Trey's Trades Made 'Just Under $1M' Trading Options In AMC Entertainment, But What Does The Four-Test Trend Say About The Stock's Trajectory?

AMC Entertainment Holdings Inc AMC showed some life when it surged higher by more than 25% this week after trading relatively flat over the past month.

The moves in AMC Entertainment's stock are relatively predictable through technical analysis, Trey's Trades YouTube channel host Trey Collins said in an interview Thursday on Benzinga's YouTube show "Power Hour."

One trend is more apparent to Collins than any other trend that he has identified in AMC over the past eight months, he told Benzinga: "It's probably the most apparent trend that I've seen. It's that four-test trend."

See Also: AMC Forms Bullish Pattern, Institutions Increase Short Positions: Will Shorts Get Smoked?

What To Know: Whenever the stock tests levels of critical resistance, it usually takes four attempts to break through the resistance, Collins explained. 

This theory played out in AMC when it broke the $37.50 level and surged higher this week. Collins told Benzinga the $48 level is now the one to watch. The stock tested the $48 level twice this week. 

"I would anticipate sometime probably within the next week, maybe two weeks, you're going to get those four tests and ultimately, that push over $50," Trey said.

The "four-test trend" has played out eight or nine times over the last eight months, Collins noted. 

Collins told Benzinga he's currently holding stock, opposed to options contracts. However, he noted he has bought call options on the stock five or six times over the last eight months. One of those trades resulted in profits of just under $1 million, according to Collins.

See the full interview here:

AMC Price Action: AMC Entertainment has traded as high as $72.62 and as low as $1.91 over a 52-week period.

At last check Thursday, the stock was down 3.75% at $42.31.

Photo: Scott Durgan from Flickr.