- AMC sitting on key support at $12.22
- AMC shares have had a sharp rally.
- #AMCSqueeze no longer trending on Twitter.
AMC shares are looking to start the week on a cautious note after last week's stellar gains saw AMC close the week struggling to hold those gains. AMC exploded out of its triangle formation and unfortunately just failed to breach the strong $14.54 resistance. Now AMC shares are clinging to support at $12.22 and looking likely to break lower. This is a key support level.
Just in case you are not too familiar with the whole GameStop and related meme stock saga, here is a little recap of the story so far from AMC's point of view. AMC is a global cinema chain and, as a result, has struggled during the global pandemic as most of these cinemas have been closed for the better part of a year. The company narrowly avoided bankruptcy through the interest of retail traders. By strongly backing it, these retail traders allowed AMC to raise capital and debt, meaning it could survive the pandemic.
AMC stock news
The catalyst for the rally was the earnings news on May 6. AMC missed analyst expectations, but the conference call was positive. The CEO Adam Aron thanked the new retail investors and made a donation to R/WallStreetBets' favoured charity, the Diane Fossey Gorilla Fund. Adam Aron also pointed out that nearly 3 million cinema goers attended AMC theatres in the first quarter. This emboldened investors to go back in and buy more AMC shares and so began eight straight sessions of gains. The most notable was the explosion out of the triangle formation on May 13 when AMC shares jumped over 20%.
News flow and sentiment had been boosted by AMC announcing it had completed the offering of 43 million shares it launched on April 29. AMC CEO and President Adam Aron said, "The additional cash raised puts AMC in a stronger position to tackle the challenges and capitalize on the opportunities that lie ahead."
AMC's share price exploded out of the triangle formation FXStreet had identified. The first breakout target of $12.22 was duly captured and is now the key level to hold to keep the bullish trend. Consolidation for a time is fine for bulls so long as this $12.22 level is not breached. The RSI (Relative Strength Index) and CCI (Commodity Channel Index) had shown overbought signals on May 19, perhaps adding to the bearishness as well as some gains being crystallized. A phase of consolidation should see both momentum oscillators, RSI and CCI, retreat to more neutral levels and shares just hold $12.22.
AMC shares now sit at this key support having just closed below on Friday at $12.08. In Monday's premarket AMC shares are again trading below the level at $12.04. Failure to hold this key support also sees AMC lose its 9-day moving average and turn neutral on the technical view. It is not until a break of $8.95 that the trend turns bearish, so now it is looking like a $12.22-$8.95 range play. Breaking $14.54 is strongly bullish and breaking $8.95 strongly bearish.
| Support | $12.22 pivot | $10.63 | $8.95 | $8.31 | $6.33 200-day |
| Resistance | $12.22 pivot | $14.54 | $20.36 | to the moon! |
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