The probability of AMC squeezing has always been there, and it’s always been relatively high for the most part.
But what’s the probability of AMC squeezing in June?
After all, with the market at an all-time low, it makes you think why wouldn’t shorts close positions now, right?
But most importantly, executive order 14032 is going into effect this June.
And this catalyst could very well just be AMC’s highest probability of squeezing.
Let’s discuss it.
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The markets are at an all-time low
More market value has been lost today than in the Dot-Com crash.
The Dot-Com crash saw a loss of $4.6 trillion.
Today, the NASDAQ’s decline has been a whopping $7.6 trillion.
To put things into perspective, the Global Financial Crisis lost $2.3 trillion, and the Covid-19 selloff lost $4.4 trillion in value.
Hedge funds have overleveraged their positions in heavily shorted stock such as AMC and GameStop.
Retail investors caused Citadel and other short sellers to lose billions last year due to the runups.
So, short sellers are in a tough position, especially those with overleveraged positions.
This bear market could provide short sellers with an incentive to close large short positions before the market begins to reverse.
The SPY (S&P 500) has touched $400 per share several times in the last 5-day trading period.
While it has traded below $400, it’s important to note the markets have to bottom out at some point.
The question is, is this the bottom?
And if it is, will short sellers take this opportunity to close out positions in AMC and GameStop?
Executive order 14032 is right around the corner
If you haven’t heard of executive order 14032 yet, you’re missing some incredible information here.
This order was previously responsible for prohibiting institutions from using Chinese securities as collateral on January 27th, and May 27th of 2021.
These are the dates before AMC began to run up to $20 per share in late January, and when it began to run up to $72 per share at the end of May, early June.
Institutions were given their collateral back for 365 days on June 2nd, 2021.
Since then, AMC and the entire markets have gone down.
This grace period will be over on June 2nd of 2022, where institutions will no longer be able to use these Chinese securities as collateral, resulting in margin calls.
The difference this time, however, is that the number of Chinese securities affected has increased from 30 companies to 70+ companies.
Margin calls could be significantly larger than the previous two times based on portfolio holdings.
Incredibly, both AMC and GameStop short sellers are more in debt now than they were in January and June of last year.
The amount of FTDs and shares on loan have snowballed to new heights for over a year now.
Does this increase the probability of AMC squeezing in June?
Given the current market circumstances and executive order 14032 going into effect soon, June could prove to be a highly important time for AMC shareholders.
Is an AMC short squeeze guaranteed in June?
No, nothing is every truly guaranteed in the markets.
But is the probability high?
I’ve mentioned this in previous articles and videos before, AMC is a short squeeze play whether this catalyst triggers a short squeeze or not.
AMC’s short interest data pointed towards a runup in January and May/June of last year – and the data says it’s not done running.
Coincidentally, Chinese collateral was removed during these two runups, and now it’s happening again.
And while today’s share price might discourage investors, I find it’s more intriguing to look at the data rather than at the share price.
It’ll change your perspective.
What do you think?
Is AMC going to squeeze soon?
Leave your thoughts in the comment section of the blog below.