Shares of pharmaceutical giant Amgen (AMGN) are attempting to bounce back after suffering a steep drop of 7.1% yesterday, following reports that the company’s weight-loss drug, MariTide, triggers a significant loss in bone density. Last seen holding above $300, AMGN could be due for more chart recovery if past is precedent.
Specifically, Amgen stock pulled back to within one standard deviation of its 320-day moving average during yesterday’s negative price action. Per Schaeffer’s Senior Quantitative Analyst Rocky White, AMGN has run into this trendline six times in the last three years.
For the purpose of this study, White defines these ‘pullbacks’ as the equity trading above the moving average 80% of the time over the past two months and closing north of the trendline in eight of the last 10 sessions before coming within striking distance of it. AMGN finished higher one month later after 83% these signals, averaging a 5.7% boost over the 30-day timeframe. From its current perch, a similar move would put Amgen stock just below $320, filling that steep gap lower and reclaiming the 10% year-to-date level.
The $300 level stepped up as support after a 11.8% post-earnings pop back in May. Year-over-year, the blue-chip is 12.2% higher. Adding to the bullish case is AMGN’s 14-Day Relative Strength Index (RSI) of 21, firmly in “oversold” territory, indicating a short-term bounce could be imminent.
Puts have been extremely popular, and should this bearish sentiment begin to unwind, it could act as a tailwind for the security. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), Amgen stock’s 10-day put/call volume ratio of 1.25 ranks higher than all other readings from the past year. Even further, AMGN’s Schaeffer’s put/call open interest ratio (SOIR) of 1.03 stands in the 82nd percentile of readings from the past 12 months.