AMC Entertainment Stock Price: AMC holds onto most of Thursday's 15% rally

  • AMC Entertainment has brought back $5 Tuesdays to spur ticket sales.
  • AMC stock has been riding an ascending trend line as support for two months.
  • CEO Adam Aron led the charge with a tweet about a coming short squeeze.

AMC Entertainment (AMC) stock started off Friday down 1% to $14.34. This is actually a postive sign after AMC's impressive rally in the previous session. AMC stock exploded 15.2% on Thursday to close at $14.48. The main spark for the fire was caused by CEO Adam Aron alluding to a coming short squeeze. AMC stock was helped by the news that GameStop (GME) was attempting a stock split, and when one meme stock rallies, the others are often not far behind. AMC also announced a date for its next quarterly earnings presentation.

Also read: Apple Stock Deep Dive: AAPL price target at $100 on falling 2023 revenues

AMC stock news: Short squeeze coming?

AMC CEO Adam Aron drove most of Thursday's rally with a single tweet:

This actually goes back to a comment from Aron during the May 9 earnings call: "We are constantly exploring the smartest courses of action, and I promise you that we will pounce, but only when the timing is right." Most observers take this to mean pouncing against short sellers to drive up the share price by in tandem buying up large quantities of short-dated call contracts. 

So there you have it, folks. The AMC stock short squeeze is coming but not until August 4. Could this be the storied MOASS (Mother of all Short Squeezes) that the Reddit gangsters have prophesied?

GameStop announced mid-week that it will undergo a stock split later this month. The videogame retailer, which alongside AMC was a major WallStreetBets pump in January 2021 that led to the collapse of hedge fund Melvin Capital, will give shareholders four shares for every one they hold at the close of trading on July 18. Because stock splits make it easier to buy calls (call contracts are sold in groups of 100 shares), GME's stock split should make it easier for retail traders to buy calls and thus produce more extreme short squeezes. As of mid-June both AMC and GME had about 22% of their floats sold short.

The stock split news helped GME shares rally 15.1%, but strangely AMC rallied even more on Thursday to close up 15.2%. The only reason for this would seem to be that the same traders bullish on GME are also bullish on AMC and decided to make it a "twofer".

The only other news released by AMC Entertainment on Thursday was to schedule its fiscal second quarter for after the market closes on August 4. Wall Street is predicting an adjusted earnings loss of $-0.19 per share on revenue of $1.18 billion.

AMC stock has also brought back $5 Tuesday's to increase its attendance numbers. Though it does not apply to certain premium offerings like IMAX, $5 Tuesdays tends to bring in a large number of otherwise infrequent customers.

AMC stock forecast: Resistance around $20

AMC stock has been riding an ascending bottom trend line that began back on May 12 close to two months ago. For what it is worth, that is impressive. It shows that there is enough belief in this beleagured name who are accumulating shares (buying the dip). The Moving Average Convergence Divergence also has been leading the signal line (orange) since May 18. These are two quite positive details. The third bit of optimism comes from the MACD rising above the zero threshold. This piece of evidence is enough to make me trust that an even greater rally is in the works (but probably not until August 4!).

There remains a supply zone from $19.34 to $20.96 that should provide resistance if AMC stock makes it into that neck of the woods. This price region was stubborn during February and March.

AMC stock daily chart

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