Option Investor
Market Updates

That's right! Amgen is a "key" stock

HAVING TROUBLE PRINTING?
Printer friendly version

Subscribers are working hard and drawing some good comparisons on "why Amgen (AMGN) is trading the way it is." Subscribers are noting how Amgen (AMGN) $60.26 +2.23% is trading right under its 200-day moving average as are the Biotech HOLDRS (BBH). This action is very indicative of how a sector may perform, based on one of the most heavily weighted positions in the index/HOLDR.

Amgen Chart - Daily Interval

If the Biotech HOLDRS (AMEX:BBH) are ever going to trade their current bullish vertical count of $142, some subscribers are beginning to think that it will need the help of Amgen (AMGN) $60.29, which is the heaviest weighted stock in the Biotech HOLDRS (BBH). I can't disagree with that and thus the reason we've often felt that Amgen (AMGN) is the sector "bellwether."

The bar chart of AMGN is interesting and gives a bullish trader a good action point with retracement overlaid. The 200-day MA is just ahead at $60.51 and combined with 61.8% retracement at $60.63, we see a pretty good technical level to be looking for a breakout. In November of last year, AMGN jumped above 61.8% retracement, ran to and then through its 200-day moving average and up into the upper level of retracement.

With the Biotech HOLDRS (BBH) setting off a triple-top buy signal today, an AMGN bull gets the feeling he/she has got some group sponsorship and it may be time for the "leader" to actually show some type of sponsorship and weigh in with a gain.

The point and figure chart of Amgen (AMGN) currently carries a bullish vertical count of $67, which would correlate with a level in the upper part of our retracement bracket.

Try using some of these observations in other groups of stocks your trading. It always helps to try and "classify" a stock or two that you feel are sector bellwethers. Often times it is hard to find a strong group move without some type of participation taking place in the sector bellwethers.

Jeff Bailey
Senior Market Technician
Option Investor

Intraday Update Archives