Nothing special happened on Tuesday to trigger the move, but something awoke the sleepy Reddit stocks.
It started with GameStop (GME) – Get Report, which opened higher by about 1%, dipped toward flat on the day, then quickly found itself up about 6% in the first hour of Tuesday’s trading session.
Even then though, it wasn’t a runaway trade, with shares chopping around in the first few hours. By the end of the day though the stock had closed higher by 27.5%.
AMC Entertainment (AMC) – Get Report wasn’t going to miss out either.
At one point, shares were up 31%, although the stock closed higher by “just” 20% on the day.
BlackBerry (BB) – Get Report and a few others followed the move, but the rally we saw in the meme-stock leaders certainly has investors’ attention again. Can this group put the squeeze back on?
Trading AMC Stock
Daily chart of AMC stock.
Chart courtesy of TrendSpider.com
AMC stock ended May on a hot streak and came exploding higher into June. After topping out near $70, it still had investors wondering if $100 or higher would be next.
Unfortunately for those bulls, shares found the $60 to $65 area to be resistance. From there it began a precipitous decline.
After initially bouncing from the $40 mark, this level failed as support, then turned into resistance. On the downside, the $30 level ultimately held as support until the 21-week moving average caught up and was able to give AMC stock a lift.
Now bursting through its major moving averages, AMC stock is back above the 50-day moving average. Further, we have a nice two-day high to measure against on the upside, near $48.25.
We essentially have an inside doji candle forming based on the current price action from Wednesday.
That’s a great consolidation pattern, which can give use a strong rotation in whichever direction the stock ends up going.
What bulls want to see from here is a rotation over $48.30. That gives us a strong move over this week’s high and puts $50-plus on the table.
If AMC is able to hurdle $50, the 61.8% retracement could be next, up near $56. Above $56 and the $60 to $65 resistance zone is next.
On the downside, watch for a break of Wednesday’s low (currently at $43.17) and the 50-day moving average. Below the latter and $40 or lower could be on the table.
