AMC Entertainment Holdings, Inc. (AMC) rose more than 60% during Monday's session after Pfizer Inc. (PFE) and BioNTech SE (BNTX) announced promising results from a large-scale Phase 2/3 clinical trial of their COVID-19 vaccine.
- AMC Entertainment shares rose more than 60% during Monday's session after promising vaccine data illuminated a path out of the pandemic.
- Pfizer and BioNTech's vaccine was more than 90% effective seven days after the second dose, which is much more promising than competing vaccines to date.
- AMC stock rose to key moving averages, erasing October's losses, but it could see some near-term consolidation as the market digests the news.
Pfizer and BioNTech's vaccine candidate was more than 90% effective seven days after the second dose in preventing infection in participants with no evidence of prior SARS-Cov-2 infection. While the study will continue through the final analysis of 164 cases (with 94 evaluated at this point), the companies plan to apply for an emergency use authorization.
AMC and other companies hard hit by COVID-19 closures reacted favorably to the news, as it provided more clarity and a path forward out of the pandemic.
From a technical standpoint, the stock jumped to its 50-day moving average at around $4.30 during the session. The relative strength index (RSI) rapidly moved toward overbought levels with a reading of 60.66, but the moving average convergence divergence (MACD) experienced a bullish crossover that could signal upside over the intermediate term. These indicators suggest that the stock could continue to recover after a period of consolidation.
Moving average convergence divergence (MACD) is a trend-following momentum indicator that shows the relationship between two moving averages of a security's price. MACD triggers technical signals when it crosses above (to buy) or below (to sell) its signal line.
Traders should watch for consolidation below the 50- and 200-day moving averages before the stock potentially breaks out to retest highs from June and early September. If the stock breaks back down, traders could see a move to Fibonacci support at $3.43. If the stock breaks out higher, traders could see a move toward trendline resistance at about $6.00 before the stock retests prior highs of around $7.70 over the intermediate term.
The Bottom Line
AMC Entertainment shares moved sharply higher following Pfizer and BioNTech's promising COVID-19 vaccine clinical trials results, which provide greater clarity into the possibility of ending the pandemic over the coming quarters. While the initial reaction erased October's losses, the stock is likely to see some near-term consolidation before continuing its intermediate-term trend higher.
The author holds no position in the stock(s) mentioned except through passively managed index funds.