A tough question most won’t answer. I care about my readers though, and I’m always going to be 100 with you. A lot of you are up a lot of money in AMC stock. New retail investors will have their big break very soon.
However, if retail investors are to experience a short squeeze they’ll have to hold. When does it make sense to pull out your initial investment in AMC? And, is it worth it?
Welcome to Franknez.com – today I want to discuss with the community something that might have crossed your mind before.
Lets get started!
AMC stock is up more than 1500% year-to-date. Retail investors who got in on the stock as of early this year are up significant gains. AMC Entertainment was up 3000% back in June. Most of us had never seen that much money in our lives.
New retail investors got in during these highs before short sellers doubled down their positions and shorted the stock back down. Yes some people sold but only a very small fraction of them.
AMC Finds A New Bottom
AMC stock has found a new solid bottom in the $33 range. This means the stock is set up for higher highs than its previous climb where $5 was the bottom.
Remember how we held AMC stock at $5 for quite some time before making its way up to $14? I strongly believe this is what we’re looking at right now with this new bottom.
AMC stock climbed to $20 before coming back down to $5. It climbed past $70 and has found a higher level of resistance around $30. The crazy thing is short sellers have yet to cover their positions!
They had the opportunity at $5, they have it $30, and they’ll have it well above the hundred(s) dollar range. So, if you’re a new retail investor who is negative on paper, I personally wouldn’t worry. The stock and the community aren’t going anywhere.
Not even after we squeeze shorts out of their positions.
Short Interest Keeps Increasing
AMC’s current short interest is around 19%, utilization is at 92.56%, and the shares on loan are at a whopping 111.67 million (via. Ortex)!
There are currently 550,000 shares available to borrow via. Fintel and we’re seeing the short borrow fee is going up again meaning short sellers are losing more money than they were last month.
AMC Entertainment continues to be the #1 play in the stock market. AMC’s beta is close to negative 4 meaning when the stock market crashes, AMC along with GME will do the complete opposite. They’ll shoot up.
Negative beta is rare and we know this play is rare. We’re not f#%!* leaving!
Should I Take My Initial Investment Out In AMC?
There are a few factors that play into this strategy. Here are some questions you need to ask yourself first.
- Do I need the money? (Emergency, family, etc.)
- Can I leverage this money? (Reinvest for more stock, other plays, etc.)
- Have I made enough to where it will not affect my position?
You Should Not Be Suffering
Does your family need the money this very moment? If so, then take care of your family’s needs first. If you don’t end up using the entirety of that initial investment then you can always average down by buying the stock at the current asking price.
Leveraging Your Money
This is going to be harder now since AMC has found a new bottom. This would make sense if you sold stock high to buying more low. If you did this then you now have more shares then when you first began this journey.
Here’s why this doesn’t bother me.
- You’re learning the market, you strategized and are now in a better position than you were.
- You BOUGHT MORE.
Money is a tool and you leveraged it to multiply your shares. You wouldn’t have done this if you don’t plan on continuing to diamond hand this trade until shorts are squeezed out of their positions.
To the very few who were able to strategize this, kudos to you.
Does It Even Make Sense At This Point?
Those of you who are up significant amount of money, does it even make sense to pull out your initial investment?
In my personal opinion, I don’t think so. This new floor is allowing us to add to our position, not to take away from it. It made sense to do this up at $70 per share but it doesn’t anymore.
Selling stock, or claiming your initial investment now could tarnish this new and beautiful level of resistance. Now is the perfect time to add.
How About As The Stock Goes Up?
As the stock goes up, we’re going to want to let it ride up naturally like it did last time. Selling as the stock goes up is going to affect the momentum, we wouldn’t want to do that.
Instead, we can look at the pattern and see whether the stock reaches a pinnacle before ultimately finding a higher level of resistance again like we saw from $5 to $30.
And again, this is only if you would really need some form of cash at hand for your family during this point, or whether you plan on buying more shares, provided that the stock goes down.
In this narrative, shorts would have not covered their positions either. Once shorts cover their positions it’s a whole other ballgame. This is where you want to hold the stock and not try to sell some to buy more because ultimately you wouldn’t be able to buy more as the stock surges.
Don’t Scalp AMC Stock
If you must take your initial in AMC out do not scalp it. Instead, let your gains do all the work with peace of mind that a short squeeze is inevitable.
Scalping AMC is like shorting AMC. Taking profits during spikes for short term gains aren’t going to play in your favor, especially if you’re in it for a short squeeze.
If You Don’t Need It, Leave It Alone
This is your safest bet towards trading a short squeeze play. The commonality in the community is we all want to trigger a short squeeze.
We all know this cannot happen if we all sell, right? In the end, diamond hands will bear the sweetest fruit and those who continue adding to their positions are essentially multiplying that fruit.