AMC stock gains even as Apes face extinction and Lightyear cannot save them

• AMC stock rises over 2% on Wednesday despite main indices falling or flat.
• AMC attempts to form a bottom from the summer box office.
• AMC stock remains highly pressured though and is down 49% YTD.

Are we about to lose another species as the AMC Apes appear to be a dying breed? Various reports circulated last week from investment banks that the era of the retail trader was coming to an end and we were looking at seller capitulation. Most of that data was based on the collapse in small lot volumes and option call volumes. Call option buying was a favored means of stock market speculation during the retail trading boom last year.

Indeed, we also noticed a report this week from the US House Committee on Financial Services that the doyen of retail trades, Robinhood (HOOD), was closer to default than previously thought. “The company was only saved from defaulting on its daily collateral deposit requirement by a discretionary and unexplained waiver,” the report said. "Robinhood’s risk-management processes did not work well to predict and avert the risk of default that materialized.” Of course, that led to Robinhood ironically moving from saint to sinner in the eyes of many retail traders. 

AMC stock news

Despite the doom and gloom around the retail space, AMC is attempting to form a bottom and is having some success in doing so. AMC stock bottomed at $9.70 in May and since then is up 30% to close Wednesday at $13.65. So far so good. The traditional summer blockbuster season may be helping with Top Gun: Maverick posting massive numbers and Jurassic World Dominion closely nipping at Tom's heels! Indeed, AMC CEO Adam Aron could not help but take a swipe at those rumors of impending demise for cinema theatres when he tweeted below:

This though was followed up with a relatively disappointing take from the Toy Story spin-off Lightyear, which was underwhelming. Box office takings look to be back on track though this week with a strong showing from Baz Luhrmann Elvis and The Black Phone. Elvis showed he is still the king as he finally clipped Top Gun's wings to knock it from the top spot.

AMC stock forecast

While we are still negative on the long-term prospect for AMC, there is potential for the short-term rally to continue. Longer-term the huge debt pile and deferred rents pose a significant problem as does the slowing economy. However, AMC has formed a bottom, and with the summer blockbuster season kicking off at least there is plenty of news. Retail stocks such as AMC need news flow to keep the momentum going. The only negative from our view is the triangle formation. Triangles usually result in strong breakouts. However, the breakout is usually in the direction of the trend. This is an upward sloping triangle, so the breakout in theory should occur to the upside, giving a target of $22 approximately. 

AMC chart, daily