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AMC stock rebounds 5% after opening sell-off

  • AMC stock dropped 2.5% on Thursday.
  • AMC Entertainment shares had their best two-day gain on Tuesday and Wednesday.
  • AMC shares are down 24% for the year but up 32% over the past five sessions.

Update: AMC stock demonstrated a slick reversal on Friday morning. Shares of the cinema chain and now gold mine investor opened 2% lower to begin the session but then rebounded more than 5% to $21.30. In yet another sign that AMC has decoupled from the broader universe on growth stocks, this rally has taken place as the Nasdaq Composite is down 0.2%. This index is known for more clearly tracking growth stocks. This move above $21 is quite good for shareholdes and bullish traders as $20.96 was the top of the supply zone where investors had taken profit in the past. Now bulls can take aim at Wednesday's high of $20.35. AMC stock has been invigorated since March 15, and now it seems clear that the rally does not seem to be a one-time thing since it has created a new range high. Above here there should be more resistance in the low $23 range from early January.

AMC stock is off 0.5% in Friday's premarket after shedding some ground on Thursday, as meme stocks were vulnerable despite Wall Street advances. The stock finished the day at $20.23, down 2.5%. The Nasdaq gained 1.9% on the day, so this was another session where the meme stock was disconnected from the overall risk-on trade. GameStop (GME) for its part was able to eke out a 1% gain. AMC's mentor in the meme category has been doing well all week after CEO Ryan Cohen boosted his stake in the video game retailer.

Catch up on Nvidia (NVDA) news here

AMC Stock News: High number of calls expiring

AMC stock is up 32% in the past five sessions despite still being down 24% year to date. Tuesday and Wednesday witnessed an unexpected 35% joint gain, but Thursday took the day off. The rest of the US market was optimistic. In Brussels President Joe Biden announced further sanctions in conjuction with EU-member nations against more than 300 Russian politicians in a bid to put more pressure on Russia to end its war in Ukraine. There were further indications that Ukraine appears to be slowly turning the war in its favor, including the successful attack on a Russian landing ship off the coast of Ukraine in the Black Sea and new data that suggest Russia has experienced extremely high casualties. 

OIl retreated 2.8% on Thursday, and US index futures all higher on Friday. The S&P 500, Dow and Nasdaq are all around 0.3% higher, so it would seem that marketwide sentiment is remaining positive for a second straight day.

A high number of options are expiring on Friday. 15,679 call contracts at a strike of $20, 13,311 at $22, and 14,798 contracts at $25. On Thursday, volume was more than four times higher than open interest for the $20 strike.

AMC Stock Forecast: Can $20 remain as support?

$20.96 appears to be the main resistance level. It is the top of a supply ridge that reaches down to $19.34. Dropping below $19.34 could send AMC stock all the way back to $13.03 or even the dreaded $8.95 that FXStreet has been yelping about for weeks. Even before $19.34, however, the $20 level may be enough. If it is broken too suddently, bulls may give up confidence as it is an easily identifiable psychological level. Wednesday's high of $22.35 is still the market to beat to see if bulls have the strength to keep this rally alive. Above there, resistance sits in the low $23s.

Of note, the 9-day moving average seems to be on track to converge with the 20-day and 50-day averages somewhere around $17. This may also lead to a support level near there.

AMC stock daily chart

AMC stock chart, daily

PRIOR UPDATE: AMC stock opened 2% lower on Friday at $19.79. This is below the all-important $20 psychological level but above the $19.34 base of the supply zone that stretches up to $20.96. At the same time, US indices are only slightly up. The Nasdaq Composite is flat for the most part, and the S&P 500 and Dow both opened up 0.2%. This would appear to suggest that the market is beginning the session in a disinterested manner that may lead to a sell-off in the next few hours and that growth is once again taking a backseat to value. Oil is beginning the session down 2.4% one day after losing 2.9%. Morgan Stanley's forecast that crude would drop to $101 in the second half of the year has put a damper on the commodity trade. All in all, there is little of curiousity happening so far this Friday.

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Author

Clay Webster

Clay Webster

FXStreet

Clay Webster grew up in the US outside Buffalo, New York and Lancaster, Pennsylvania. He began investing after college following the 2008 financial crisis.

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