The best count here is that of a large A-B-C. The B-wave is pretty well complete and C should start any moment now. For starters expect a drop of about 62% and close to the level of a 4th wave of previous degree, roughly at $35 or a little lower. An unlikely alternative would be that the stock had a large 4th wave triangle and is now in a 5th wave. In that scenario the stock could possible climb another $5 or so, not worth the risk in our opinion. A sell.
Again the then, Dec. 2010, and now charts;
There are various blogs in between advising exiting the position and, in contradiction to that, waiting for targets at $24 and $28 (all are in the archives). You are up about 40% if you held on to this stock from Dec. 10 onwards. Now that things are a little clearer we would prefer the A-B-C count as opposed to the 1-2-3-4-5 possibility. The two legs are roughly equal in size if not in an absolute sense than proportionately and both the RSI and MACD have been turning down for some time. The same holds for BAX, Baxter.
Big Pharma has been giving mixed signals. Amgen is a good example as it has , arguable, spent the last two years going absolutely nowhere with higher lows and lower highs, suggesting the possibility of a triangle. These only occur as waves 4 in a 5-wave sequence, or as waves B in an A-B-C. The short-term chart on the left seems to favor the notion that the triangle is a B wave and consequently an explosive thrust up should start any moment (perhaps today with the announcement of a new prostate cancer drug). The longer-term chart on the right leaves more possibilities, one of which suggest that this might in fact be a 4th wave of C in a multi year corrective move that is not yet complete. A breakout either way will clarify the situation.
By comparison I have added charts of PFE , BAX and MRK.
Pfizer, see previous comments, overall favors the bull case having already lost 80% of its value. Today’s dividend announcement may push the stock through the upper trend-line.
BAX also favors the upside, that is at least to the level of the b-wave in the last A-B-C correction. MRK, see previous comments, is presently sitting in the middle of nowhere
In conclusion, a buy with a tight stop would be the way to go on AMGN.