AMC is trending once again. #AMCSqueeze is trending on Twitter today, along with #amc100k. It looks like the WallStreetBets (WSB) meme crowd is back!
Things have been quiet on the meme/retail stock side lately, but the action seems to be picking up. One look at WSB Reddit, and I can see a lot of AMC posts, along with the favorite, Gamestop (GME). What makes me happy is seeing more technical analysis posts up on WSB. It’s kind of my specialty, and I like seeing people learn and use charts because they can offer so much.
Before we delve into the AMC chart, let’s think about the Fundamentals for a bit.
Is there a short squeeze possibility?
There is no short percent of float data up on shortsqueeze.com, but the short interest shows 87,550,000 shares short. Yes, a squeeze can happen, especially if they have 1 day to cover, but that’s only if the majority of short sellers shorted below these prices.
What about the vaccine/re-opening theme?
I think this is what gives AMC a better chance of causing a larger move higher. There are real fundamentals in re-openings and vaccines. As theatres re-open and new movies come out, people will go back to theatres. Seats will be filled, popcorn tubs will be devoured.
What about the momentum of the meme/retail crowd?
This is an important point with macro repercussions. I discussed this in a Market Moment last week. The meme/retail crowd were leaving stock markets for crypto’s. You could just feel this trading the markets. They were very dull.
One thing I mentioned is to watch and see if that money returns to stocks when we see crypto’s fall. Elon Musk and his comments may have chased away some of the retail crowd, and they seem to be heading back into stocks.
Above I have an intraday 1 hour chart of the Russell 2000. This is the US Small Caps Index. In today’s trading, while the S&P, the Nasdaq and the Dow were initially heading lower, the Russell was shooting higher. This index tends to lead, but I know many traders were thinking is this the WSB crowd returning? Keep an eye on how this index trades compared to the larger indices.
But let’s get down to business.
Technical Tactics
These are the technical levels I have been using on AMC. Members of our Discord Trading Room could have acted on this info in advance, as I covered the technicals there. We looked at AMC last year when it was close to $2.00 a share. Our target was $5.00. Little did I know WSB would squeeze this.
The last time I covered AMC on Market Moment was in February of 2021, where I wrote about how important the break above $8.00 was. But more importantly, how this zone HAD to hold as new support. It did.
Price did pullback to retest $8.00 and held. We actually ranged and did nothing for many weeks until recently. Over on our Discord trading room, I drew out this trendline and warned about a forthcoming breakout. This occurred too.
Now, AMC remains bullish above $11.00. Price can pullback to retest the trendline and support before moving higher.
What price is doing currently is indicating a battle between the bulls and the bears. We are at a resistance of $14.50. In the last three trading days, price has tested it but has not managed to break above. A battleground.
Personally, I think entering now based on technicals is a premature entry. Price could very well pullback to $11.00 for a better entry. The key, or trigger, would be a break and candle CLOSE above $14.50. Then we would have a confirmed breakout, and a better probability of upwards momentum.
Targets? 100k like the tweet? Nah, I would target the squeeze highs around $20.00 initially. If that breaks… there is resistance at $26.00.
So in summary the technicals for AMC look spectacular. Something we can work with. What is more interesting for me is the fact that the meme crowd might be coming back to stocks. Watch that Russell 2000 for confirmation of this. This would mean more action in the Stock Markets going forward.