You Ask, We Analyze: The Bull, Bear Case For AMC Entertainment As Stock Surges Higher

On Tuesday evening, Benzinga asked its followers on Twitter what stocks are on their watchlist Wednesday. We selected one ticker from the replies for technical analysis.

@miguel96520256 responded to say they’re focused on AMC Entertainment Holdings, Inc AMC.

AMC's Q4 Earnings Ahead: AMC was spiking up over 5% in the premarket Wednesday after closing over 16% higher on Tuesday. Tuesday’s move defied the S&P 500, which closed down 2% after sinking continuously through the trading day.

The theater chain is set to print its fourth-quarter earnings on Feb. 28, and traders and investors will be watching closely to see if AMC can post a third consecutive beat.

When the company printed its third-quarter results, AMC CEO Adam Aron called for a “more robust film slate in the fourth quarter of 2022” based on a number of big releases that were slated for the quarter, including “Black Panther: Wakanda Forever” and “Avatar: The Way of Water.”

Although revenues from AMC’s most recent collectible release, Ant-Man popcorn helmets, won’t show up in the company’s fourth-quarter results, the move indicates Aron is working to bring in additional revenue streams. On Friday, Aron posted to Twitter that AMC brought in $600,000 in revenue in a single day by selling 20,000 movie-based popcorn holders and said there would be “more collectibles ahead with future movies.”

As AMC approaches its earnings print, the stock looks to be attempting to confirm an uptrend, but will need to break up from a long-term descending trendline to signal a larger reversal to the upside is in the cards.

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The AMC Chart: AMC gapped up to start the trading day Wednesday, and it ran into a group of sellers who caused the stock to completely fill the empty trading range. Since gaps are filled about 90% of the time, it’s a positive sign for the bulls that the gap wasn’t left open. After filling the gap, AMC reversed upward.

• AMC negated its most recent uptrend Feb. 10, when the stock fell under the most recent higher low. The stock hasn’t confirmed a downtrend by printing a lower high, however.
• If AMC is unable to break up from the upper descending trendline later on Wednesday or on Thursday, a lower high may form, at which point bullish traders will want to see a higher low print over the next few days to confirm an uptrend.
• If AMC is able to break up from the descending trendline, the stock is likely to meet resistance at the 200-day simple moving average (SMA). If that occurs, bullish traders will want to see the stock consolidate under the level, while bearish traders will want to see a sharp reversal from the 200-day SMA with big bearish volume.
• AMC has resistance above at $7.47 and $8.51 and support below at $6.33 and $5.23.

Photo via Shutterstock.