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Saturday, June 15, 2013

Likely another good opprotunity for Amgen

I talked about a few biotech companies about a year ago, including Amgen (AMGN) which was trading at about $50. I thought they were good buys back then and sure enough they all took off and flied higher and higher since then. But often times, things will go ahead of itself, sort of too far too fast. AGMN is one of them. I has more than doubled to reach $110 recently. But since then it has come down quite a lot in the past few weeks. With more than 10% decline already done, I think now is likely another good opportunity to buy AMGN at the price around $95. I don't time to talk in details but all the technicals I'm seeming for it are pointing to the buy side. Briefly: close to its 200 day moving average (DMA), close to its low boundary of the Bollinger Bands, around the oversold side based on RSI at 20, and significantly below its 50 DMA. Of course, at the price of $95 or so, it is not as cheap as $50 or so a year ago but if you know how to play with options, you may structure in a way to get a free ride or even get some money upfront. E.g. using a combo of buying a long-term call and selling a long-term put, you can virtually get paid upfront to ride with its uptrend, if it indeed starts to take off again. The worst you just buy it at a significantly lower price, say another 15% off its current price.

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