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AMC Stock: Dark Pool Regulation Could Fuel The Short Squeeze

Recently, SEC Chair Gary Gensler commented that he is looking very closely into dark pools. Wall Street Memes takes a closer look at how SEC regulation could lead to a short squeeze on AMC stock.

AMC stock  (AMC) - Get AMC Entertainment Holdings, Inc. Class A Report has been moving away from the $40 levels in recent weeks. With the company releasing above expectations second quarter results on Monday, August 9, many investors are still waiting for a turnaround in the company's stock and hoping for the MOASS (mother of all short squeezes).

Figure 1: Monthly view of AMC stock chart.

Figure 1: Monthly view of AMC stock chart.

Lack of transparency in the U.S market is seen by the apes as a main factor preventing AMC stock from going to the moon. Wall Street Memes takes a closer look at the case.

(Read more from WS Memes: AMC Q2 2021 Earnings: Live Blog For Investors)

Dark pools being observed

SEC Chair Gary Gensler, in a recent interview (see below), commented on new market regulations. According to him, the SEC is looking very closely at dark pool activity and intends to promote maximum transparency for all investors.

The SEC chairman’s speech helps to reassure that retail investors are being heard, and that the agency is doing what is necessary to protect them from possible conflicts of interest and lack of transparency.

However, many apes received Gary Gensler's speech with skepticism. According to comments on the main Reddit forums, the lack of transparency involving dark pools is quite clear and the SEC should start to address the issues rather than “just” observe.

Jim Cramer recently commented on this topic. He said that the SEC’s work done by Gary Gensler should be encouraged and applauded, and that disclosure can cure anything but outright fraud. Making an analogy, he said that sunlight is the best disinfectant, and that it's easy to see the risks if you dig for them. But he argues that people should see the risks upfront, as on cigarette packs.

Can SEC regulation fuel the MOASS?

According to many within the ape community, the primary factors preventing the mother of all short squeezes are fraud and lack of transparency by regulators of the U.S financial market – while others claim these to be not much more than conspiracy theory.

Apes believe that dark pools and naked short activities have been pulling AMC's share price down, and that the true short interest ratio is much higher than the current 16% reported by Yahoo Finance. Worth noting, however, the two massive short squeezes on AMC stock in 2021 occurred despite the current trading environment.

In any case, AMC’s “official” short interest is high enough to keep bears at risk of being squeezed again, should eventual bullishness turn into a growing snowball. With some hedge funds adding to their short positions on AMC, this “suits vs. apes” battle seems far from over.

Twitter speaks

AMC apes and stock enthusiasts: do you believe that potential regulation around dark pools could have a substantial positive impact on AMC stock performance?

(Disclaimers: this is not investment advice. The author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not influence editorial content. Thanks for supporting Wall Street Memes)