AMC Entertainment Stock's Not Monkeying Around: A Technical Analysis

AMC Entertainment Holdings, Inc AMC continued the strong uptrend Benzinga called out on Sept. 10 and flew through a resistance level at $48.52.

The movie theatre chain continues to showcase across social media and was trending on Reddit’s r/WallStreetBets early Tuesday morning. Like GameStop Corporation GME, AMC's stock is being targeted by the shrewdness of retail traders in an attempt to stamp out hedge funds and institutions that hold short positions on the stock.

Short interest has been increasing on AMC and of its 511 million share float, 18.76%, meaning 95.94 million shares, is held short. The number is up over 10 million from the 85.85 million shares held short in August.

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The AMC Chart: On Aug. 5 and Aug. 11 AMC created a bullish double bottom pattern at the $29 level and on Aug. 12 the pattern was recognized and the stock reacted to the pattern and began an uptrend. AMC has created consistent higher highs and higher lows during its ascent while reacting to support and resistance levels.

On Monday AMC printed a doji candlestick, which likely indicates the higher high is in and the stock may now come down to create a higher low. As long as AMC doesn’t retrace lower than the $42 mark the uptrend will remain intact.

AMC’s relative strength index is running high at about 67%, which also indicates some consolidation may be needed to garner the strength for another run higher. When a stock’s RSI approaches or exceeds the 70% area reached overbought status, which is a sell signal for short-term technical traders.

AMC is trading above the eight-day and 21-day exponential moving averages with the eight-day EMA trending above the 21-day, both of which are bullish indicators. The stock is also trading well above the 200-day simple moving average, which indicates overall sentiment is bullish.

• Bulls want to see some consolidation to drop AMC’s RSI and then for big bullish volume to come in and drive the stock up over resistance at $55.07. If the stock can regain the level as support it has room to move up to $61.
• Bears want to see big bearish volume come in and drop AMC down below the $42 mark to negate the uptrend. If the stock loses the level as support it could fall toward the $39 area.