For over a year now, shareholders have looked at catalysts that would trigger an AMC short squeeze.
But not just any short squeeze, the mother of all short squeezes.
Also known as, MOASS.
While AMC managed to scare a few short sellers off last year when the stock price rose to $72 per share, new investors are wondering when the next major runup will occur.
For this, we will have to look at what caused AMC to surge last year.
Let’s discuss it.
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Looking back at 2021
It’s important to look back at history to predict the future.
But above all, is an AMC short squeeze even possible?
The answer is, of course it is.
We know this by looking at AMC’s short interest data which tells us how much of AMC’s float is being shorted.
And just like last year, AMC has a high short interest percentage of over 22%.
Some of you might remember AMC dropped from 23% to 20%, and then to 14% when the share price rose from $14 per share to its all-time high of $72 per share.
AMC still has this potential.
Now simply imagine AMC’s short interest drops from 22% to 10%, or even 5%.
Just how high can AMC’s share price go?
That’s the million-dollar question.
But the short interest doesn’t matter if a short squeeze isn’t triggered.
For months and months, retail investors hoped for a specific catalyst that would bring riches to fruition.
The truth is, it’s always been up to retail.
What will cause AMC to squeeze?
Now that we have an understanding of what AMC’s short interest means and how it plays a key role in a short squeeze, here is how shareholders can trigger it.
Heavy buying pressure
It’s no secret heavy buying pressure triggered AMC to surge in price last year.
Big daily volume between 300,000 and 700,000+ forced the share price to move up creating panic for short sellers to close their positions.
This resulted in a domino effect further fueling AMC’s share price to rise as more shorts followed suit.
While many held unrealized losses, some were quick to cut their losses.
The ape community has bought and held AMC Entertainment stock for over a year now, but it’s fair to say majority of retail investors have simply been holding.
The proof is in the daily volume, now trading below AMC’s average of 52 million.
Liquidity in the market tends to go down during a bear market, contrary to a bull market.
It’s the nature of the market – stocks drop and majority of investors buy less, stock go up and majority of investors buy more.
I used to speak heavy on volume several months before AMC ran to $72 per share.
The truth is the ape community is accountable for triggering an AMC short squeeze.
Not the SEC, not a law, but investors.
You can’t take volume with a grain of salt
Unlike many catalysts that have surfaced for over a year now, you cannot take retail volume with a grain of salt.
Because it is what it is.
Some investors argue that volume does not matter due to how much of it is rerouted outside the lit exchange.
But it mattered when AMC ran up to $72 per share, so why wouldn’t it matter now?
Heavy volume triggered AMC to run last year when millions of retail investors bought the stock en masse.
And the same applies today.
AMC soared to $34 per share in March where its average volume had doubled during the run prior to getting halted.
GameStop claimed $199 per share where its average volume had also doubled that same trading day.
If retail investors are to squeeze shorts from their positions, they’ll have to play in offense and remember why AMC ran in the first place.