Check out this large cap biotech stock. Earnings are released tomorrow. (April 20, 2015)
I want you to look at Amgen ( NASDAQ:AMGN ) here. The company reports tomorrow; it’s in the biotech space and there’s a lot to like about biotech. What I like about Amgen ( NASDAQ:AMGN ) is this has basically been trending sideways, it’s been chopping around for almost 6 months.
This is a high base; the trend is higher, you can see it, and so the idea of a quote “high base” is that the base is not down here, this would be a quote “base” not a low base just a base. But you get the same thing within an uptrend where the idea is that the stock starts to drift sideways after a big nice move. Why is that? Because traders are taking profits, and so, “Oh my gosh, this is a top!” Well not so much because the stock doesn’t do that; instead other traders are buying.
So they’re buying this stock, it’s drifting down a little bit, finally at about $150.00 the buyers make a stand and say I will take all you have and then the stock starts drifting higher. Over time what happens is the average cost basis, listen to me, the average cost basis of short-term investors, short-term traders, recent buyers, the average cost basis is right around here, right in the box; as opposed to down here or here or here where they’re going to tend to want to take profits. Or down here, everybody buys here.
So the idea is that this stock has been consolidating long enough, it’s a large cap biotech stock. I don’t know, they could announce horrible results and the stock could fall down to 130.00 or 120.00; I doubt that it’s going to do that, if it does buy more. What I would suggest you do is take this stock prior to when they announce earnings and if you have to do a pre-market, hey, works for me; you just want to own some of this stock because these large cap biotech stocks have been doing well over time, this is not the top.
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