AMC Entertainment Stock Surges Higher Following 'Black Panther' Sequel Release: What's Happening?

Zinger Key Points
  • Although AMC negates its downtrend, the stock has yet to print a higher low to confirm a new uptrend.
  • Bullish traders want to see consolidation take place, possibly in the form of an inside bar or bull flag pattern.

AMC Entertainment Holdings, Inc AMC gapped up more than 11% to start the trading session on Monday after the company announced it set a domestic record for its November opening of "Black Panther: Wakanda Forever."

The company enjoyed its fourth-highest attendance weekend in 2022, with more than 4.9 million moviegoers visiting AMC theatres Thursday through to Sunday. The company also said it saw strong food and beverage sales.

AMC CEO Adam Aron thanked retail traders on CNBC's "Squawk Box" Monday for the theatre chain’s survival through the COVID-19 pandemic. Speaking about the group, known as apes, Aron said “If they hadn't been there, we wouldn't be here today."

The multinational “big-screen” company was headed for bankruptcy at the beginning of the pandemic, before retail traders grouped together and drove the share price higher, allowing AMC to raise $2.2 billion of equity in 2021 to keep the company afloat.

AMC has implemented several measures to grow its business since the pandemic ended, including the declaration of a special dividend in the form of APE, or AMC Preferred Equity Units APE.

On Nov. 7, AMC announced a partnership with Zoom Video Communications Inc ZM to turn some AMC locations in the U.S. into Zoom Rooms.

The stock was struggling to hold its morning gains intraday because the total 40% rally that has taken place since Thursday indicates consolidation is likely needed. That consolidation may come in the form of sideways trading or slightly lower prices, before AMC gains the power to potentially run higher again.

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The AMC Chart: Although AMC negated its downtrend on Nov. 10 by printing a higher high above the Nov. 8 lower high of $5.62, the stock hasn’t yet formed a higher low to confirm an uptrend is in play. Eventually, AMC will need to retrace to print a higher low above the $5.05 52-week low formed on Nov. 9.

  • The retracement is likely to come over the next few trading days because on Monday, AMC looked to be printing a possible doji candlestick. When a doji candlestick is created on a move higher, it can indicate the temporary top is in.
  • Lower prices are also needed because AMC’s relative strength index (RSI) is measuring in at about 62%. When a stock’s RSI nears or reaches the 70% mark, it becomes overbought, which can be a sell signal for technical traders.
  • Bullish traders would like to see the stock consolidate sideways or slightly lower, possibly settling into an inside bar or bull flag pattern, which could indicate another rally is on the horizon. Bearish traders want to see big bearish volume come in and knock the stock down under the 50-day simple moving average, which could then act as heavy resistance.
  • AMC has resistance above at $8.51 and $9.90 and support below at $7.46 and $6.33.

Photo: Shutterstock

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