This week was a sliding down the slope for AMC. As predicted it didnt go below $30. And it will not do tomorrow. It just dipped below 30 for one hour just to come back into the profitable range for the Market Makers. Tuesday the trading volume with Calls vs Puts, was 136% Puts. The tide keeps turning. Wednesday the trading volume hit 90% CPR, Call to Put Ratio. The Bears are gearing up to push AMC further down. The Open Interests "CPR", is sitting at 58.66% for this week according to my data and they might vary from broker to broker or data provider to data provider. Nevertheless, they will be outside the range of error. This week seems bearish and so does next week. Even Apes seldom buy anything beyond their immediate sight, open interests in Put contracts are at 90%. Very high
The least losses, hence the biggest profit for the Market Makers will be in between < $38 - > $33. We have a huge amount of Put contracts sitting at the $30 level. I call it a level now since the puts are concentrated at $30. It is not a spread out "zone".
The price of AMC will not go above $36 with a trading volume of 60% of the average. These Calls are all wasted money, landing in the pockets of Goldman and Sachs. As I said many times before and just think about it, You need an exceptional volume to drive the price up exceptionally in short terms. And buying Call options on a week to week base is super short term trading. Remember there has been above 700 million shares traded to drive the price up on a daily base in May. Now we are creeping at around 60 million. This is 10% of the original squeeze volume. 10%, bro!!
This rocket ship to the moon has no fuel loaded. It is an empty decoy to lure in your money as liquidity for the early Apes. You go in and they get out. They sell to you their seat for a lot of money and they know the tank is empty. They will take your money, guaranteed. If they wont go out, all of you lose over time. To push a car up hill, especially if it is a steep hill, you need a lot of horsepower, fuel or ropes for pulling. Just holding the ropes wont do it and thus, it will roll back.
The Call options at $34, 36, 40, 45, 50 will disappear tomorrow. The Market Maker cash in, you lose your bet and the Market Maker will own all the long shares. NOW, for them to be sure they will drive the price down with you if you start buying PUT Options. They will cover the underlaying and short AMC. The price goes down and when you take profit they buy AMC back for a lower price and do their profit too, on the slippage and the broker on the commission. BUT, remember they are sitting on a truck load of long positions and they want to dump them. Thus, the speed downhill will be faster!! Take my word for it.
Since 7, seven, weeks the Ape Army is losing their battle. They cannot drive the price up!! What makes you think they will do it next week? I am open to think outside the box but you have to come up with some data, any data to support your opinion.
Volume In May the trading volume was 380 million up to peak at 750 million PER DAY!! In June it dropped to 300 million a day as a high point. In July we had 170 million in average and now we barely reach 50% of that. What you think is going to happen? You think the volume you need to increase the price significantly, and I just mean by 15 Dollars, can be done with 100 million shares daily? Or do you think it will go up by mystical Pixie dust? Where are the buyers?
RSI The RSI is showing a divergence since mid of June after AMC peaked beginning of June. The technical aspect.
MACD MACD is a lagging Momentum indicator to confirm your technical, at least for me. Also here we have a divergence going on in the dailies. The only studies I use.
SMA 5 and 20 In the daily charts we also see that the MA5 broke below the monthly MA, which is the SMA20.
I use SMA5, and SMA20, SMA 5 is the weekly base of 5 trading days and there are 20 trading days in a months and so are 250 trading days in a year. I can clearly see if the average of AMC on a weekly base is breaking below the monthly average!
Support and Resistance levels The only Support level sits at $30 with 25,000 Put contracts for now. The Resistance levels sit at $34, 5,000 Call Contracts. The Resistance levels sit at $36, 6,000 Call Contracts. The Resistance levels sit at $40, 6,500 Call Contracts. The Resistance levels sit at $45, 5,000 Call Contracts. The Resistance levels sit at $50, 5,500 Call Contracts. All (98%) of which will expire this Friday, 6th of August, 2021.
Nevertheless, Fundamental analysis is king and will eventually prevail when people running out of money and losing interest.
Conclusion Now that we saw the first time that AMC broke through the $29 level it shows me the direction where the Market Maker and the Avenger Apes want to walk. It will not break on Friday. Maybe not even on Monday. Remember, Tuesdays and Wednesday are the important days for options. But it will eventually. It must. The small volume will not keep the momentum. Gravity will take over.
For the Bulls this is not very encouraging and next week we might see the further decline. We will see where they place the puts. Three things I will watch out for daily.
The volume as discussed. Everything below 100 million shares trading volume is nothing. 100 million on the Call Option Side only.
Unusual Option Trading at the end of a day from Barchart. Compile it in your Excel and eliminate duplicates and keep those options that were mentioned before but not maybe this day. You will see R and S level pretty clearly.
I will calculate the Sweet Spot of the Market Maker and keeping in mind that they are sitting on a train loads of AMC shares ready to sell at any price. This will create an additional downward pressure when the Revenger Apes start buying Puts.
