Austin, TX (PRWEB) April 17, 2006
(NASDAQ- AMGN) Chief analyst Oswald Castillo of http://www.TheStockStalker.com issues a strong buy alert on the biotechnology and pharmaceutical giant Amgen Inc. This alert is being issued as a technical buy set up. Due to the confluence encountered in multiple time frames and other factors included in the report, this alert is being issued as an institutional grade buy set up that has the precision of a professional technical trader type entry along with the profit opportunity normally associated with a long-term investment.
(The text portion of this press release is a synopsis and outline of the full analysis which is included in the video that is available at this link: http://www.thestockstalker.com/pr.html . To actually see and hear the full report, be sure to watch the video in its entirety). The technical analytical charting profile of Amgen Inc. has developed into what we feel is an extraordinary buying opportunity. All of the analysis that we have done on it is purely technical and without regard to any fundamentals. That said, the many overlapping layers of technical confluence on this chart are not often seen and have created a situation where we feel the reward to risk parameters are such that they deserve a close look as not only a trade, but a long-term investment.
The analysis that we did on the chart included and was not limited to the following.
1. Price and volume analysis
2. Fibonacci analysis - including projection, retracement, and Fibonacci fan analysis which includes elements of both price and time.
3. Additional confluence was provided by the fact that we used multiple time frames with a goal of providing directional alignment and achieving greater confluence overall. The time frames used were daily, weekly, monthly, quarterly, and finally, yearly price bars.
Here is a brief overview of our analysis.
Amgen has been trading in a sideways base for six years. This base was broken out of last year on very heavy volume and in what we call a based top breakout (BTBO). The stock then went into a corrective eight-month pullback and has done so on relatively light volume. This combination of strong volume on the way up and low volume on the way down is what we call a positive volume divergence (PVD). The stock market is like a democracy where volume is the measure of the votes. Basically, the voters are telling us that the yeas are much stronger than the nays in regard to whether the stock wants to go up or not. These concepts and terms are discussed much more clearly in the video as well as on our http://www.TheStockStalker.com .
The Fibonacci analysis was also very revealing. We used three different time periods of Fibonacci retracement and were able to find confluence precisely where the stock is trading right now. The three-time frames used were anchored at two points by a short-term, medium-term, and very long-term time frames. There was confluence at three retracement levels. These levels included the 23.6%, 50%, and 61.8% levels. Professionally done technical analysis strives reveal these hidden confluence points in a chart. Not just the Fibonacci, but any and all of the indicators at the analyst disposal. Any single one of these three points would have been enough to catch our attention as a possible trade. The fact that the three converge at the same point and for multiple time frames is precisely the kind of thing we want to find wherever in the stock market this occurs. We manually flip through and look at over 1,500 stock charts several times a week to find these gems so our clients do not have to (assuming they could).
Another tool that we use is Fibonacci fan analysis. This analysis has elements of both time and price in it. The line plots itself diagonally on the chart as a result of this. We uncovered a major point of confluence at the current price as well as some other historic data that shows this particular stock has traded well use in this specific form of analysis and is (in phase). This fan was placed on a very long-term chart and the current price has pulled back to the 61.8% diagonal. In Fibonacci analysis, the 61.8% level is the most powerful level in our opinion. This includes the 61.8%, 161.8%, and 261.8%.
Now let's talk about the short-term reasons this looks like a precision point trade entry. Two trading days ago this stock broke down through what is considered a very important price level. So in the eyes of the sophomoric text-book traders of the world, the stock looks like it is going to breakdown. The stock has not broken down in the two days that followed. In fact, the next trading day was an inside day, where the high and the low of the day are contained inside the high and the low of the previous day. This is what we call “narrowing range.” This day was followed by yet another inside day. This last trading day is what we call an NR7 which is a technical word Toby Crabel termed and a key part of narrow range analysis. An NR7 simply means it's the narrowest trading range bar of the preceding 6 price bars (total of 7 bars). NR7 is simply an acronym for “narrow range seven.” It implies that the downward momentum which the stock has seen in the last several days is waning. Add to this the fact that it is a double inside day NR7. This is yet another example of confluence in the AMGN chart. The current price bar is also what is called a Trader Vic 2B bottom, where the current price traded below the February lows by just a bit and the stock is not breaking down. This offers a great place to take a trade with a very tight stop loss. If the stock holds the $69 price level (it closed Thursday at $70.07) then this could conceivably be the bottom of this eight-month pullback.
Being able to take a trade that can turn into an investment while having the luxury of a stop loss that is placed a mere 1 ½% lower is one of the most appealing things of this trade. It is our view that the upside of the stock over the next year or two is about $140. It is also our view that in reality this move could really expand much further than this. The reason I limit my projection at $140 is because the investment community typically shakes its head at price targets that get much higher than this one in terms of percentage gain. We feel that a breakout of this six-year base could very easily take the stock much higher.
If in fact the technical implication of the down move three days ago is in fact bearish for the stock, then the amount theoretically lost is very small in comparison to what the reward potential is. Technical analysis is more about the reward to risk scenarios than it is about prediction. This trade has a stop loss that's less than 2% while the minimum upside target is over a hundred times that.
Amgen is scheduled to report this Tuesday, April 18, after the market closes. This could cause short term volatility before the announcement. There is considerable risk that the stock could gap down on the report. Trade gaps are part of this business and something that investors have to deal with if they intend to be in this business. Options may be a way of eliminating some of this risk in the first part of this trade.
Disclaimer: TheStockStalker.com is not a registered securities firm. nor is not a licensed securities broker or financial planner. Any information contained in this press release, or at http://www.thestockstalker.com is simply the opinion of this analyst. TheStockStalker does not accept cash, stock, warrants, or promises thereof, to select or profile any company. This publication is neither an offer to sell nor a solicitation to buy any securities mentioned herein. The information contained herein is based on data obtained from proprietary analysis for our own trading. We have not independently verified the facts, assumptions and estimates contained in the report. Accordingly, no representation or warranty, expressed or implied, is made as to, and no reliance should be placed on, the
fairness, accuracy, completeness or correctness of the information and opinions contained in the report. The information contained in the report is not and does not purport to be a complete analysis of every material fact respecting any company, industry, or security.
Do not ever take any trade simply because someone else does so. Only take trades that fall within your own system and your own risk parameters.
Oswald S. Castillo