Stocks » AMC shares are up 16.6% at the start of the week

AMC stock is up 16.6% at the start of the week

  • AMC shares surged nearly 30% in the stock market last week as independent traders returned.
  • AMC Entertainment and GME return to the top of the Wallstreetbets chat room.
  • AMC and GME both expect further gains on Monday.

AMC shares rose 16.6% to $23.60 on Monday. It looks like meme actions are regaining popularity. For its part, GameStop (GME), the original leader of the movement, is up more than 8% over the same period. For all the fanfare, the major markets are pretty much dormant.

The Dow Jones was down 0.3%, the S&P 500 was flat and the Nasdaq was up a meager 0.2%. CEO Adam Aron appears to have fueled hunger for his company among independent traders after telling Reuters that AMC could become a kind of holding company for investing in meme stocks. Stock investors are also impressed that Hycroft Mining was able to raise over $190 million in a stock offering, which immediately made AMC’s investment more compelling. $23 call options expiring Friday are on fire this morning with 12,900 volume already booked. The last contract sold for $2.05.

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AMC stock continued to see more interest on social media on Monday as the stock looks to build on last week’s strong performance. Not just AMC, but GameStop (GME) as well, as meme storage has surged over the last week. While AMC’s 28% gain over the past week certainly looks impressive, GME’s stock has more than doubled to 67% over the week to maintain its status as the king of memes. This week, the risk return theme is likely to continue, particularly in the risky stock space.

News about AMC Entertainment Holdings Inc.

CEO Adam Aron tweeted over the weekend that more deals are afoot on the exchange following the success of the Hycroft Mining (HYMC) deal. AMC entered the gold mining world just two weeks ago with a small investment in Hycroft Mining, a mining company in Nevada. This financially troubled former gold miner went public last week by successfully raising $139 million through a share placement.

In response, HYMC shares rallied more than 20% in the stock market in after-hours trading. Now, Reuters has reported that Adam Aron, in a phone interview from his limousine en route to the Oscars, said further deals in meme stocks are possible as the cinema chain appears to be becoming some sort of investment vehicle.

“I would imagine there will be more external M&A announcements from third parties in the future where AMC can hit the stars and intriguing investments with potentially attractive returns,” Aron told Reuters. “While investing in Hycroft is quite a distance from home, it builds on a core competency of our business in understanding balance sheets, raising funds and addressing liquidity issues.”

That last statement probably hits the nail on the head. Aron has become adept at exploiting the current trend and endearing himself to stock traders. This earned it a large following and allowed AMC Entertainment to raise funds from retail investors, which certainly helped AMC avoid bankruptcy during the pandemic.

AMC stock price analysis

Starting with the 15 minute chart this time to give us a short term focus, the $18+ level is key to hold due to the volume gap underneath. A downside break will result in a quick move to $16 and below.

Chart AMC Entertainment Holdings Inc. (NYSE:AMC) 15 minutes

amc stock exchange march 28, 2022
Source: Tradingview, FXstreet

On the daily chart, we have yet to cleanly break the $21.04 resistance and close above it. This opens a move to $26.92. More importantly, it ends the long-term downtrend. This can then engage the CTA and trend-following funds in trending, or at least stop the trend-following sales programs. Now I’m bearish on AMC stock from here and long a few puts. I know some of you aren’t going to enjoy reading this, but it’s a longer-term perspective. I tend to trade on macroeconomic fundamentals and foresee problems in the stock market. AMC should hold up in the short term, but I’m not so confident in the longer term. If the AMC monkeys manage to close above the $21.04 resistance level I mentioned, then I might close the position.

Chart AMC Entertainment Holdings Inc. (NYSE:AMC) 15 minutes

Exchange amc 28032022
Source: Tradingview, FXstreet

*The author is ‘long‘ in AMC and HYMC.

By Ivan Brian, Analyst at FXStreet

Ivan has over 25 years of experience in the financial markets as a trader, analyst and fund manager. He was Head of Trading and Research at Baxter Financial Services, a Dublin and Sydney based foreign exchange broking firm, for six years and was a senior trader at J&E Davy Capital Markets, a Dublin based institutional stock broking firm, for 13 years.

The opinions expressed herein are solely those of the author and do not necessarily reflect the views of Forex Quebec. Every investment and trading move involves risk, you should do your own research when making a decision.

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Disclaimer: The information and opinions contained in this report are for general information only and do not constitute an offer or a solicitation to buy or sell any foreign exchange contract or CFD. Although the information contained herein has been obtained from sources believed to be reliable, the author does not guarantee its accuracy or completeness and accepts no responsibility for any direct, indirect or consequential damages that may arise from reliance on this information by anyone.

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