AMC Entertainment Holdings, Inc. (NYSE:AMC) stock has caught the attention of all types of traders and investors.
Even for those who don’t buy or sell shares or options of the stock, there’s a story unfolding around AMC and other stocks such as GameStop Corporation (NYSE:GME) that highlights how the average retail trader fits into the stock market, what and who they’re up against and maybe even a lesson on how to win.
For weeks, institutions have been spending millions per day on AMC call contracts, and on Monday Benzinga reported Qraft AI-Enhanced US Large Cap Momentum ETF (NYSE:AMOM), an artificial intelligence led ETF, added AMC to its holdings in July. Many institutions are holding shares of AMC. The Vanguard Group Inc and Blackrock, Inc. (NYSE:BLK) have the largest positions and hold 37,441,784 and 27,334,957 shares each, respectively.
Not all of a company’s statistics are available to the average trader, such as whether naked shorting is occurring on a security, but knowing the short interest in a stock has become highly important to navigate the markets.
Naked short positions hold a stock down unfairly and many retail investors believe there are enough naked short positions on AMC to drive the stock to over $100 if the shorts were forced to cover their positions.
The AMC Chart: AMC’s stock has been trading under a descending trendline since making a new all-time high of $72.62 on June 2. On July 7, the stock fell under a resistance level at $47.91, reclaimed it on Thursday and fell back below it on Friday.
AMC is holding strong above the $40 mark, which gives the bulls confidence the stock is consolidating in preparation for another move.
Volume in AMC’s stock has been declining, especially in terms of bearish volume, which indicates the stock is running out of sellers. This pattern is often seen before eventual large upward swings in a stock.
AMC is trading below both the eight-day and 21-day exponential moving averages, but the eight-day EMA is trending above the 21-day EMA, which indicates bearish indecision. AMC is also trading below the 200-day simple moving averages, which indicates overall sentiment in the stock is bearish.
AMC is within about 18% of all three moving averages, and if bulls take control could easily regain all three.
Bulls want to see bearish volume continue to decrease and for bullish volume to enter the stock and drive it up to close above its upper resistance level.
If it can regain $47.91 as support, it has room to move up to $51.50, which could help AMC test the descending trendline and possibly make a bull break above it.
Bulls want to see bearish volume increase to drop AMC’s stock down the $40 level. $40 is a must-hold level for the bulls and the bears, as there is no recent price history to support AMC below $40 until around the $20 mark.
AMC Price Action: Shares of AMC were trading down 4.81% at $43.97 at last check Monday.