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.