How to Trade AMC Entertainment After It Reports Earnings

Shares of AMC have been all over the map but the bulls have regained momentum ahead of earnings. Here are the key levels to know after the print.
Author:
Publish date:

AMC Entertainment  (AMC) - Get Report continues to ride the Reddit hype, particularly with stocks like GameStop  (GME) - Get Report still riding high.

However, earnings could throw a curveball in the mix when AMC reports after the close of trading Wednesday.

On Monday, Wedbush analysts doubled their price target on the stock to $5. However, that would imply more than 50% downside from current levels.

Even though shares are well off the session highs, AMC stock was still up about 11% on the day as of this writing. Shares have been all over the map lately, but are currently up about 45% in the last three trading sessions.

Of course, the action comes after a 75% decline from the January high, as shares look to recoup some of those losses.

It’s a very mixed bag with AMC as the company continues to struggle but as the country continues to reopen. The reopening trade paired with the WallStreetBets hype has made for a volatile ride.

Let’s look at some key levels on the chart. 

Trading AMC

Daily chart of AMC stock.

Daily chart of AMC stock.

On the chart above, notice that this pre-earnings four-day ramp came off a retest of the $7.50 area.

This zone has been significant over the past year, most serving as resistance until January 2021. That’s when AMC rocketed through this level on its way to $20.

After a few days of extreme volatility — where shares went from ~$20 to $7 and back to $17 — AMC ultimately settled down in the $5.50 to $6 range before pushing back through $7.50 and enjoying the rally we’re seeing today.

Stalling at the 200-week moving average as we speak, earnings will likely be a deciding factor in how the stock trades over the short term.

On the upside, I want to see if the stock can take out Wednesday’s high and fill the gap up near $13. If it can do that, there’s nothing that technically keeps the stock from retesting the 61.8% retracement at $14.59.

Above that puts $16 in play. On an extreme push, $20 could eventually be on the table, but with AMC wisely raising capital on its prior price spike, the additional supply of stock makes a robust rally hard to bet on.

On the downside, it’s pretty simple. Bulls want to see the 10-day moving average hold, but need to see $7.50 hold as support. Below puts the February low in play at $5.26, followed by the 200-day moving average just below $5.