Happy birthday, but is it time to buy AMC?

  • AMC stock continues to fall as major markets tumble.
  • Risk aversion has hit meme stocks particularly hard this year.

AMC stock continues to tumble but at least limited its losses on Wednesday. The stock closed at $15.94 for a meager loss of just 0.5%. AMC shareholders did not have a profitable start to 2022 as market sentiment deteriorated in favor of more speculative investments. AMC is down over 40% so far in 2022 and is even down now for the last 12 months. And this despite all the massive price spike that took place in 2021.

AMC Stock News

January 27 marks exactly one year since AMC stock went parabolic. On January 27 of last year, AMC jumped $4.96 to close at $19.90, a 301% gain. It was actually as good as it gets for a while with the violent stock trading. It waited until May before going really crazy when it hit $72.62. Since then, it has remained volatile but has never reached such dizzying heights again. What’s most interesting to note about this recent move lower is the relative calm of the losses. Volatility has dropped significantly and AMC has now posted 10 straight days of consecutive losses.

The Wall Street Journal published an article earlier this week regarding AMC refinancing some of its debt. This would allow AMC to reduce its interest on debt and/or increase the term to maturity, thereby reducing the debt burden on the balance sheet and cash flow. Although the Fed is taking a more hawkish approach, money is still cheap, and this move would make sense. According to a report by Benzinga, AMC used 27% of its revenue to pay interest. Investors, however, took the negative side of this restructuring news. The timing may not be favorable as AMC shares have fallen, which will understandably make bondholders more wary of the restructuring. If AMC manages to obtain more favorable conditions, it could lead to an increase in momentum.

AMC Stock Forecast

Technically, AMC reached support at $14.54 earlier this week and so far it has held. This might provide some comfort, but in such a strong downtrend, trying to call the bottom is very risky. However, for now the stock has rebounded, and we also note that AMC is heavily oversold on the Relative Strength Index (RSI). Most forecasters use 70 and 30 as overbought and oversold conditions for RSI readings. However, we prefer the tighter valuations of 80 and 20. This eliminates a lot of false signals. According to our extended measurements, AMC is oversold when the RSI is at 20.

AMC is entering a strong volume profile support zone. The highest volume, however, is below $9.28, which is the checkpoint. From $16 to $8, the volume is much stronger than it has been. The possibility is certainly there for AMC to have some pop.

From a fundamental perspective, AMC is not a buy-and-hold stock. However, based on the RSI and the support and volume profile, a bounce may be possible. Risk has been the theme so far this year, but look for signs that it may be fading, such as the fall in the dollar or gold and the rebound in bitcoin, etc.

Momentum is essential for short-term trading and for stocks alike. Mentions on social media are an indication of this, so keep an eye out for AMC and how it appears on the usual sites. The 9-day moving average at $18.16 is the first resistance. AMC has been below its 9-day MA for most of 2022 and has bounced lower several times.

AMC chart, daily

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Karen J. Nelson