Why AMC Entertainment Stock Could Go Bananas

AMC Entertainment Holdings, Inc AMC was trading slightly lower when the markets opened Friday morning, but at 10:15 a.m. bullish volume came into the stock and propped it up.

The short interest on the stock has been increasing and as of Aug. 31 the number of shares held short came in at 95.94 million, meaning 18.76%. The figure is up from 85.85 million in July.

The amount of naked shorting on AMC Entertainment is not included in the number of registered shares held short and could be significant. Naked shorting is an illegal market manipulation tactic where synthetic shares are lent between brokers and large hedge funds.

AMC also has a massive amount of trading activity occurring over the dark pool. The dark pool allows financial institutions and hedge funds to trade anonymously and can be used as a predatory practice. As of Friday at 10 a.m. ET, over 60% of AMC’s trading volume was completed over dark pools.

See Also: 5 Stocks To Consider For World Gorilla Day

The AMC Chart: After hitting a high of $52.79 on Sept. 13, AMC entered into a downtrend and declined about 28% to a low of $37.74. The stock then created a double bottom pattern and the level and bounced up about 10% higher.

The decline set AMC’s stock into a falling channel pattern where it made a series of lower highs and lower lows between two parallel lines. On Thursday, the stock broke up bullishly from the falling channel, tested the upper descending trendline of the channel as support and closed the trading day above it. On Friday, AMC was holding above a support level at $39.07, possibly consolidating the break of the pattern.

  • If AMC is working on a bullish trend change, Friday’s action may serve as the higher low. Bulls can watch for future trading action to create a higher high above $42 level. Sideways price movement on low volume indicates consolidation as opposed to downward pressure.
  • Bears will need to see a break of the $39 level and for big bearish volume to push the stock down to a lower low below $37.74. Below the level, AMC has support at $31.81.
Posted In: Long IdeasShort IdeasTechnicalsTop StoriesTrading Ideas

Ad Disclosure: The rate information is obtained by Bankrate from the listed institutions. Bankrate cannot guaranty the accuracy or availability of any rates shown above. Institutions may have different rates on their own websites than those posted on Bankrate.com. The listings that appear on this page are from companies from which this website receives compensation, which may impact how, where, and in what order products appear. This table does not include all companies or all available products.

All rates are subject to change without notice and may vary depending on location. These quotes are from banks, thrifts, and credit unions, some of whom have paid for a link to their own Web site where you can find additional information. Those with a paid link are our Advertisers. Those without a paid link are listings we obtain to improve the consumer shopping experience and are not Advertisers. To receive the Bankrate.com rate from an Advertiser, please identify yourself as a Bankrate customer. Bank and thrift deposits are insured by the Federal Deposit Insurance Corp. Credit union deposits are insured by the National Credit Union Administration.

Consumer Satisfaction: Bankrate attempts to verify the accuracy and availability of its Advertisers' terms through its quality assurance process and requires Advertisers to agree to our Terms and Conditions and to adhere to our Quality Control Program. If you believe that you have received an inaccurate quote or are otherwise not satisfied with the services provided to you by the institution you choose, please click here.

Rate collection and criteria: Click here for more information on rate collection and criteria.