AMC Entertainment Holdings AMC was plummeting about 20% at one point on Tuesday after 88% of shareholders approved by vote that the company could convert AMC Preferred Equity Units APE into common shares.
The theater chain’s CEO Adam Aron took to Twitter following the approval to thank shareholders “for giving AMC the tools we need to continue fighting the good fight on your behalf,” adding that “saving AMC is (his) professional mission.”
At 12 p.m. massive selling pressure came in to AMC, causing the stock to plunge from $5.27 to the $4.37 mark, which it reached at 2:45 p.m. before bouncing up slightly.
The massive drop caused AMC to confirm its downtrend remains intact. A downtrend occurs when a stock consistently makes a series of lower lows and lower highs on the chart.
The lower lows indicate the bears are in control, while the intermittent lower highs indicate consolidation periods.
Traders can use moving averages to help identify a downtrend, with descending lower timeframe moving averages (such as the eight-day or 21-day exponential moving averages) indicating the stock is in a steep shorter-term downtrend.
Descending longer-term moving averages (such as the 200-day simple moving average) indicate a long-term downtrend.
Want direct analysis? Find me in the BZ Pro lounge! Click here for a free trial.
The AMC Chart: AMC’s most recent lower high within its downtrend pattern was formed on March 6 at $6.75 and the most recent confirmed lower low was printed at the $5.90 mark on March 2. On Tuesday, AMC looked to be printing a hammer candlestick, with a long lower wick, which could indicate the next local bottom is in, and the stock will trade higher on Wednesday.
The second most likely scenario is that AMC trades sideways, to print a possible inside bar pattern to consolidate Tuesday’s steep drop. If that happens, the pattern will lean bearish for a continuation lower.
If AMC trades higher on Wednesday, near to the upper range of Tuesday’s candlestick and eventually breaks up above that level, the stock will break up through a long-term descending trendline, which could indicate a longer-term bullish run. If that takes place, bullish traders will want to see the move happen on higher-than-average volume.
AMC has resistance above at $5.23 and $6.33 and support below at $4.31 and $3.56.
Read Next: AMC CEO Is In Touch With NYSE, FNRA About Stock Staying In 'Threshold List' For 'Failure-To-Deliver'
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
