Take Two and Call Me in the Morning

I will be posting less regularly for about a week or two because I'’m moving. After I'm all set in my new place, all will be back to normal.

Last post I finished by saying Buy Amgen, allow me to explain the trade. Amgen (AMGN) is the second largest biotechnology company in the world, so there wont be much volatility. When you get a stock with a market cap around 100 billion dollars, everything is usually priced into it already. This is why I prefer small to mid caps, but in this case the large size may help.

Daily Chart

• Good spot on the Slow STO
• Rising MACD
• Yes, I see the stock is below the 50DMA but this will be broken

Weekly Chart

• Bad MACD
• 200DMA support

Keep in mind, the 200DMA is the strongest support/resistance line for a stock. Amgen is coming back into favor as pundits like Jim Jubak and Jim Cramer have recently highlighted. (click on their names to read further)
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Now on to the DJIA, something that it seems many technical traders are missing and what I mentioned earlier, is that we could be setting ourselves up for a double top. (marked by the dotted line at 11600)

I've shown how the DJIA had reacted whenever it's Slow STO gets above 150 in conjunction with it's RSI above 65. Each time it has dropped over 600 points. If we hit 11600 levels in the next week or so, this could play out again.

You could easily make the opposite point, when the Slow STO hits 20, the DJIA bounces, but what makes this shorting opportunity more promising is the 4 month double top which would develop.

Buying the DXD would be the obvious play if this pattern forms.

(Full disclosure: I bought shares of AMGN on 08/08/06)