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

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Written By: Elliott Laybourne
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    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.

AMC stock price chart

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Written By: Elliott Laybourne

Elliott Laybourne is an accomplished Hedge Fund sales and Investment bank trading specialist. Elliott also started a successful Base Metals Brokerage business in partnership with ABN AMRO clearing bank. He worked on the open outcry trading floors at the London International Financial Futures Exchange 'LIFFE' and the London Metal Exchange 'LME.' He also provided research and execution services for Goldman Sachs, JP Morgan, Credit Suisse, Schroders Asset Management, and Pennsylvania State Public School Employees Retirement System, as amongst others. Today, he focuses on providing trading consultancy and business development services for family office and brokerage clientele.

Published by
Written By: Elliott Laybourne