AMC stock surged to $4.92 closing up +21.18% on Wednesday.
No major catalyst moved the stock, though trading volume did exceed almost twice its average volume of 26 million.
The movie theatre chain stock demonstrated strong bullish price action today, did AMC stock just bottom out?
Analysts at TipRanks gave AMC Entertainment stock a price forecast of $4.50 at its highest on a 12-month period but AMC blew those estimates fairly quickly.
The stock is having a bounce after it’s hit the $3.80 levels for the past few weeks.
Technical analysis shows us a break above $4.96 will take AMC stock up to retest $5.30.
#AMCSTRONG and #AMCtothemoon are trending on Twitter as shareholders rejoice from the bullish price action.
Will the movie theatre chain company be able to maintain this momentum?
Let’s discuss it.
Why is AMC Stock Going Up?
It’s very likely AMC has bottomed out and is beginning to bounce back up.
All this means is we’ve identified a key level of resistance for the movie theatre stock around $3.80-$4.00 levels.
There’s another strong demand zone around $5-$6 levels, the same ones we saw in 2021 before massive buying pressure took share prices up to $9 then $14 per share.
Analysts fail to familiarize themselves with the events, catalysts, and community that was able to drive big volume into AMC stock.
AMC stock was never meant to be a fundamental trade for the majority of retail investors, another key point that analysts fail to recognize.
Massive buying volume and the closing of short positions is all a stock needs to skyrocket to unprecedented numbers.
Of course, short interest must be high enough to fuel additional buying power.
AMC Stock At A Glance
Out of nearly 4,000 market participants, 93% said they are or will still be holding AMC Entertainment stock in 2023.
Majority of shareholders might be down significantly, but investors continue to buy company shares that are heavily shorted.
AMC’s current short interest is now at 22%, per Fintel.
Heavy buying pressure took AMC’s share price from $5 to $9 and then to $14 before getting out of hand for short sellers.
Around the same time, AMC’s short interest was also at 22%.
As share prices rose to $72 per share, we saw AMC’s short interest deflate to 14% before slowly climbing back up again.
Is history about to repeat itself?
The recipe for a short squeeze is certainly there.
But investors must be warned to never invest more than they’re willing to lose.
And while shareholders are anticipating a new all-time high during the next run, it’s also important to consider creating a ‘take profit’ exit strategy.
Seeing massive gains and then letting those profits turn into losses is a hard pill to swallow for most investors.
Always have a plan.
Related: How to Buy AMC Stock (2023 Guide)
Is Now the Time to Buy AMC Stock Again?
All signs are pointing out to an AMC bottom and shareholders aren’t leaving.
If we continue to see a bounce continuation, it could signify the movie theatre stock is making way for the next leg up.
Value investors could take advantage of any major price action that may come of it in the short term.
Otherwise, holding out for a potentially large short squeeze could prove to be rewarding in the long run.
But I’m curious to know what you think.
Is AMC on the verge of squeezing short sellers from their positions soon?
Leave your thoughts in the comment section of the blog down below.
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