short squeeze may happen at any moment.
This is why it’s imperative that shareholders hold the stock.
Investors are creating pressure through buying momentum, which increases the probability of runups and short covering.
AMC short sellers have suffered more than $750 million in the past two weeks.
Last week GME short sellers lost almost $500 million in one day alone.
The odds are definitely in retail’s favor.
Shorting AMC and GME stock will prove to be one of the riskiest bets in stock market history.
The pressure is certainly on and I’m excited to see retail come out at the end of this victorious.
I’d love to hear your thoughts.
Do you own AMC and GME stock?
Leave a comment below.
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What I don’t understand is why everyone thinks it’s going to squeeze to these enormous levels when all they have to do is halt trading and the price drops. Whether it’s that or ladder attacks or other manipulation. As you said: it’s all for the market makers benefit, so what is there that would actually ALLOW a squeeze or run up of any kind?
Yep… any postion other than long is self defeating….. #AMC
Hey all Ive been selling out of the money weekly calls against my AMC stock , but noticed it runs up to that strike and sometimes past it , I mainly use weeklys for extra income but don’t want give up my shares especially if their might be a huge squeeze coming , I’ve been closing thoses calls sometimes at a loss just to roll it next week at a higher strike , but with this volatility, should I just keep some shares loose( not having calls against them? )
Thanks Mike
Uh yes keep shares loose – do not bet against this right now. Ride the retail wave and if it is unsuccessful then resume your normal trading/investing strategy.
Frank thanks for the update , This is crazy they can keep doing this . Does anyone know what the blame was on. I am sure it is Total BS
Let’s start a discussion!