You Ask, We Analyze: Why AMC Entertainment Stock Must Regain This Key Level

On Thursday evening, Benzinga asked its followers on Twitter what they’re buying at the open on Friday. From the replies Benzinga selected one ticker for technical analysis.

@senci8, @Ynot92279544, @Son895, @Bono06141, @diamante_jozu, @hypocrisy1776, @AglowStockNews and @SamirRakip are buying AMC Entertainment Holdings, Inc AMC, while @lee13950199 said they plan to short it.

On Dec. 7, AMC’s CEO Adam Aron continued to cash out his stake in the theatre chain, selling 312,500 shares valued at about $9.65 million. AMC’s CFO, Sean Goodman, also sold 18,316 shares for nearly $565,000.

AMC insiders have sold more than $70 million in stock so far this year but that hasn’t deterred swarms of retail traders who promise they “are not leaving.” The stock has trended across social media during 2021 and on Thursday Aron said that “Clearly interest in @AMCTheatres has been incredibly high,” following a report ‘AMC stock” was the seventh most googled search in the U.S.

See Also: How to Buy AMC Stock Right Now

The AMC Chart: On Nov. 30, AMC broke bearishly down from a pennant formation the stock had been trading in since June 2 when it reached a new all-time high of $72.62. The break down from the pattern took place on high volume, which indicates the pattern was recognized.

On Dec. 1, AMC continued to descend and fell over 22% in a single trading session. Since the date, AMC has consolidated the move lower by trading slightly upwards within an ascending channel.

The sharp move lower paired with the upwards consolidation may have settled AMC into a bear flag on the daily chart, with the pole created between Nov. 30 and Dec. 1 and the flag between Dec. 3 and Thursday. It should be noted, however, that the flag has set AMC into a possible uptrend and if the stock can regain support at the eight-day exponential moving average (EMA) the flag will be negated.

It's a good sign for the bulls that the consolidation and 8.93% drop on Thursday took place on lower-than-average volume with 36.55 million shares having exchanged hands compared to the 10-day average of 42.69 million. When a stock drops on low volume it indicates profit taking is occurring as opposed to shareholders selling out of fear.

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• Bulls want to see big bullish volume come in and push AMC up over the eight-day EMA to negate the bear flag, which would indicate Thursday’s price action was the higher low of the uptrend. There is resistance above at $35.59 and $39.07.
• Bears want to see big bearish volume come in and drop AMC down through the bottom ascending trendline of the flag, which would indicate the pattern was recognized. The stock has support below at 29.45 and $25.79.