AMC Stock price jumps 12% after $4 billion fund reveals a short position

AMC stock price snapped a five-day losing streak yesterday after Crispin Odey became the lastest hedge fund to take on the Reddit retail army.

AMC Entertainment Holdings Inc closed Thursday at $33.51, higher by $3.67 (+12.30%).

It’s been a while since the AMC bulls had something to cheer for. However, yesterday’s bounce may have come at just the right time.

On Wednesday, the stock was printing a 2-month low beneath $30.00 and nudging a key level of support. As I mentioned in my report earlier this week, the last time the price tested the support, it bounced 50% in the following two days.

AMC had fallen out of favour recently and was losing traction on Reddit’s wallstreetbets investing forum. However, the announcement that a new player has joined the game may have the retail army wondering if they could claim another hedge fund scalp.

Odey Asset Management

UK-based Crispin Odey is a well-known figure in the city of London’s square mile. He often makes headlines for his bearish calls on the market and is considered a permabear by many.

The Financial Times revealed, Odey, who manages around $4 billion, has “recently” taken a short position. Exactly how recently, or at what price, we don’t know. However, according to an investor letter, the position has been one of his biggest winners, so we can assume he took it within the last few weeks.

So could this create another short squeeze? Clearly, the position has been working for him, which creates no immediate funding pressure. And considering the stock is more than 50% below June’s $72.62 high, his position may be comfortable for some time to come.

Although, it’s been dangerous betting against the retail crowd in 2021. And after taking down Melvin Capital’s Gabriel Plotkin, retail investors may be feeling invincible.

AMC technical analysis

The 4-hour chart shows the price has bounced from trend support at $29.20. This is clearly the first and most significant level of support.

Notably, a concise descending trend has also formed and is offering resistance around $34.75. Should the AMC stock price clear this level, it will target the longer-term trend line resistance at $45.00.

Presently, the price isn’t giving off a convincing signal in either direction. However, I expect that either the support or the resistance will soon fall.

As yet, it’s hard to say which, but today’s price action may well set the scene for volatility next week.

AMC stock price chart (4-hour)

AMC stock price

For more market insights, follow Elliott on Twitter.