Some might be wary that if it’s September the show on Wall Street must be over. But when it comes to AMC Entertainment’s (NYSE:AMC) stock, it looks ready for a bullish sequel that’ll be worth the price of admission.
Despite Covid-19 raging on, U.S. moviegoers appear more motivated by the box office than the latest pandemic numbers and mixed sound bites of what folks need to know, while hunkered down at home.
Blame it on “Covid fatigue,” murky civil liberties buried in the Constitution or what have you … it is what it is. Right?
Regardless, the country’s collective activity this past holiday weekend produced terrific Labor Day box office news for the country’s largest theater operator AMC.
To be fair, paying to sit next to a stranger in a dark theatre did have Disney’s (NYSE:DIS) Marvel superhero flick Shang-Chi and the Legend of the Ten Rings acting as a certain catalyst.
On Tuesday AMC announced that more than 2 million people from sea to shining sea took to its theatres over the holiday. And that very determined action was spearheaded by a record-shattering $90 million domestic box office for Shang-Chi.
AMC’s good fortunes didn’t stop there either.
With help from Universal’s Candyman (2021) and joint studio feature Free Guy — alongside other theatre fare — the chain also announced overall record admission and sales revenues for the Labor Day weekend.
The thing is, from Memorial Day through Labor Day, AMC’s 2021 summer was a strong one.
The theatre chain enjoyed standout performances from Black Widow, F9 and A Quiet Place Part II, as well as a sizzling blockbuster earnings release in August. Could it possibly get any better for AMC stock as we look ahead? I think it can.
If nothing else there’s James Bond’s No Time To Die next month and Top Gun: Maverick in November to look forward to. Or not? I’ll try not to judge.
No matter what type of flicks you live for, based on what’s being shown on the weekly chart of AMC stock, the price of admission looks ready and reasonable for a bullish audience beyond Reddit.
AMC Stock: Weekly Price Chart
Source: Charts by TradingView
There’s a historical tendency for investors to get spooked in the month of September. But rather than worry, AMC stock might deserve a bullish “Booyah!” thanks to its continued business success.
Admittedly, James “Booyah” Cramer isn’t quite there yet. The CNBC analyst spoke positively about AMC on Thursday, but was unwilling to gush over the stock in his unique made-for-camera way.
Still, solid-looking momentum is speaking to bulls who are willing to pay attention to AMC stock’s weekly price chart.
Technically, shares this week have narrowly broken above the high of an inside candlestick or pairing pattern. It’s the second such formation in AMC since this summer.
The first incident established a classic test of Fibonacci support and former 2016 high to confirm a low within a three-month corrective base. Today is different though.
This week’s pattern confirmation is a momentum trade rather than playing a bottom in shares. Both types of purchases of course have their unique risks.
Working in this entry’s favor, the pairing breakout has cleared the base’s 38% retracement level, an oversold stochastics is bullishly aligned, and AMC’s Bollinger Bands also appear mostly supportive.
Less favorable? AMC stock still has its 50% and 62% Fibonacci levels above current prices.
For those interested in a more durable cup pattern, the 50% level still needs to be cleared before AMC is officially in the right side of the base. And without that in place, a classic handle entry often used by those same investors will also have to wait.
So, AMC isn’t the perfect stock. What’s new, right?
Closing the curtains on today’s bullish-looking AMC backstory, if investors are interested in playing AMC stock, a September $50/$54 bull call spread looks promising.
On the date of publication, Chris Tyler did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Chris Tyler is a former floor-based, derivatives market maker on the American and Pacific exchanges. For additional market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits.