AMC Entertainment Holdings Price: AMC raises $230 million from Mudrick Capital Management

• AMC closes lower on Friday having pushed above $36 early in the session.
• Momentum oscillators show stocks as very overbought.
• Mudrick Capital buys 8.5m shares at a cost of $230.5 million.

Update June 1: AMC Entertainment Holdings issued 8,500,000 shares of its Class A common stock to Mudrick Capital Management  for $230,500,000. AMC intends to use the proceeds from the share sale primarily for the pursuit of value creating acquisitions of theatre assets and leases, as well as investments to enhance the consumer appeal of its theatres. In addition, AMC intends to continue exploring deleveraging opportunities.

AMC shares went at it again on Friday as the strong move in Friday's premarket fed through to the early part of the standard trading session. AMC topped out at $36.72 but slid back to actually close down on the day at $26.12. This is a large move intraday with an ugly-looking candle adding to the momentum oscillators showing overbought conditions.

AMC announced on May 13 that 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." Further, the hashtag #AMCSqueeze trended on Twitter, which seems to have brought in another Redditt-led wave of retail investors. 

AMC stock forecast

On Wednesday of last week, FXStreet examined the monthly chart for a longer-term overview of the move and how it had worked nicely from a technical perspective. The breakout in January was confirmed with a surge in volume and an almost perfect retracement and retesting of the $7.50 breakthrough level. The monthly chart also shows the nice base around $2.50 that AMC had formed and defended multiple times.  AMC on the monthly chart showed clearly the next major resistance was at $21.44 from 2018. 

Returning to the daily chart, AMC staged a beautiful breakout of the long-term channel identified on the monthly chart. The catalyst was when AMC finally broke above the 200-day moving average, and it has not looked back since. The triangle formation from March through May was left behind, and the triangle breakout target just above $19 was reached on Wednesday. Friday saw the culmination of an impressive week as AMC surged to new highs above $36.72 and in the process took out the high from 2015. It is safe to say the cinema business looked a lot better back in 2015, but that is another argument. The move has been explosive and the momentum oscillators have shown just how overbought the current AMC price is. The Relative Strength Index (RSI) and the Commodity Channel Index (CCI) are both highly overbought and the Williams%R has already retraced from overbought based on Friday's sell-off into the close. The Moving Average Convergence Divergence also looks stretched. Caution is needed. The first support is at $21.44 and below that the old January spike high at $20.36.