AMC Entertainment stock is respecting that $35-$38 level of resistance very well. Retail investors are wondering when AMC will rebound.
Some of you are HODLing gains, some of you losses.
However, something extraordinary has been happening while AMC stock has been slowly creeping down to its current price range.
The short interest has hit an all-time high. And although new shorts might be profiting on paper from AMC’s $70 decline, hedge funds who have been shorting AMC since January face apocalyptical conditions.
I mean, have you seen Kenny recently?
Welcome to Franknez.com – the blog that provides you with unfiltered information about your favorite stocks. Today we’re talking AMC and why I personally think we’re heading towards a rebound.
Let’s get started!
Last time AMC’s short interest was at 20% it jumped past $70 per share back in June. The current short interest is hovering extremely close to 21% now.
If this doesn’t have you excited it should. If history repeats itself, which usually does, this could be big.
Here’s what we can learn from the past.
Patterns Often Times Repeat Themselves
Before we moved past $50 again last month, patterns suggested that breaking specific levels of resistance would lead us there.
Breaking $32, $38, $40, etc, proved to be right.
Well now AMC has been doing incredible at respecting the mid to high $30s again like it did last month.
Community, don’t be fooled – this shows strength in the stock. Not just the stock; but in the community as well.
See, no one is getting left behind. We’ve come too far to let off the gas pedal.
The fact that we have been seeing a strong resistant level in the $30s again signals that apes continue to hold. It will be a rare instance if AMC’s share price goes below this price range.
And although we might have seen it drop a little below (maybe once or twice) last month, AMC has proven to be extremely uncomfortable below the $30 range.
This leads me to believe that we indeed have a new bottom. And compared to where it was at $5, I’d say it’s a pretty great bottom.
What Does AMC’s Short Interest Data Tell Us?
The short interest is the number or percentage of a stocks float that has yet to be covered by shorts.
This is what I like to refer as the rocket fuel. 10% short interest is considered to be high where 20% is considered to be ‘extremely high‘.
For perspective, Apple stock has less than 1% short interest.
Here’s Why This Matters
AMC topped almost 9% back in January during its first runup to $20. Then, it peaked at 20% in June when the stock price surged past $70+.
AMC’s short interest fell as low (or I should still say as high) as 14.76% in July before beginning to move up again in August and September.
October could be the month we get another massive rebound. AMC actually hit 21% short interest a few days ago and is extremely close to reaching this percentage again.
The increase in short interest percentage tells us that more short sellers have gotten in on the stock since the runup back in June.
And as long as retail investors continue to buy and hold the stock, the community can set new bottoms and run the price up again, squeezing new short sellers from their current positions.
This extremely high short interest can ignite an AMC rebound specifically because the ‘market‘ is there. The short sellers are there and the demand for AMC stock continues to increase.
So what happened is that instead of all short sellers closing their positions back in June, the few that did were replaced by new ones. This short squeeze play is nowhere close to being over and I’m excited!
Here’s What The Trading Volume Tells Us
AMC’s trading volume reached 1.2B the day it rose to $20 per share. It’s previous trading day volume was around 456M.
In June, when AMC’s share price hit $70+ dollars the volume peaked at 766M. AMC opened at $37.52 that same day on Wednesday June 2nd. Incredible right?
The trading volume before the runup ranged between 400M-700M its previous trading days.
Ladies and gentlemen, volume matters. An AMC rebound is just around the corner; however, retail would need to play more offense than defense.
AMC has the perfect setup for another massive upswing. And if you sold, sorry to break it to you but this ain’t done running up.
Theoretically speaking, retail would have to refrain from selling in order to hold new levels of resistance to further runup AMC’s share price.
Upcoming AMC Price Prediction (October-November)
AMC has peaked at $20, and it’s peaked at $70; that’s 3.5X from it’s first run. If this pattern continues, we could very well see AMC peak closer to $250 per share with some serious volume from retail.
If you’re part of the Patreon, you’ve seen me adding AMC throughout the months and know I’m making another purchase very soon. The stock is currently at a bargain for momentum traders and my conviction has only gotten stronger.
This is why buying and holding has been all the DD the community every truly needed. The volume from retail is the sleeping giant. It’s what hedge funds didn’t want you to know.
As always, thank you for reading the article. Be sure to share it with another ape.
How Long Have You Been HODLing AMC For?
Leave a comment below. How long have you been holding AMC stock for? Were you in the battle of $8.01? Or are you a new ape? Share your story with the community below 👊.
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