Genius Brands Stock Holds Critical Level, Looks Set To Break

Genius Brands International, Inc GNUS was the target of an epic short squeeze on Jan. 27 when the stock skyrocketed over 87% higher in a single day. It was targeted again in March when the entertainment company ran 76% north over the course of 14 trading days.

Like GameStop Corporation GME and AMC Entertainment Holdings, Inc AMC Genius Brands has the typical characteristics of a short squeeze candidate:

• Relatively Small Float: Genius Brands has 279.84 million shares available for trading.
• High Levels of Ownership: Almost a quarter of Genius Brand’s float is held by insiders and institutions with insiders owning 4.84% and institutions $18.68% of the available shares.
• High Short Interest: 16%, which equals 45.79 million shares, of Genius Brands are held short. This number has increased from 41.59 million in June.

Genius Brands is also continuing to demonstrate growth and on Monday announced the “Rainbow Rangers” series continues to grow its viewership across various broadcast platforms worldwide. The hit animated series is available on a wide range of streaming services such as Netflix Inc NFLX and Amazon.com Inc’s AMZN Prime Video Direct and will debut on the Paramount Plus network on Aug. 18.

The Genius Chart: Genius Brands entered into a downtrend on June 9 when the stock reached a high of $2.30, making consistent lower highs and lower lows until hitting a bottom at the $1.46 mark. The stock then popped back up above $1.56 and has closed above the level for the past 11 trading days while tightening into the apex of a descending triangle.

Genius Brands look set to reach the apex of the triangle on Aug. 6 and should break bullishly up or bearishly down from it before then. Traders will want to watch for big volume, in either direction, on the break to know whether the descending triangle was a recognized pattern.

Genius Brands is trading below both the eight-day and 21-day exponential moving averages (EMAs) with the eight-day EMA trending below the 21-day, both of which are bearish indicators. The stock is also trading below the 200-day simple moving average indicating overall sentiment is bearish.

The trading volume on Genius Brands has been decreasing over time which indicates the stock is running out of both buyers and sellers. Often when a stock has decreasing volume on the daily chart buyers come in and break it up bullishly which has happened previously on Genius Brands.

Bulls want to see Genius Brands break up over the descending trendline of the triangle and for big bullish volume to push it up towards its next resistance level at $1.66. If the stock can regain the level as support, it could run toward the $1.76 level.

Bears want to see Genius Brands break below the key level of $1.56. If the stock can’t maintain the level as support it could retract toward $1.46.