You Ask, We Analyze: Did AMC Entertainment Stock Just Pull Off A Bear Trap?

On Thursday evening, Benzinga asked its followers on Twitter to name a stock they want to buy at the open on Friday. From the replies, Benzinga selected one ticker for technical analysis. @PrestonHillber2, @TreysKraken, @thejeffparulan, @PapaCrawford, @invisibleaxm, @STLBLUE96080416, @0zerec, @zmurc, @koryamc1, @conflict1904, @rickity_wrecks, @Odijay_Ariemay, @apewithnoface, @MSM1224 and @NoobApe1 are buying AMC Entertainment Holdings, Inc AMC.

Between 2 p.m. and 3 p.m. on Thursday, huge bullish volume came into AMC’s stock and drove the price up 18% higher to the $41.78 level. The stock then declined slightly but closed up 7.09% off the open.

In Friday's premarket, AMC was trading over 3% higher and was once again trending highest in the r/WallStreetBets community.

See Also: AMC Finds Its Way Back To Become Top WallStreetBets Interest Again, These Are Other Top Trends

The AMC Chart: On Sept. 28, AMC broke down bearishly from a symmetrical triangle the stock has been trading in since May 25. There was no follow through on the break in terms of big bearish volume, however, which indicates either the pattern wasn't recognized or the price action could have been a bear trap.

On Thursday AMC’s had higher than average bullish volume with 102.82 million shares exchanging hands compared to the average 10-day volume of 50.86 million. Higher than average volume indicates interest has returned to a stock.

On Sept. 13, AMC entered into a downtrend within the triangle, making a series of lower highs and lower lows. Thursday’s price action was unable to make a higher high above the Sept. 23 price of $41.79. For a bullish trend change to occur, AMC will have to rise above the price in the coming days.

AMC’s stock is trading below the eight-day and 21-day exponential moving averages (EMAs), with the eight-day EMA trending below the 21-day, both of which are bearish indicators for the short term. The stock is trading up about 60% above the 200-day simple moving average, however, which indicates overall sentiment is bullish.

• Bulls want to see continued big bull volume come in to push AMC back up into the triangle pattern and through a resistance level at $43.33. If AMC can regain the level as support, it has room to test the resistance at the descending trendline of the triangle and if it can break through the pattern there is another resistance at $48.52.
• Bulls want to see big bearish volume come in and drop AMC’s stock down below $33.74 to confirm the downtrend is still intact. Below the level, AMC has support at $31.81 and $29.45.