AMC Stock Attempts To Break Higher Amid Writer's Strike Deal, Falls On Low Volume: The Bull, Bear Case

AMC Entertainment Holdings, Inc AMC popped up about 2% at one point on Tuesday, despite the general market continuing to suffer the fallout of the September Federal Reserve meeting, which raised concerns about the state of the economy.

The theater chain was rising on news of a tentative writer’s strike deal, which AMC CEO Adam Aron said would benefit movie theaters, as halted productions resume filming once a formal deal is reached.

AMC has seen decreasing volume since plunging 35% on Sept. 6, when the stock broke down from a bear flag pattern on the daily chart, which Benzinga pointed out earlier that day.

Since then, AMC has been consolidating mostly sideways on decreasing volume, suggesting a larger move is likely on the horizon. Although AMC’s price action appears largely bearish, the stock’s relative strength index is measuring in at about 29%, suggesting at least a brief pop higher may be in the cards.

When a stock’s RSI falls below the 30% level, it's considered to be oversold. When a stock enters oversold territory, it indicates the security's price no longer reflects the asset's true value, which can signal a reversal to the upside.

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The AMC Chart: The lack of volume in AMC caused the move upward to lose momentum and the stock rejected the eight-day exponential moving average (EMA), as it has for the last four trading days. Bullish traders want to see the stock eventually close a trading day above that area, which could signal strength is returning.

• Bearish traders want to see big bearish volume come in and drop AMC down under the $7.50 level, which would throw the stock into a downtrend and indicate that the recent sideways price action was indicative of distribution.
• The stock has two gaps above that exist between $11.70 and $12.64 and $16.60 and $19.40 which are about 90% likely to be filled in the future. If the stock regains the eight-day EMA and can confirm a new uptrend, the stock is likely to find resistance at the upper range of the gaps.
• AMC has resistance above at $8.51 and at $9.90 and support below at $7.47 and at $6.33.

Read Next: Hollywood Writers Accept Tentative Deal, Including Pay From Streamers: What About Actors?

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