All indicators and studies are lagging. Keep that in mind. They only confirm or deny what you already know.
I am not allowed to post images here. To see the images too, search Google "in the trenches of option trading" in blogspot. I dont do this to make any money. I do it to clear my mind and to pick the right side of a trade and for documentation reason. Do not subscribe to anything since I am not offering anything.
Trade active
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After Earning Report AMC traded 1% higher. And the stock is owned by the Apes, 80% retail traders. But they also own the debt which is gigantic. Price target on the high side is $16.00 and on the low side $1.00. “The Delta variant appears to be weighing on the box office, as a recent NRG survey showed that theater-going comfort levels slipped to 72% in late July from the recent high of 81% (including mothers now 59% vs prior 75%),” Mitchelson wrote. Credit Suisse has an Underperform rating and a $1.55 price target for AMC.
Trade active
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AMC reported 22 million ticket sales in the first quarter, up sharply from its 7 million ticket sales in the first quarter and well below a record 97 million ticket sales in the second quarter of 2019. AMC reported $1.8 billion in cash and $2 billion in liquidity as of the end of June. Sales reach about 10% of what it was before the pandemic. And at that time with a revenue of $5.5 billion the company was losing money big time. Dan Nathan said the thing that's unique about AMC is that 80% of the company’s stock is owned by retail investors rather than institutions. “If I look at it from an institutional perspective, it’s uninvestable. They were losing money in 2019 before the pandemic when their sales were more than $5.5 billion,” Nathan said. “Retail sees something very different in this than institutions.”
What about the shorts having to cover their positions, would that have an impact on the price of the shares?
Option_Crusader
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@SRL2, depends on the volume. If there were millions of shares to cover that would drive the price up. But I do not see shorts that have to be covered. Not sure where you get that question from or how to find that out. It is up to the short seller to come up with more margin or to buy back their shares, or they simply wait it out. I cannot read their minds.
comprehensiveE32782
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What about the volume of transactions made in the Dark Pool, does it make any difference on the share price?
Option_Crusader
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@comprehensiveE32782, I have no idea. You have to find that one out and let me know
Option_Crusader
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I am amazed how angry apes become when they discover that there are people who do not follow their vision of "to the moon, bro". They sound as if they were doing it since 20 years or so but in reality they live at home and spend all their pay checks on AMC and other memes and they want you to do the same. Buy weekly options and let them expire OTM. You lose millions and make the Market Maker rich, and thus, Goldman and Sachs who brokers AMC for the most part. And keep in mind that late comers to the party will pay the price for those apes who will get out for a profit. the new comer provides the liquidity for their position. You buy and they sell. I have a few other positions where I am waiting and waiting and waiting. But this is based on fundamentals, Not crizle crazle lines and rumors. Are the apes angry because I do not agree with them now? I made good money on the first launch, but I also made money on the down turn, and I am still waiting for more. It was all about volume and surprise. But that momentum is gone. Now it is about volume and patience.
Or are the apes angry that novice traders start reconsidering their weekly lottery ticket buy? Are they angry because their are realizing they should have gotten out earlier and are down now? Or angry because I might, maybe, who knows, but maybe I could be right. Earning reports of AMC made a short splash to 37 after market. Thats it. There will be no Tsunami tomorrow. Lets see what the apes can do. Maybe there will be another march on Rome, tomorrow or Wednesday. If not then the weeklies will expire again. End of Story. If this continues the price will drop to 25 and maybe 20. I just wonder if we breach 30 this week. It doesnt look like. But also who knows. But nobody can predict the market. Maybe a crazy guy comes along and sells his AMC position and an institution starts shorting the stock and it drops. Nobody knows until it happens. Apes, dont be too angry, life is too short. Be respectful.
csteffy00
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@Andrew_Lander, Andrew please keep up your posts with AMC. They demonstrate insight backed by logic. Your viewpoint is appreciated.
Option_Crusader
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@csteffy00, thank you. I unfortunately cannot put images here because I am too busy and want to see how it all works out. Here I post for the most part only stuff in writing and these charts, which in my opinion ONLY give you an ENTRY or EXIT point. BUT technicals never give you the sentiment of a stock. These would the fundamentals. If you want to look for better analysis go to hedgingstocks.blogspot.com
csteffy00
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The address provided was not taking me to an active site however I did a quick check up and it seems they have a ways to go.
From researching public sentiment, the play seems to have little to do with fundamentals. It all stems from a combination of supposed synthetics used to short, ftd data, 2nd quarter institutional buying and recent nscc filings specifically mentioning naked shorting as well as giving margin called funds the ability to use shares as collateral in exchange for cash to cover their positions. This among many other things, is what has people believing a squeeze is on the table. There are good points made, but the message gets lost with excess hype and facts being misrepresented which makes it challenging to back. Whether it actually happens or not time will tell.
As for the TA you provide, keep it up. Seems to be a good representation of how the game is being played.