Bulls, Apes Defend AMC Entertainment Stock Amid Pullback

AMC Entertainment Holdings, Inc AMC lost a recent key level on Wednesday, but bounced and held support above an older level created in 2017.

AMC is set to print its second-quarter earnings results next Monday. With many of its theatres in the U.S., at least, reopened during the quarter, traders and investors will have a close eye on how far along AMC is in recovering.

If AMC can demonstrate a solid road toward profitability when it prints its results, the stock could react bullishly because it hasn’t run higher into the event.

The AMC Chart: On Monday, AMC broke bearishly from a triangle it had set up between July 19 and July 30 and printed a bearish Marubozu candlestick, which indicated lower prices were likely on Tuesday. On Tuesday, AMC printed a red hammer candlestick, indicating the dip was bought and higher prices may come, but it was negated when the stock continued to trade lower on Wednesday.

AMC dropped below a key resistance level at 31.81 and bounced off an old support level at $29.45 before popping back above a psychological support level at the $30 mark. Bulls will want to see AMC close above the level and print a reversal candle pattern on Thursday.

Options traders see upside ahead for AMC and on Wednesday continued to hammer bullish call contracts. The traders purchased well over $1 million worth although the orders below were filtered to only include purchases that totaled over $100,000 each.

See Also: How to Buy AMC Stock Right Now

Why It’s Important: When a sweep order occurs, it indicates the trader wanted to get into a position quickly and is anticipating an imminent large move in stock price. A sweeper pays market price for the call or put option instead of placing a bid, which sweeps the order book of multiple exchanges to fill the order immediately.

These types of option orders are usually made by institutions, and retail investors can find watching for sweepers useful because it indicates “smart money” has entered into a position.

The AMC Trades: Below is a look at the notable options alerts, courtesy of Benzinga Pro:

• At 9:40 a.m., a trader executed a call sweep near the midpoint of 300 AMC Entertainment options with a strike price of $80 expiring on Jan. 21, 2022. The trade represented a $159,000 bullish bet for which the trader paid $5.30 per option contract.
• At 9:51 a.m., a trader executed a call sweep near the midpoint of 200 AMC Entertainment options with a strike price of $45 expiring on Jan. 21, 2022. The trade represented a $198,000 bullish bet for which the trader paid $9.90 per option contract.
• At 10:29 a.m., a trader executed a call sweep near the midpoint of 200 AMC Entertainment options with a strike price of $42 expiring on Jan. 21, 2022. The trade represented a $195,000 bullish bet for which the trader paid $9.75 per option contract.
• At 9:51 a.m., a trader executed a call sweep near the midpoint of 200 AMC Entertainment options with a strike price of $32 expiring on Sept. 17. The trade represented a $134,000 bullish bet for which the trader paid $6.70 per option contract.

AMC Price Action: AMC Entertainment was trading down 9% to $30.53 at publication time.