Stocks have been crashing. When the financial markets move swiftly in one direction, most of the household, big names you think of like Apple, Microsoft, Amazon… tend to move in unison with the overall market. For now, the most widely held companies’ stock charts are tracking the S&P 500 and NASDAQ.
You can substitute one for the other and barely notice a difference.
We want something that’s not absolutely correlated with the market right now. So, we looked at the most active options list for Wednesday, June 15, 2022 to see where speculators are placing their bets.
AMC Entertainment Holdings, Inc. (AMC) garnered plenty of attention from options traders with 241,477 contracts traded. The theatre chain had the most lopsided call to put ratio with 76.6% of the action on the side of bulls. Maybe the meme players are back?
Let’s see what AMC’s chart has to say.
Like most companies, the entertainment company’s stock price has been under pressure, falling from a recent closing high of $29.33 on March 28, 2022. Unlike many other companies, AMC didn’t get whacked to a new low in the most recent selloff. Instead, the stock held its own following the last out of this universe inflation report.
In fact, since the middle of May, AMC set a series of higher lows, but on the other side, a sequence of lower highs, drawing up two converging lines. From experience, this pattern usually comes before a breakout or breakdown.
If bulls can carry AMC above the top side of the triangle, then the stock is likely to rally, perhaps aggressively. There is some initial resistance at $16 and then again at $20. If it can get past $18, “to the moon” as they say. The 200-day-moving average of $25.70 being the most logical best-case scenario in the intermediate term.
Now to the downside case. If sellers push through the trendline connecting recent bottoms, then AMC would likely test its recent closing low of $10.37. A close below $9.70, and we’d cut this film short and take our losses.
As we type, AMC Entertainment Holdings, Inc. (AMC) is $12.77. Downside risk to $9.70 is $3.07 and $12.93 potential upside to the 200-day moving average. Perhaps, it’s this technical analysis reward to risk ratio that inspired speculators to load up on call options.