The American entertainment company headquartered in New York, that owns and operates the cable channels AMC, IFC, We TV, BBC America, and SundanceTV, AMC NETWORKS INC (NASDAQ: AMCX) seems to be getting ready for a price bump in the short-term as per the latest charts.
Bullish Move – Chart Indications
#1 Downtrend Channel Pattern Breakout: As you can see from the daily chart of AMCX, the stock has been forming a downtrend channel during the past several months. This is marked in purple color in the daily chart below. The stock had typically taken support at the bottom of the channel before bouncing back. The stock has currently broken out of the downtrend channel, indicating possible bullishness.
Daily Chart – AMCX
#2 Triple Bottom Pattern Breakout: Within the downtrend channel, the stock had formed a triple bottom pattern. This is marked in the daily chart in pink color.
A triple bottom pattern is a bullish reversal pattern and a breakout from it indicates that the stock could move upwards.Currently, the stock has broken out of the pattern, indicating a bullish bias.
#3 Price above MA: The stock is currently above the 50-day SMA, indicating that the bulls are currently in control.
#4 MACD above Signal Line: In the daily chart, the MACD (light blue color) is currently above the MACD signal line (orange color).
This indicates a possible bullish setup.
#5 Bullish ADX and DI: The ADX indicator shows bullishness because (+DI) is greater than (-DI), and ADX has started rising from below both (+DI) and (-DI).
#6 Bullish Aroon: The value of Aroon Up (orange line) is above 70 while Aroon Down (blue line) is below 30 in the daily chart. This indicates bullishness.
#7 Stoch-Price Bullish Divergence: The weekly chart shows that there is a bullish divergence between Stochastic and price. While the price formed a lower low, the stoch formed a higher low. This is marked as blue dotted lines in the chart. A bullish divergence is usually the sign of a possible upmove in the near-term. The %K line is also above the %D line of the stochastic in the weekly chart, indicating possible bullishness.
Weekly Chart – AMCX
#8 Bullish MACD: The MACD line is above the signal line in the weekly chart as well, indicating a possible bullish bias.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level for AMCX is if it trades above yesterday’s close. This translates to a price of around $28.60.
TP: Our target prices are $32 and $38 in the next 2 to 6 months.
SL: To limit risk, place a stop loss at $26.25. Note that the stop loss is on a closing basis.
Our target potential upside is 12% to 33% in the next 3-6 months.
For a risk of $2.35, our target rewards are $3.40 and $9.40. This is a nearly 1:2 and 1:4 risk-reward trade.
In other words, this trade offers 2x to 4x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down from the downtrend channel breakout level with high volume. The sell-off of the stock could also be triggered in case of any negative news, overall weakness in the market, or any regulatory changes in the sector.
Happy Trading!
Tara