Amgen (AMGN) Breaking Lower

Amgen’s the largest cap in the biotech sector ETF, IBB.

Loss of momentum (magenta arrow) is clear.

Upside energy (weekly) MACD has been dissipating for over a year.

So, this is no transient direction change. Zooming into the daily chart shows hesitation at the trend line.

Then last Friday, a significant move away from that trend.

When there’s a trend break, typically there’ll be a test of that break.

In this case, such a test would cause price action to move higher; testing the underside of the trend.

Because there’s been so much congestion at the trend line, we may not get the upside move.

It may have already self-tested. From here, price action could just make its way down to the measured move target ~ 164 – 165.

Positioning:

We’re short this market via LABD (not advice, not a recommendation) and have moved the stop to 18.17, based on yesterday’s action.

Summary:

If AMGN decides to test the trend underside, it’s likely to stop out LABD.

If price continues to decline (unabated) to target levels, we’ll probably exit at pre-identified IBB, target ~ 138 – 140 (approx: 35 – 38, LABD).

Stay Tuned

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Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.

Amgen: Head & Shoulders

Like Newmont is to GDX, so is Amgen to IBB. 

It’s the heavy hitter. If we decipher what’s going on with it, then we can trade biotech for (potential) profit.

The chart shows price action began to retrace off the lows for the week.  In doing so, it created a possible neckline.

The 38% retrace area, marked with the dashed line, also shows it’s a juncture between weekly bars; the circled area.

That’s a trading tip … watch the circle.

If price action gets to 38% and stalls, it shows weakness. 

Our interest is to look for shorting opportunities.  Specifically, via the 2X Inverse Biotech, BIS. 

For years now, except for energy (nat-gas) and commodities (corn, wheat, et al), markets are being worked from the short side.

Steven Van Metre presents an excellent case for a deflationary impulse first before there’s any inflation.

The ‘macro’ as he calls it, provides a backdrop for what’s really going on. 

For now, the action (not advice, not a recommendation) is to watch AMGN play out.  If the trading is choppy, overlapping and laboring into the 38% level, then we have our answer.

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Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.

Lying In Wait

That’s exactly what’s happening with biotech (IBB) and more specifically Amgen (AMGN).

Just like with Newmont and GDX from the previous update, Amgen’s the heavy hitter for the biotech sector.

What we see on the daily chart below and expandable version here, is that AMGN’s at the danger point.

Price action penetrated well established support and then stopped dead (so far).

If that’s the case, we’re looking for price action to rebound and move toward the 242 – 244 area; a 50% retrace from current levels.

If that point is reached, depending on the behavior of price action itself, the expectation is for a long-term reversal.

There have been several trades using BIS and LABD with the overall result being about break-even to slightly down.

More important than outright profit is the trading insight (over several months) into the sector itself.  That insight can only come from active positions. 

No amount of ‘paper trading’ or external analysis will provide a visceral feel for the market.

Summary: 

We’re waiting for price action in AMGN and the overall IBB, to counter-trend upward as we head into November.

If there’s an obvious reversal at that time (not advice, not a recommendation) the risk on a short position may be at its lowest.

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Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.

Friday: After the close

Two markets being watched at this time are biotech (IBB) and natural gas (UNG).

Today’s session in nat-gas was strong but on the downside, price action closed below last week’s high.

There’s a lot going on with the hurricane in the gulf; potential earthquakes (threatening to rupture lines), already happening in the New Madrid zone.

So nat-gas could literally explode at any time. 

We’ve analyzed price action enough to show a reversal underway.

The downside; it’s a bit weaker than expected. At least at these initial stages.  However, commodity markets tend to start slow and then build into a blow-off top. 

So, we could still see intense action during November and December.

Next, is biotech and specifically IBB.

The chart below is an interesting picture.  Price up and volume down.  This type of scenario has one of two meanings:

No. 1:  There is no commitment to the upside and reversal is imminent

No. 2:  Volume has decreased as sellers are backing away from the market … prices may drift higher.

With the negative report from Amgen (AMGN) during the week, the bloom may be off.  Amgen is the leader (market cap) of the sector.  If it has reversed as has been proposed several times, it may be strategic and long term.

The chart wedge that had been discussed here and here has now been officially and decisively penetrated to the downside.

Barring some miraculous recovery, the measured move for AMGN is in the vicinity of 192; about 20% down from current levels.

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Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.

Amgen Higher To 290

Price action itself has negated the breakdown scenario in Amgen (AMGN).

Instead, we now have a wedge that’s forecasting a move higher. 

Using a measure move off a wedge breakout (yet to occur), we can project AMGN to the 290 area.

The expectation is the overall biotech index (IBB) will move higher as well.  If so, there’s a potential to form a bearish weekly MACD divergence if IBB makes new highs.

Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.

Amgen At The Edge

The market itself has decided the lower wedge-line is important.

