Is it possible AMC squeezes this week due to the executive order that’s going into effect?
AMC finished the week strong up more than 20% last week.
The movie theatre chain surged almost 18% on Friday alone.
Stocks have been on a free-fall as the SPY and NASDAQ pull the entire market down with them.
However, both the SPY and NASDAQ finished up 6% last week which could indicate a potential reversal is underway.
There are very important things happening in the market right now, especially with AMC Entertainment stock and I’m going to go over it.
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It’s now costing short sellers a lot more money to short AMC stock
A major change has happened in the past week.
The cost to short AMC stock has dramatically increased from 2% to now 7.1%.
Short sellers are now paying more to short AMC stock.
This is a pattern long-term AMC shareholders are too familiar with.
AMC’s short borrow fee began to rise last year moments before the stock saw big price action.
An increasing fee incentivized a small percentage of short sellers to close their positions driving the stock price up.
Today, there are more short sellers in AMC than there were when the stock price soared to $72 per share.
AMC’s current reported short interest is 22.85%.
The number of shares on loan are at an all-time high meaning there are now more shares that have to be returned than there were during AMC’s run to $20 and $72 per share.
AMC has the perfect short squeeze setup.
And as the fee rises to short AMC stock, shorts will have to make the decision to either deal with it or close their short positions.
Executive order 14032 will trigger margin calls
Executive order 14032 will prohibit institutions to use Chinese securities as collateral, which will result in large margin calls.
This executive order replaced 13959 from the Trump administration.
When executive order 13959 disarmed institutions with this collateral in January of 2021, AMC surged to $20+ per share.
The order was amended as stocks surged resulting in sharp declines, giving institutions this collateral back.
The amended date moved to late May, where we saw AMC reach an all-time high of $72 per share.
Institutions were then given their collateral back on June 2nd for a period of 365 calendar days.
This collateral will no longer serve institutions on June 3rd until the order is amended again.
This order could be the reason AMC squeezes next week, or rather the reason why we see large price movement very, very soon.
Only time will tell exactly how this executive order will affect AMC and other heavily shorted stock.
But the data is there, and the coincidence is far too big to simply ignore.
You can read more about executive order 14032 and get access to the government document here.
No dates, but the stars are aligning in retail’s favor
No matter how you look at it, another AMC surge is imminent.
It’s very possible the SPY also hit a bottom around the low $400 levels.
This means the stock market could be seeing a reversal very soon, granted that the SPY continues to break upwards.
A short squeeze play though, is different.
AMC’s short interest data is there, there’s no doubt this is indeed a short squeeze play.
And whether AMC squeezes next week or not, short sellers are in a very tough position right now.
The markets are bound to go up again.
Failing to close at these all-time lows could prove to be a very big mistake.
Retail investors, brace yourself – winter seems to be over.
I’m curious to hear your thoughts.
Leave a comment down below.