The New York Stock Exchange has traders on it.
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During Monday trades, shares of AMC Entertainment plunged as much as 15%.
The meme-stock favorites have experienced big short-squeezes this year.
The technical support levels for AMC and GameStop are getting worse.
The stock of AMC Entertainment plummeted as it faced a decline in technical support levels.
Retail investors became big owners of AMC Entertainment and GameStop this year after big short-squeezes sent shares to sky-high prices. As the dust settles from those big price moves, investors are forced to reckon with the underlying company fundamentals that are still not good.
The need to visit a physical video-game store is being eliminated by more people buying online or digitally. The secular decline in movie theater attendance at chains like AMC is a result of the prevalence of streaming content.
The domestic box office generated $12 billion in ticket sales before the COVID-19 Pandemic. The number fell to $2 billion in 2020 and is on track to hit $4 billion this year. AMC still trades at its highest valuation in years, despite a decline of 70%.
While investors in both companies are aware of the worsening trends behind video-game retailers and cinema operators, they now have to contend with deteriorated technicals.
After falling below its 50- and 200-day moving averages last week, GameStop plunged below its key horizontal support level of $150 on Monday. There is a "death cross" in the stock.
Stockcharts.com is a website.
A death cross occurs when the shorter-term 50-day moving average of a stock crosses below the longer-term 200-day moving average. Technical analysts and traders follow the signal. The lagging crossover indicator can help alert traders to securities that are solidifying their downtrend and are likely to experience a continuation.
AMC broke below its key horizontal support level of $30 last week. If AMC doesn't quickly recover from its recent sell-off, a death cross can occur later this month, according to the two moving averages.
Stockcharts.com is a website.
Last week's lackluster earnings report, which revealed larger-than- expected losses and a subpoena from the SEC, wasn't helping the stock price. AMC investors are still reeling from insider sales from its CEO and CFO, as well as the CEO's rejection of a shareholder idea to issue an NFT dividend.
AMC is up 1,004% and GameStop is up 645%, despite both stocks being down from their record highs.
Business Insider has an original article.
