Trade of the Day: Regal Entertainment Group (RGC)

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Our indicators are giving neutral-to-bearish readings this week, a downgrade from bullish-to-neutral readings last week, so caution is advised over the near term. A group I’m definitely negative on right now is the movie theaters.

AMC Entertainment Holdings Inc (NYSE:AMC) got hit really hard on Wednesday after reporting earnings; in general, theaters are really suffering, and I think they’re going to see a lot more distress in the next few months. For one thing, they’re in a lot of malls, which are on a major decline.

And there’s a new trend toward just ordering Domino’s Pizza, Inc. (NYSE:DPZ) and binge-watching on your TV at home. People just aren’t going out. I think that’s starting to show in the younger generation, too. So, it’s just like the collapse of retailers — movie theaters are starting to move into an ice age, too.

For that reason, today I’m recommending a bearish play on Regal Entertainment Group (NYSE:RGC), which hasn’t fallen as much as AMC.

Buy to open the RGC Oct 17.50 Puts (RGC171020P00017500) at $0.50 or lower.

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