Amgen Inc. ( AMGN) is the Stock of the Day at Real Money here on Monday as it has agreed to acquire the global rights to Celgene Corp.'s ( CELG) psoriasis medication Otezla for $13.4 billion in cash. Celgene is selling Otezla so that regulators will allow its planned sale to Bristol-Myers Squibb Co. ( BMY) to proceed. A lot of my neighbors in New Jersey are involved in the drug industry, so I will leave the fine details up to them and just concentrate on the charts and indicators of Amgen, which is a holding of Jim Cramer's Action Alerts PLUS charitable trust.
In this daily bar chart of AMGN, below, we can see the price action through Friday's close. Amgen was trading around $196 in pre-market activity on Monday but opened at more than $200. If the shares fall back to the $195 area here on Monday it could be a normal pullback after the price strength seen earlier this month, and the $195 area also can be viewed as a reversal from prior resistance in April to support today. Even with a dip prices would be above the rising 50-day moving average line and rising 200-day line. The volume of trading this month has been heavier than in July and the On-Balance-Volume (OBV) line made a new high for the move up. The Moving Average Convergence Divergence (MACD) oscillator has narrowed recently and could cross to the downside for a take profits sell signal.
In this weekly bar chart of AMGN, below, we can see the past three years. This chart shows an uptrend from late 2016 but with lots of pullbacks along the way. Prices are testing the 2018 highs and are above the rising 40-week moving average line. The weekly OBV line has broken out to a new high over the 2018 highs for this indicator. This is a very positive development. The weekly MACD oscillator is poised to cross the zero line and an outright go long signal.
In this weekly Point and Figure chart of AMGN, below, a potential longer-term price target of $231 is indicated.
Bottom line strategy: Traders, investors and analysts may or may not need a day or two to digest the latest corporate news. Longer term, I would look for prices to work higher. A trade at $211.69 would refresh the uptrend.
