AMC Entertainment (AMC) Stock: Is Another Squeeze Coming?

AMC Entertainment Holdings Inc (NYSE: AMC) is facing more declines in the premarket this morning, following up on the significant losses investors have been handed as of late. Now, many are wondering if the fun and games are over and AMC is destined to produce more losses?

Not Quite!

Here’s how I see it:

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AMC Stock Nosedives

There’s no question that the past few trading sessions have been painful for AMC investors. Over the past week, investors in the stock have lost a whopping 36% and with the stock in the red this morning, those losses are growing. 

It seems as though the once-great meme stock is taking a major hit, but it’s not over until the fat lady sings. 

For some time now, I’ve been very bullish on AMC, going against the grain and pointing to the fact that retail investors would use the stock to hand a smackdown to institutional players and hedge funds that waged heavy short positions. 

Of course, the short squeeze happened, sending the stock for the top and sending shorts running for cover. 

However, the market tends to move in a series of waves, with investors pushing values up, taking profits, then watching as values collapse, waiting on the next opportunity, an opportunity that seems to be just around the corner. 

First and foremost, I’d like to point out that the short squeeze pushed short interest down in a big way, with the figure falling to below 10%. Now, that number is ticking up in a big way, and just hit a major threshold. 

Stocks with 20% more in short interest have the largest potential for a short squeeze, resulting in significant growth. Well, AMC stock is now trading with short interest above 21%, putting it right into short squeeze territory. 

Is A Short Squeeze Going To Happen Today?

Probably not. The reality is that the community seems to be waiting for the right time to strike, allowing short interest to build up and following the price closely, waiting for a key support level. 

It seems as though we’re getting close. 

As the profit taking started, I looked into the chart to see what the most probable range for a short squeeze to start in would be, and it looks like we just broke into the range. 

Ultimately, retailers have huge potential should they trigger a squeeze between $26.12 and $32.04. In the premarket hours this morning, the stock broke below the key $32.04 mark, putting it cleanly in this range. 

So When Will The Squeeze Happen?

The truth is, there’s no telling. I don’t have a crystal ball that allows me to peek into the future, nor any inside information or group of retail investors that are telling me when they’re going to pounce. 

Nonetheless, I do believe it will happen soon. Considering the fact that we’re nearing the end of the trading week, I would even go out on a limb and say AMC stock is gearing up for a squeeze as soon as next week. 

There’s More To The Squeeze Than Profits

Now that we know a squeeze is likely coming for AMC stock, it’s important to understand why all this is happening in the first place. I mean, what’s the deal with meme stocks?

Well, for some time now, hedge funds and other institutions have been manipulating the market, placing large short bets on relatively sound companies in an attempt to drive prices down and make a profit while taking those profits out of the pockets of the little guys. 

Some big players have been seriously bad actors, going as far as breaking the law to pad their pockets. What’s more, regulatory agencies seem to look the other way. 

Retail investors are tired of it and crowds are looking for ways to turn the tables and make a profit while punishing the big guys at the helm of the manipulation. 

While AMC is exciting, it’s also a tool used by the retail community to do just that, and as hedge funds continue to attack the stock, retail investors will continue to push back, creating tremendous opportunities. 

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Final Thoughts

They say it’s not over until the fat lady sings, and while declines on AMC stock have been painful over the past several sessions, that pain seems to be coming to an end. Soon, retail investors are likely to band together yet again, pushing another dramatic short squeeze and generating significant profits in the process. 

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