AMC Stock Squeeze Episode III: Revenge of The Apes

The AMC Stock price jumped 20% yesterday, bursting out of its downtrend and reminding the shorts that they are not out of the woods yet. It was a good day for the self-titled smooth-brained apes who frequent Reddit’s infamous Wallstreetbets investing forum. AMC Entertainment Holdings Inc (NYSE: AMC) was in good company. Several so-called meme stocks, including GameStop (NYSE: GME), and Clover Health (NYSE: CLOV), ripped higher yesterday, taking many by surprise. However, this move has been brewing for a while. And as we noted last week, AMC had been trading in a similar pattern in May when it jumped 175%. Of course, this may not guarantee the same now, but it could worry the shorts enough to trigger another melt-up.

Following June’s epic short-squeeze to $72.62, the AMC stock price has been trending lower. Furthermore, short exposure had supposedly dropped considerably. However, this is a hotly debated subject that may not be as clear-cut as it appears. Nonetheless, the bullish case was evaporating on the surface, and the price followed for a while. This encouraged Crispin Odey’s $4 billion hedge fund to take a short position in the stock. But rather than striking fear into the hearts of the retail army, it only served to embolden them.

The Wallstreetbets crowd who live by the motto ‘Apes strong together’ frown upon sellers and encourage each other to ‘diamond hand’ HODL. Furthermore, the only consideration is not when to sell but how to buy more. This determination, twinned with their sheer magnitude, make them a formidable adversary, for even the most seasoned of short-sellers.

Whether AMC stock will embark on another emphatic squeeze remains unclear. Although, I would certainly bet against it.

AMC Entertainment Technical Analysis

The first thing you see when you look at the daily chart is a clear falling wedge pattern. The top edge of the triangle ran from the June high and was visible Tuesday at $39.00. The impulsive move higher to yesterday’s $48.20 high cleared the trend, and the 100-day moving average at $32.07. This is clearly price-positive, and high trading volume reinforces the bullish breakout. But where this move takes the price is anyone guess. A logical target for the bulls (or apes) is the all-time high at $72.62. Although something tells me that even if it gets there, WSB will not be selling.

Technically speaking, the price action is positive and suggesting an extension higher. And that will remain the case as long as it stays above the trend at $39.00. Although, If the AMC stock price loses this support, it may initially move lower. However, just like the Fast and Furious franchise, this saga may drag on and could be just as explosive.

AMC Stock Price Chart (Daily)

AMC stock price

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