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A Few Lessons From AMGN (Trade Review)

If you’re looking for excitement, this isn’t a post for you.

This is a recap of a trade which actually yielded nothing – but there were some good lessons tied to it.  Plus, I certainly wouldn’t be bragging about a breakeven trade.

The Setup

Let’s go back to August 12th, the day I originally listed AMGN for a swing trade buy.  The stock had outperformed the NAZ since June 11th with a 22% gain (vs. the NAZ up 7.5%).  It clearly had momentum and had been able to put in some well-deserved rest for two weeks.  I noticed the descending trend line from the high, and set up a buy upon a break of that trend line at $83.00 and shared it with subscribers.

Here’s a look at the chart of AMGN when I set up the trade:

Why I Use TC2000 [1]

That buy triggered on Aug. 14th, and over the next few weeks the stock grinded higher but never really gathered momentum.  Three times it posted a new 52-week high, only to immediately hesitate afterward.

Adjustments

Having sat in AMGN for a few weeks with limited progress, I tightened my stop loss from $80 (initial stop) to $82 on Sept. 3 in order to reduce risk.  The stock had just completed a multi-day pullback and it was appropriate to tighten up after strength returned.  I tightened it again to $83 a week later after the stock had tagged the prior high to the penny, only to reverse lower.  This looked ominous, so I tightened to my breakeven.

The AMGN chart with my stop adjustments along the way:

Why I Use TC2000 [1]

This gave the stock a little wiggle room to keep me in the trade should it turn back up, but it eliminated my effective risk in the trade.  A stop out wouldn’t pay me a thing, but for a trade which never took off, neither would it cost me anything.

The Exit

I was taken out of the AMGN position at $83 on Wednesday, and since then the stock has broken down further with a solid breach of the multi-week uptrend line.  Where it goes from here, I don’t know, but I sure don’t view this action as bullish so I’m out.

Here’s a look at AMGN as it currently stands:

Why I Use TC2000 [1]

On some trades, breakeven isn’t bad.  You enter a great setup, you give it room, you stay patient, and it just doesn’t ever get going.  This was one of those.

Hopefully by looking back at this trade, it’ll help you manage your next position better when it acts sluggish.  If you’re seeing modest rewards but after ample time you’re really not getting paid, tighten up.  Odds are, if it turns lower you’ll be glad you did.

Trade Like a Bandit!

Jeff White
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