AMC's Rally Off 'Top Gun: Maverick' Loses Altitude

Whether it's a short or long-term investment you're considering, getting in is much easier than getting out.

The focus of this article will be exiting a shorter-term investment in AMC Entertainment Holdings Inc. AMC, the PreMarket Prep Plus stock of the day.

What A Week For AMC: AMC had a fantastic week along with the broad market ahead of Memorial Day, rallying from $12.03 to $14.43, or nearly 20%. What is noteworthy about the rally is that it took place on higher than average volume, as opposed to the S&P 500 index, which had a rally as well but on much less than average volume.

The 'Top Gun' Effect: It is no surprise that "Top Gun: Maverick" had the best Memorial Day opening of all time. Not only did the film get rave reviews, but it also had excellent marketing.

Most importantly, after the last two years of dealing with the pandemic, people wanted to get out and do something fun.

The Premarket AMC Pump: The primary reason that issues can have more dramatic moves in the premarket or after-hours: there are simply fewer market participants.

Although there was significant volume in AMC’s premarket trading, many of the larger players or institutions wait until 9:30 a.m. EST to begin entering or exiting large positions.

On many occasions, the price levels reached in the extended sessions will never be revisited.

Pulling The Trigger On The AMC Exit: When the issue was being covered on the PreMarket Prep Plus broadcast Tuesday, it was trading at the $15.80 area. It should be noted the premarket high of $16.64 had already been established just after 8 a.m. 

Since the issue was nearly $1 off that level, the chance of the issue coming back to that area was reduced. The reason: later buyers who entered the issue at those elevated levels would try to mitigate or break even on their late entry.

Instead, the author of this article noted the multiple daily highs from the regular trading sessions and encouraged longs of the issue to closely monitor that level in early trading.

AMC Price Action: After a much higher open from Friday’s close ($15.75 vs. $14.43), the issue barely breached $16, rallying to $16.13 before sharply reversing course. AMC did surpass Friday’s close before finding buyers at $13.93.

Since making that low, it has rebounded into the $14 handle and ultimately ended Tuesday's session down 0.62% at $14.34. 

The discussion on the issue from Tuesday’s broadcast can be found here: