What a ridiculously bullish day for certain stocks today! Despite the massive selloff this morning in most sectors of the market today, certain stocks decided to change course and take a rocket ride higher. Of note today – obviously – is AMC stock (and Tesla duh). The “diamond hands” HODLers decided to take this one for a spin, smashing the ask right at the open. But what was the catalyst? Or was the move just a slap in the face for all those that sold at the lows after last month’s parabolic move? Lets see why AMC Stock Skyrocketed 17% Today!
AMC Decides To Blast Off
This morning AMC stock joined most other stocks in taking a sharp dip, reaching all the way down to $6 after a strong opening. However, the dip was ferociously bought, leading to newer highs throughout the day.
This move comes after several weeks of deep consolidation following the whole Wall Street Bets craze.
Just in case you missed it, we predicted AMC would explode last month. Check out our article here. We caught AMC right about when it broke out from ~$3 to $21. It was one of our biggest gains in one week on record.
With the confirmation today, it may be time for AMC to break out again. Maybe not back to the $20 range, but at least 100% from today’s lows (in our opinion).
What Was The Catalyst?
In all likelihood, the catalyst for today’s breakout was the announcement by NY Governor Cuomo.
According to MarketWatch:
Shares of AMC Entertainment Holdings Inc. AMC, +17.56% rallied 3.8% in premarket trading Tuesday, to extend the previous session’s 14.9% surge, which was fueled by New York Gov. Andrew Cuomo’s announcement that New York City movie theaters can open at 25% capacity next week. Wedbush analyst Michael Pachter reiterated the neutral rating he’s had on AMC for the past 11 months, but said Cuomo’s announcement was a “ray of light” for the company. “We think there is significant pent-up desire to go out to the movies, and this could potentially add meaningfully to AMC’s March/Q1 and Q2 results given that AMC’s NYC theaters are some of its highest performing theaters in its domestic circuit”
Essentially, the Governor of NY said theaters can open across the state starting next week.
This was taken as a bullish sign for the aforementioned analyst and the AMC HODL community.
Nothing like some strong gains after a big wipeout! #Bullish
But was this big move the end of the rally?
We don’t think so!
AMC Price Prediction
Late last week, we started noticing unusual options activity on AMC. Particularly multiple March expiration dates of $10 strikes.
This unusual options activity continued into today. See Barchart’s Unusual Options Activity below:
When you combine this with the fact that the daily chart is looking very bullish, you might get an explosive move higher. Keyword “might,” we are not prophets, we just follow the breadcrumbs.
And the breadcrumbs look pretty bullish.
If you look closely at the daily MACD, you can see how it is curling up with the price.
Generally when this happens you get a strong move higher. Currently price is stuck right below the 20 day moving average, but a simple push higher in the near future can break this resistance and push the stock up.
Finally, you have a disturbingly large “gap” around $13, a remnant of the colossal dump manufactured by trading platforms and their colleagues last month.
This massive gap is where I am putting my money, which is why I have a $13 Price Target.
Hold on bulls, we may have liftoff!
In summary, we are medium term bullish on the stock for several reasons:
- Theaters are reopening in NY, which will likely pressure other states to follow suit.
- Unusual options trades target $10+ March Calls
- Strong daily chart with an ascending MACD.
Obviously we are not financial advisors, but with these three pieces of data, it is likely that the gap will fill, and may potentially move higher.
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