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AMC Stock To The Moon: Could This Be The Week?

AMC shares finally climbed on Thursday, the most on a single day since mid-June. Wall Street Memes evaluates whether this could be the beginning of the stock’s journey to the moon.

AMC stock  (AMC) - Get Report has finally caught a break. After falling nearly 50% from the early June peak, share price finally climbed 8% on Thursday and, as of the writing of this paragraph, had moved higher another 2% during Friday’s trading.

Wall Street Memes looks at whether recent price action may have finally marked a U-turn for AMC stock. Could this be the beginning of the long-awaited MOASS (mother of all short squeezes), or will this prove to be a head fake? 

Figure 1: AMC theater.

Figure 1: AMC theater.

(Read more from Wall Street Memes: AMC Stock: Beware Of These Risks)

Reasons to be optimistic

It is no secret that the “meme thesis” on AMC going to the moon is not grounded on business or macroeconomic fundamentals. Instead, it is all about sentiment driving bullishness, in turn forcing a short squeeze in snowball-turned-avalanche fashion.

For the spike in share price to happen, therefore, shorts need to overcrowd the trade first. Famed “ape” Matt Kohrs points out that utilization rate – borrowed shares divided by the shares investors are willing to lend – remain very elevated, at over 91%.

The closer the utilization gets to 100%, the greater the risk for short sellers and the higher the upside potential in the case of a short squeeze, as more bears would need to cover their positions. The setup that apes need for a meme attack to happen still seems to be in place.

(Read more from Wall Street Memes: AMC Stock: A Few Reasons To Keep Holding)

Reasons to be skeptical

At the same time, at least for now, the recent spike in AMC share price has not been enough to spark overwhelming bullishness. According to metrics available on Interactive Brokers, social media sentiment and tweet volume on AMC stock have increased in the past day, but only minimally.

Swaggy Stocks offers a similar read – see chart below. Despite Thursday’s 8% spike in share price, buzz around AMC remained near four-week lows. Even worse, negative sentiment rivaled positive sentiment, according to the platform’s tracker.

Figure 2: WSB ticker sentiment - AMC.

Figure 2: WSB ticker sentiment - AMC.

(Read more from Wall Street Memes: AMC Stock: A Test For Diamond Hands)

Wall Street Memes’ takeaways

Based on the above, Wall Street Memes can not reach a high-conviction conclusion on whether AMC stock will finally head to the moon in the foreseeable future. The stage remains set for a potential short squeeze, but one or two days of good performance has not yet showed signs that it can turn into a bullish snowball.

As a second and probably more important takeaway, we agree with trader Trey Collins’ recent take on Twitter (see below). Regardless of what happens in the markets, hodlers must be sure that they are “eating, sleeping, comfortable, and emotionally stable”. A healthy ape is a happy ape.

(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)