AMC Entertainment (AMC) – Get report continues to take advantage of the Reddit advertising campaign, especially with actions like GameStop (GME) – Get report still flying high.
However, profits could turn a curve in the mix when AMC reports after Wednesday’s trading closes.
On Monday, Wedbush analysts doubled the target share price to $ 5. However, that would mean a drop of more than 50% from current levels.
Although the shares are well below session highs, AMC’s shares were still up about 11% as of the day this article was written. The stock has been on the entire map recently, but currently has risen about 45% in the past three trading sessions.
Obviously, the stock comes after a 75% drop from the January high, as the shares seek to recover some of those losses.
It is a bag very mixed with AMC as the company continues to struggle, but as the country continues to reopen. The reopening trade paired with the WallStreetBets hype took a volatile ride.
Let’s look at some main levels of the graph.
Trading AMC
Daily chart of AMC stock.
Graphic courtesy of TrendSpider.com
In the chart above, note that this ramp four days before earnings resulted from a new test of the $ 7.50 area.
This zone was significant last year, serving mainly as a resistance until January 2021. That was when the AMC shot through this level on its way to $ 20.
After a few days of extreme volatility – where stocks dropped from ~ $ 20 to $ 7 and went back to $ 17 – AMC finally settled in the $ 5.50 to $ 6 range before moving from $ 7.50 and taking advantage the high we are seeing today.
Stopping at the 200-week moving average at this point, earnings are likely to be a deciding factor in the way stocks are traded in the short term.
On the positive side, I want to see if the stock manages to overcome Wednesday’s high and close the gap close to $ 13. If I can do that, there is nothing that technically prevents the stock from re-testing the 61.8% retracement at $ 14.59.
Above that, $ 16 is at stake. In an extreme boost, $ 20 could eventually be on the table, but with AMC wisely raising capital at its previous price spike, the additional stock offering makes it difficult to bet on a hefty rise.
On the other hand, it is very simple. Bulls want to see the 10-day moving average maintained, but need to see $ 7.50 withheld as support. Below, it puts the February low at stake at $ 5.26, followed by the 200-day moving average just below $ 5.