- AMC stock slumps nearly 9% on Tuesday as equities fall sharply across the board.
- AMC Entertainment shares suffer as Nasdaq closes nearly 4% lower on Tuesday.
- Apes still holding strong but other investors selling to safety.
$AMC Entertainment(AMC)$ AMC stock closed nearly 9% lower as the recent sell-off continues in the name. This was a strong move but the reaction was largely due to a total lack of risk appetite from investors who instead fled to safe-haven assets. Notably, the US dollar saw significant inflows as worries over the global economy continue to mount as Russia curtails gas supplies to certain EU countries.
Also weighing on tech sentiment were earnings from Netflix$Netflix(NFLX)$ (NFLX) last week and worries over a repat performance from Meta$Meta Platforms, Inc.(FB)$ (FB) out.
AMC stock usually gets hit harder when things turn south just as it tends to outperform in good times. This is called beta or a fancy word for volatility. We know AMC stock is the king ofvolatilityand with the VIX index spiking above 30 on Tuesday it was no surprise risk assets took a severe hit.The Ark Innovation ETF is a proxy for risk and growth stocks and this fell nearly 7%.
Is it time to buy AMC yet?
A bounce will come, it always does. While it appears bears may be taking control of the narrative on the longer-term time horizon, sharp rallies are always a feature and AMC can benefit from this. The S&P 500 (SPY) is approaching the Ukraine low of $410.To demonstrate we are still in a bull market this level needs to hold. But even if it does not we may just set a lower low before legging higher again. Earnings season will help with a bigweek aheadand Facebook up after the close tonight.
AMC stock needs a catalyst though to get things moving again. Whether that comes from a turnaround in equity markets or another distressed debt deal is unclear. Distressed debt deals such as the Hycroft Mining $Hycroft Mining Holding Corporation(HYMC)$ (HYMC) investment will get harder to do with rising yields and tightening credit, but AMC does have a pile of cash it is sitting on from astute cash-raising during the retail frenzy.
AMC stock forecast: Wait-and-see for trend shaping
For now, it is time to sit on the sidelines and wait for the next signal.AMC may have more tough days ahead but shorting it does not offer appropriate risk-reward in our view. We need to wait for risk to return and enter the trend perhaps late, catching the meaty part of any spike and getting out at the first sign of momentum fading.
The overall bearish picture remains in place though for AMC stock. Every spike fails at a lower high and so defines the trendline we have drawn. That should eventually led to support at $14.54 being broken which would then signal a move to test $8.95.
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