Chart of the Day – $AMGN Hits All-time High

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Amgen broke out to an all-time high today, which is quite a feat for a $70 billion market cap biotechnology company that has had numerous strong rallies over the past 20 years.  Amgen is one of the few stocks in this market which I view as a good long-term hold, a stock that has an attractive valuation and secular tailwinds at its back.  It has a 2% dividend yield, is projected to grow earnings 12%, and is priced at a trailing p/e of 15x, quite cheap in the context of its earnings growth rate.  And you get all that for a stock that has not had an annual earnings decrease in the past 10 years.  In other words, about as safe as you can get.

The long-term chart shows the importance of the $80 area.  Here is the 20 year monthly chart:

20 year monthly chart of AMGN, Courtesy of Bloomberg

20 year monthly chart of AMGN, Courtesy of Bloomberg

 

The $80 level acted as resistance during the last 2 bull markets in AMGN, and the stock finally broke 80 convincingly last year.  In the past 6 months, the stock has traded between 80 and 90, and finally broke above the 90 level today on increasing volume.  Here is the 1 year chart:

AMGN 1 year chart, Courtesy of Bloomberg

AMGN 1 year chart, Courtesy of Bloomberg

 

Now that the stock has broken above 90, what’s the trade?

I prefer to see how a stock acts on a long-term breakout like this one.  If the stock continues to run higher, that adds confirmation to the breakout.  At that point, I would hope for a pullback to near the $90 level for a long entry.  For now, it’s a wait and see, with the thought that a fat pitch might develop in the future.

Of course, that’s a trader’s mindset.  For a long-term investor, this is probably a decent stock to put away in the drawer and forget about.  One of the few in this market where that description fits.