Every Chart Tells a Story - Amgen, Inc. (Public, NASDAQ:AMGN)

Yesterday's trading session was somewhat foiled by the FED intervention. What I mean by that is that we had a nice relief rally coming off of Thursday's lows and it looked like it was set to continue higher into Friday. The fed intervention resulted in a huge gap up and all those who started accumulating Thursday afternoon were well positioned for some huge profit taking on Friday's open.

That became quite clear shortly after the open as almost all my charts were taking on the same pattern - gap fade.

So basically I had to look at story stocks - gap, earnings, etc. I took a small long position in ADSK (break of 4/15) on earnings and an upgrade and started looking at Thursday's gapper list for some continuation plays.

AMGN seemed like a good candidate because it was trading at multi-year lows. When I first looked at the chart, it had breached the prior day's pivot low, but was hovering in the PP area and it was unclear whether it would develop as a long or a short.

I looked at the monthly timeframe to get a better idea of long-term S/R. The key PP at $52.00 had been lost and now it was hanging on to dear life at $48.50, after which there was nothing much in the way of support until $42.00.

In there early going, the daily chart was printing a WR red bar and the whole scenario looked rather hopeless. EOD tells a very different story - a bullish green hammer reversal stick. But I'm getting ahead of myself.
A quick look at the lower timeframes indicated that AMGN was carving out a shallow base. Sometimes when I'm only focused on the longer timeframe -15 min., there's a fine line between continuation and reversal and that's why I use multiple timeframes to get a more complete picture.

From the 1 minute chart below, we see a nice shallow base. price breaks the base (green line) and comes back in for a retest. As price moves back out of the base, I enter long. Before entering long, I check yesterday's intraday price pivots and plan to take a partial at $49.40 because it was Thursday's ORL and served as resistance into the noon hour.

After a 38% retracement from the $49.40 PP, AMGN carves out a bullish W pattern with a higher low on the second V and I decide to re-enter full size on a break of the PP. My target is met shortly after as price rallies into the upper PP ( daily resistance from Thurs. and Friday's ORH.

As you can see from the 15 min. and daily charts, AMGN is basing and ready to 1. fill the gap, and 2. possibly rally back up to the $52.00 PP. Keep it on the watch list for next week.

Trading has been challenging over the last few weeks and will likely become increasingly so until the current focus on credit becomes less pressing. A good way to minimize stop outs and scratches is to focus on well-defined setups. AMGN is a good example. Remember that price has a memory. A PP from yesterday or from the past will be a trigger point for either consolidation, reversal, retracement, continuation, etc. What I mean is that even if you missed the break of the initial base, you could have entered on the break of the PP midway in the move for a nice profit. Don't just focus on today's price action in isolation, look at today's price action in context of yesterday's and beyond as required by the range of price and volume expansion.


Okay, enough preaching, have a good weekend!