Recent meme stock AMC ($AMC Entertainment(AMC)$ ) had made some good moves on Monday on "Barbenheimer" over the weekend. Two blockbuster films had a good weekend, with raking in $155 million in the US & Canada and Oppenheimer bring in $80.5 million in the US, which lead to the fourth-biggest ever weekend in the US.
And of course the stock made a 40% up move, taking out the previous May swing high of $6.11. If you were able to read patterns, you would clearly know is a bull trap, which is a manipulation tactic to trap retail investors.
Bull trap on AMC last week
Subsequently, the down has fallen 25% over the next 4 trading days.
When retail buys, the market maker is selling
When a stock price is moving up, the market maker is in fact net short, he is selling to retail and after the huge move up, the next step is to bring the price down!
When a price action goes vertical, either set a trailing stop if you had bought in earlier, or just sit on the sidelines and watch.
If history has taught retail anything, it is to avoid meme stocks like AMC. In fact, AMC gets a relative strength of 8 from Investors Business Daily. Stocks with poor relative strength tend to under perform the market.
Comments
Meme stocks are volatile and can be risky investments, so investors should do their own research before investing in any meme stock.
Before you invest in any security or other asset, it is important to do your research and understand the risks involved.
It is difficult to say whether the post on r/WallStreetBets was the only factor that caused AMC to move up on Monday.
It is clear that the post did have some impact on the stock.