AMC stock along with the entire mass market is melting.
Despite powerful Q1 results, the largest movie theatre chain in the world continues on a downtrend.
The Q1 earnings call was able to raise AMC’s share price after hours but majority of the market is on fire this Tuesday.
Will this market meltdown trigger AMC to squeeze?
Let’s discuss it below.
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The SPY continues to pull the market down
The SPY (S&P 500), which tracks the top 500 companies in the United States continues to pull the market.
Today the SPY is down more than 16% (year-to-date).
On average, the S&P 500 is up 8%-10%.
This is an incredible time to also take advantage of the S&P 500 as it has always set higher levels in the long-term.
However, the SPY is a great indicator of where the markets are going, and we can see AMC is no exception to this market downtrend.
And as the markets tumble, it’s important to concentrate on the opportunities in these conditions.
If you’re part of my private community on the Patreon you’ve seen I’ve been earning 10%-20% gains trading options every week.
This is one way investors may hedge against these market conditions.
The market doesn’t go down forever, eventually it has to come back up so taking advantage of lower stock prices today could bear profits as soon as the market goes into a reversal.
Some of the largest CEOs in the U.S don’t believe this bear market will linger which means at some point short sellers will begin to either take profits, cut losses, or close their positions breaking even.
This is when the markets could see a big reversal.
Analysts still believe AMC is overvalued
Analysts are crediting AMC for being able to massively improve their fundamentals BUT, there is always a but.
AMC’s current share price is still believed to be ‘irrational’ by these ‘experts’.
What’s irrational is lowering prices when the demand for something skyrockets.
You do not lower the price of lemonade on a hot summer day when there’s a huge line wanting to buy it.
But these ‘experts’ say that’s how it works.
AMC’s massive demand for the stock has not reflected in the share price for months now.
And even when the high volume began to show, regulators halted it back in March.
The people running the markets don’t like how the game is playing out and they’re essentially cheating.
So, although they might be orchestrating a ‘correction’, is it possible this ends out playing in retail’s favor?
Shills give AMC a $5.76 price target
Wall Street analysts are giving AMC a price target of $5.76.
But why does their ‘expertise’ even matter?
What makes their price target significant or valuable?
They acknowledge AMC is innovating like no other company with the use of NFTs and cryptocurrency, so why go backwards instead of forward?
Like Adam Aron said, these analysts only look through the rear-view mirror oppose to the front windshield – ahead.
And it makes absolutely no sense.
These old ways of thinking are what’s keeping the economy from striving.
Are institutions preparing to close massive short positions?
Given the current market circumstances, we can see the market is struggling to find a bottom, or at least trying to get comfortable in one.
This could give way for short sellers to plan an exit strategy at low share prices to profit from.
The current market conditions provide short sellers who have been holding long short positions on AMC an opportunity to close before the markets begin to move up again.
AMC currently has a high short interest of 19.77%.
This short interest shows there are many short positions still open today that have yet to be closed.
The market meltdown we are seeing at the moment is setting up the perfect conditions for short sellers to close their positions, initiating a short squeeze in heavily shorted stock such as AMC.
Now, is this guaranteed?
Very few things in the market are guaranteed.
When stocks go up, they must come down too – and when stocks go down, they’re bound to go up.
At some point, short sellers will want to cash in their profits before they’re erased by an inevitable market reversal.
I’d love to hear your thoughts on the topic.
Leave a comment down below.