Price action penetrated, then recovered, penetrated again and is now testing the underside.

This oscillation about the line validates its existence and confirms its importance.

AMGN is at the danger point.  Price action can go either way.

Higher, and the wedge has been negated.  Lower and we may have a strategic, long-term reversal.

Separately, the short position via BIS at the trader’s discretion was exited early during Friday’s session.

When it’s obvious, we did not wait around for the stop.

The total profit on the short, held for just ten days, was about four-weeks pay for the typical American worker.

Why list it in those terms? 

With at least 30% of the population out of work and no job in sight, would it not make sense to show how proper research, experience and training may replace some of the lost income?

Getting back to the biotech short position; Later in the session, as IBB was rising, BIS declining, the short was re-established.

More on that entry is planned for tomorrow’s discussion.

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Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.

Amgen: Strategic Reversal

Amgen (AMGN) was covered in the last update as having a wedge breakout to the downside. 

Price action then promptly reversed back into the wedge, giving the equity a new lease on life.

At least, that’s the way it looked at the time.

If we pull out to one time frame higher … the weekly, and look at AMGN, the reversal set-up and possible channel(s) are clear.

The terminating, rising wedge is there.  However, we can see several trend-line symmetries.

Taking the solid blue trend-line (right side) and bringing it backward (dashed lines), sometimes referred to as “reverse trend-line”, there’s symmetry in the AMGN set-up.

We may be witnessing the strategic reversal of AMGN which has already developed a massive trading channel.

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Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.

Amgen (AMGN) Forecast

Now that AMGN is breaking lower, let’s take a look at how far down it could go.

The chart shows the terminating wedge pattern.  Depending on where the wedge entry is measured, slightly different projections will result.

A fairly conservative estimate is shown.

If we do not get some kind of recovery back into the wedge itself, a measured move projects to the 185-area.

A potential downside breakout was highlighted yesterday. The press as typical, appears surprised by the markets opening lower, continuing lower.

Doing what they do (fabricate a ‘reason’), AMGN’s decline seems to be a political problem … even though its been in a topping formation for years with ever slowing upward trend.

No matter, it’s all about healthcare uncertainty.  Tomorrow it may be all about something else. 

Wyckoff said over a century ago, the financial press was essentially useless at best and intentionally deceptive at worst.

A hundred years later, not much has changed.

Wyckoff analysis is one of the best kept secrets on Wall St.  We’ve been using it to spot market opportunities since 2008.  Find out more about Wyckoff analysis here.

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Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.

Upside Breakout Ready

The chart below has a bullish wedge.

Price action’s at the wedge top.

This is how it looks just before an up-side breakout.  Of course we’re dealing with probabilities and the pattern could morph into something else.

However, at this juncture it looks about to move … higher.

The problem is and you may have already noticed, the chart does not look quite right.  Why is price action at the bottom and volume at the top?

It’s inverted … turned up-side down.

We’re looking at Amgen (AMGN), inverted.

Inverting the chart is an old trading technique that’s used to remove analysis bias in one direction or other. 

If a chart looks like a buy (or sell) no matter which way you turn it, there’s a problem … a significant trader’s bias that blinds one to the potential.

Amgen is the largest component in the biotech (IBB) sector. The coming week, may support or negate the breakout potential.

An expandable version of the chart above is here.

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Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.

Prepping For The Downside

The more sophisticated market participants work the downside.  That’s where the biggest (and fastest) money is made.

shutterstock_242289160Trading books and specifically Reminisces of a Stock Operator, (first published in 1923) detail how the wealthiest traders in the world prefer downside action.

The markets are now stretched to obscene levels and could go higher, still.

Just this past week, we have interest rates breaking out to the up-side, a-la August, 1987.

Being long anything other than corn or wheat and the occasional down-trodden coal miner,  seems to be a high risk plan (not a recommendation).

Positioning for the downside in the appropriate market, might be a lower risk option than riding the insanity to the top … wherever that is.

Which brings us to inverse biotech fund, BIS.  The daily chart shows the well-heeled know something’s up.

2020-08-30_9-32-52-IBB-Daily-5-bar-lanscape-notesSpeculative volume for potential downside in biotech is increasing.  Last Friday’s volume in BIS was the highest in nearly four years.

BIS was trading higher throughout the entire session until the last few minutes.  It closed slightly lower for the day and thus colored the volume bar red.

That minor BIS downturn (up turn in IBB) can be traced directly to Amgen (AMGN) which is now part of the Dow 30, effective Monday the 31st.

It’s important to note that for the past four months, volume activity in IBB has remained relatively unchanged.  Not so with BIS.

We’re nearing the Labor Day Weekend during the next sessions.  The market will be closed on Monday, September 7th.

Back in the day of 1929, the market made its all time high on September 3rd, the Tuesday after the Labor Day Weekend.

 

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Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.