AMC stock price frustrates the bears: Are the bulls about to charge?

Summary:

The AMC stock price is surprisingly resilient and bouyant above $40.00. Will an increase in short exposure lead to another nasty shock for the bears?

The AMC stock price is surprisingly resilient and bouyant above $40.00. Will an increase in short exposure lead to another nasty shock for the bears?

AMC Entertainment Holdings inc (NYSE: AMC) started the week with a bang. The stock gained $3.30 to finish Monday’s session at $40.29, higher by 8.92%.

For a while, it appeared that AMC was on the verge of breaking down. After reaching an all-time record of $72.62 in June, the AMC stock price had been trending lower. Which culminated in the stock declining almost 57% to $31.15.

However, in the last seven trading days, AMC has clawed back almost $10, gaining 30% along the way.

Interestingly, and maybe worryingly for the sellers, the short interest has increased by 6% over the same period.

On the 21st I reported that AMC had a short position totalling 75.84 million shares. Today that number is just short of 80 million.

So could that lead to another squeeze?

Price forecast

Looking at the daily chart, a clear descending trading channel is evident. The lower end of the band is seen at $30.80 and was responsible for reversing the decline earlier this month.

This is therefore the first level of support. below that, the 100 and 200-day moving averages offer additional support at $26.04 and $15.19, respectively.

H0wever, considering the increasing short exposure, the upside targets may be of more interest.

The first level of resistance is offered bythe 50 DMA at $41.72. Followed by the top end of the trading band at $50.50.

Furthermore, if the price clears $50.50, from a technical perspective, there isn’t much to stop it from returning to the ATH.

Of course, technical analysis could be considered redundant in a stock with such a high level of short exposure. However, it does give an indication of investor sentiment.

Trading in meme-stocks is inherently risky and should be left to professionals or those that are happy to absorb considerable losses.