Trade of the Day: Amgen, Inc. Nears a Buy Point Again

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Shares of biotechnology giant Amgen, Inc. (NASDAQ:AMGN) were lower in after-hours trading on Wednesday following the company’s latest earnings report. AMGN stock, however, continues to look promising, and this latest pullback in fact looks to provide a better reward-to-risk opportunity to buy again.

AMGN Stock: Amgen, Inc. Nears a Buy Point Again

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The last time I mused about Amgen on Sept. 27, I offered that despite the stock’s constructive posturing on its longer-term charts, it looked to be near-term overbought. Specifically I said the following: “For me, in order to buy AMGN stock again at this juncture I need it to break out of the bull flag pattern and clear above the $189-$200 area on a daily closing basis, and with some conviction.”

The stock never broke above said technical resistance area and thus never triggered a new near-term  trade, which also helped me avoid the most recent near-term pullback in the stock.

AMGN Stock Charts


Click to Enlarge

Moving averages legend: red – 200 week, blue – 100 week, yellow – 50 week

For some perspective let’s start off with a multiyear weekly chart of AMGN stock on top and the biotechnology ETF, the iShares Nasdaq Biotechnology Index (ETF) (NASDAQ:IBB), at the bottom.

Here we see that after a multiyear sideways push, AMGN stock in the first part of September finally achieved a marginal breakout of this wide trading range. All the while the IBB ETF, i.e. large-cap biotech stocks as a group, continue to push higher and in fact are higher by about 20% for the year-to-date.

As such I have no reason to make a bearish call in this time frame on biotech stocks, but in fact see a better buying opportunity setting up.


Click to Enlarge

 Moving averages legend: red – 200 day, blue – 100 day, yellow – 50 day

On the daily chart we see that the recent pullback in AMGN stock from the September highs has so far just pulled the stock back to its blue 100 day moving average. In after hours trading on Wednesday AMGN stock dropped another couple of percentage points and it is possible the stock could fall as low as the low $170s, which would coincide with the twelve-month black support line as well as the red 200 day moving average.

Active investors and traders here should look out for any strong bullish reversal that closes the stock well off its daily lows, which would signal a better entry point to buy AMGN stock toward a next upside target at $190, followed by possibly $200.

Check out Anthony Mirhaydari’s Daily Market Outlook for Oct. 26.

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Article printed from InvestorPlace Media, https://investorplace.com/2017/10/trade-amgen-inc-amgn-stock-nears-buy-point/.

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