Popcorn Ready? Trading Strategies For AMC Entertainment Stock Before And After Q4 Earnings

AMC Entertainment Holdings, Inc AMC surged over 12% at one point on Tuesday before falling to trade about 3% lower as the company heads into its fourth-quarter earnings print after the close.

Ahead of the event, the theater chain announced a collaboration with Walmart on an exclusive launch of AMC's six new lines of microwave and ready-to-eat popcorn items in hundreds of Walmart locations around the United States. The announcement was contrasted by news that AMC’s investors are suing the company’s top executives.

When AMC printed mixed third-quarter results on Nov. 8, the stock gapped higher and closed the following trading day up almost 12%.

For the third quarter, AMC reported a loss of 44 cents per share on revenues of $755.6 million. The company beat the EPS estimate for a loss of 53 cents per share and the $708.3-million revenue estimate.

For the fourth quarter, analysts, on average, estimate AMC will report a loss of 19 cents per share on revenues of $1.01 billion.

From a technical analysis perspective, AMC’s stock looks bullish heading into the event, having regained the 200-day simple moving average (SMA) on Monday and back tested and held above that level on Tuesday.

It should be noted that holding stocks or options over an earnings print is akin to gambling because stocks can react bullishly to an earnings miss and bearishly to an earnings beat.

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The AMC Chart: On Monday, AMC broke up bullishly from a long-term descending trendline, which Benzinga pointed out would be a bullish indicator on Feb. 22. The break above the trendline caused AMC to regain support at the 200-day SMA, which is bullish.

• On Tuesday, AMC briefly dropped under the 200-day before bouncing back up to regain the area as support. Bullish traders will want to see AMC continue to trade above that level on Wednesday.
• If AMC suffers a bearish reaction to its earnings print and loses support at the 200-day SMA, the stock may fall to retest support near the upper area of the descending trendline. If that happens, bullish traders can watch for the stock to print a possible bullish reversal candlestick, such as a doiji or hammer candlestick, presenting a potential entry point.
• Bearish traders want to see big bearish volume come in and break AMC back down under the descending trendline, which could indicate Monday and Tuesday’s move higher was a bull trap and the stock will continue in its downtrend.
• AMC has resistance above at $7.47 and $8.51 and support below at $6.33 and $5.23.

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