Sunday, October 30, 2005
AMGN (Amgen) forecast using Elliott Waves
This is an example of purely technical analysis. I will add analyses like this to my blog once in a while. The predictions for Amgen here are separate from my Biotech-Oncology model portfolio picks. Consider this forecast as an attempt to develop a trading approach based on the Elliott wave theory. Keep in mind that the future can not be predicted. Be skeptic about any forecasts.
Amgen Possible trading strategy
Since the outlook is bullish long term and short term (except Scenario 3), the following trading strategy seems reasonable.
1. Enter market at open 31-Oct-2005 (if the price above 72.37). Stop loss 72.30. Take profit 99.90.
2. If the price moves below 72.37 resistance, enter short at 72.30 with the stop loss 73.20 and profit target 58.0.
3. Follow the market and define which scenario is in development.
4. It is important to watch AMGN pattern closely in the next 2-3 days to minimize losses if a long positition is open but Scenario 3 will tend to be the real scenario.
Detailed Elliott analysis with description of Scenarios 1 through 3 can be found in the comments.
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Detailed Elliott analysis of AMGN
The stock is at an interesting point when three alternative scenarios may unfold in the nearest future.
1. AMGN accomplished a correction pattern in July 2002 and since then it is in the third impulsive wave. In the long term it is expected to complete in the price range 93.40 to 474.41, but more probably between 104.81 and 198.79. This wave is due to complete anytime from now until 17-Jan-2017, but is most likely to complete before 13-Apr-2011. Medium term - wave (III) of the third wave is expected to complete in the price range 77.66 to 233.29, but more probably between 86.05 and 128.83. This wave could complete anytime between now and 15-Jan-2008, but is most likely to complete sometime between 22-Jul-2005 and 01-Dec-2006. In the Short term, AMGN just finished correction wave on October 21 and it is about to rise sharply to the target area of the Medium term forecast. If the price falls below the high on 15-Jul-2003 - 72.37, then this scenario will become invalid (Scenario 1).
2. AMGN still in the correction stage. In the long term, wave (b) of the Flat had already entered high probability price range and outside the high probability time range, which means that time is running out for this wave. It is expected to complete in the price range 64.48 to 160.73, but more probably between 65.47 and 90.91. This wave was expected to complete before 09-Nov-2004, and must complete by 01-May-2015. After wave (b) is complete, expect the market to continue down into wave(c), which should be a five wave Impulsive pattern. It will complete flat pattern and corrective wave II of the Grand Super cycle degree Impulse in the price range .08 to 69.99, but more probably between 35.43 and 62.76. This wave is due to complete anytime from now until 14-Apr-2038, but is most likely to complete before 18-Nov-2005. After this wave II is complete, expect the market to continue up into wave III. In the Medium term, wave (y) of the inverted Double Zigzag is expected to complete in the price range 88.36 to 153.85, but more probably between 88.99 and 117.89. This wave is due to complete anytime from now until 06-Dec-2007, but is most likely to complete before 12-May-2006. Wave (y) will probably complete this Double Sharp pattern, although it could possibly extend into a Triple Sharp pattern. However the shorter term view provides two possible outlooks:
a) Short term correction is finished and the new bullish move is expected to complete in the price range 100.18 to 122.88, but more probably between100.65 and 113.02. This wave is most likely to complete sometime between 05-Dec-2005 and 26-Apr-2006 Note that it cannot complete until 25-Nov-2005 but must complete by 14-Sep-2006. This wave will probably complete the Double Zigzag pattern (Scenario 2).
b) the wave (y) was already completed on 20-Sep-2005 and since then we have observed the first impulsive wave of the higher order Flat. Currently AMGN is in the wave 2 of the inverted Impulse which is expected to complete in the price range 74.78 to 86.92, but more probably between 77.12 and 81.95. This wave is due to complete anytime from now until 06-Jan-2006, but is most likely to complete before 31-Oct-2005. After this wave 2 is complete, expect the market to continue down into wave 3. Penetration through the resistanceat 72.37 should support this scenario (Scenario 3).
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