Lights, Camera: AMC Entertainment Looks Ready For Action

AMC Entertainment Holdings, Inc. AMC has been in the spotlight for months now, along with GameStop Corporation GME and a number of other stocks that have bizarre underlying statistics.

AMC’s stock doesn’t have the high levels of insider or institutional ownership like some of the other stocks popular in Reddit communities but it has had a history of high short interest. AMC’s last big squeeze to all-time highs caused some shorts to cover, however, and short interest on the stock has dropped to 17.02% from 22.85% in May.

The percentage of short interest registered doesn't include any possible naked shorting taking place on AMC and a growing number of voices are beginning to speak out about the issues around the market structure and how it gives institutional investors a big unfair advantage.

Recently Dave Lauer, CEO of Urvin AI, spoke to CNBC’s Melissa Lee regarding how Lauer believes the market is broken. He noted as much as 70% of trading in names such as AMC and GameStop takes place off regular exchanges and can cause stock price discrepancies of 25%.

See also: How to Buy AMC Stock Right Now

The AMC Entertainment Chart: AMC has been consolidating on the daily chart since reaching its all-time high of $72.62 on June 2. The consolidation has been needed for price discovery and has allowed the stock to form support and resistance levels.

Over the past 17 trading days, AMC’s stock has tightened into a triangle and, if the pattern is recognized, AMC’s stock could break up or down from it on Monday as it meets the triangle’s apex. Further sideways consolidation would not be bad for the stock if the pattern is not recognized and traders can watch for it to set up another pattern over the coming days.

AMC fell below the eight-day exponential moving average (EMA) on Friday and it's now acting as resistance. The stock is still trading above the 21-day EMA and the eight-day EMA is trending above the 21-day EMA, both of which are bullish indicators. Bulls will want to see AMC regain the eight-day EMA as support.

The stock is trading well above the 200-day simple moving average, which indicates overall sentiment in the stock is bullish.

Bulls want to see AMC’s stock regain the eight-day EMA as support and for bullish volume to break the stock up out of the triangle and above a resistance level at $57.16. If it can regain that level as support, it has room to move up toward $61.26.

Bears want to see bearish volume come in and push AMC down below the bottom trendline of the triangle and for it to lose support at $51.50. If the stock was unable to hold that level as support, it could revisit the $47.91 mark.

AMC Price Action: AMC Entertainment was trading up 4.7% to $56.54 at publication time.

Photo: courtesy of AMC Theaters.