AMC Drops 25% in 7 Days, but Retail Says It’s Buying the Dip
Having apes covering its back, AMC stock swiftly recovers. Pincered between new viral fears and animus toward short-sellers, the meme stock gained another, unexpected bullish supporter.
Did Adam Aaron’s Canceling of New Shares Trigger AMC’s Dip?
Since the Tokenist last covered AMC news two week ago, the CEO Adam Aaron took Wall Street by surprise. As a veteran company manager in the travel industry, and now in charge of AMC’s future, he forwent his plan to authorize 25 million new shares. Aaron saw the additional shares as a vehicle to raise capital in order to deleverage the company.
However, the gravitic pull of meme stock retail traders – apes – cannot be ignored, especially when their view on Aaron’s plan was divided. As of early June, retail trades—self-proclaimed ‘apes’—hold over 80% of AMC shares, dispersed across 4.1 million individual shareholders, with each one holding 120 shares, on average. In the financial world, we have rarely, if ever, seen such a development where retail traders are so solidly planted in the driver’s seat.
Although Aaron’s decision closed off a specific path to capital influx, a case could be made that it reduced FUD – Fear, Uncertainty, Doubt – lingering around AMC. At the time, on July 7th, AMC price was at around $45. From then to Wednesday, it took a precipitous 25.8% nose dive.
However, although AMC price broke under the 200-day moving average, within two days it bounced up by 10.6%, going from $33.43 on Wednesday to about $37 on Friday. It turns out, the dip had been predicted by a well-known ape personality, Trey Collins, the host of Trey’s Trades.
Trey Collins Resists AMC Panic Selloff
Breaking under the 200-day moving average is no small matter. It signifies a bearish turn, by equaling or going over a 20% decline. In other words, it is traditionally seen as a sell signal. That is, if we were dealing with conventional market conditions instead of one dominated by such ‘apes’. One of the more prominent figures in this community, Trey Collins, confidently turned this sell signal into a ‘buy-the-dip’ signal.
Trey wasn’t surprised by the bearish turn. A week ago, Trey took a short-term bearish stance, forecasting AMC price to drop to $33 – $34 range, just as it did. He explained this good call to Fox Business as coming from his trading philosophy:
“When people are fearful, you need to be greedy.”
It seems his 377k-strong ape audience heeded the call. AMC closed the week at around $35—reaching Trey’s forecasted bottom, but not exceeding it.
More tellingly, but this ape army is not alone in defying the market odds and continuing to buy AMC. In fact, the army is joined by AI-led ETFs, as well.
AMOM Trading Bot Prefers AMC Over Other Stocks
Whether you call software trading algorithms AI, machine learning, neural networks, or simply – bots – they are defined by their key advantage. They cannot fall victim to either panic or bias. Trading on the NYSE under the moniker AMOM since 2019, the South Korean-made Qraft AI-Enhanced U.S. Large Cap Momentum ETF has been beating human counterparts at their game.
As its name suggests, it was developed to trade in stocks that have high capital appreciation potential, according to Geeseok Oh, Qraft’s managing director. Given this drive, AMOM abandoned GameStop stock trading in June in favor of AMC, as a result of its monthly rebalancing and tracking of 50 large-cap US stocks. Likewise, AMOM ditched five other stocks – Facebook (FB), Adobe (ADBE), Walmart (WMT), Texas Instruments (TXN) and Home Depot (HD).
While this is a fascinating indicator in and of itself, the scope of the bot’s predictive power is limited to market scanning alone. Because a market is a reflection of the wider world, if it were to be fed with real-world data, then its trading prowess could be truly revolutionary. To put it more succinctly:
“All things are subject to interpretation. Whichever interpretation prevails at a given time is a function of power and not truth.”
In this light, the AMOM bot can serve as another largely bullish signal that can be adopted by actors (apes) outside the bot’s scanning sphere.
Do you think apes will take a hold of 90% of AMC shares by the end of the year? Let us know in the comments below.