Amgen Slips With Healthcare Sector, But Signals Point To A Reversal - Amgen (NASDAQ:AMGN), UnitedHealth Group (NYSE:UNH)

The stock of Amgen Inc. AMGN is trading higher on Thursday. But along with the rest of the healthcare sector, it is still in a steep downtrend. The news regarding potential fraud at UnitedHealth Group Incorporated UNH has put pressure on the entire sector.

But there is a good chance that Amgen finds a bottom soon. It may even reverse and head higher. This is why we have named it our Stock of the Day.

The shares are oversold.

The lower part of the chart is the Stochastics Momentum Indicator. If the blue line is below the lower horizontal red line, it indicates oversold conditions. As you can see, that is the case now.

This means that the shares have been aggressively sold and are trading below their typical or normal range. This could draw buyers into the market.

Many trading strategies are based on the concept of reversion to the mean. This means buyers will be anticipating a reversal or move higher and their buying may become a self-fulfilling prophecy.

The shares are also getting close to a potential support level.

$255.50 was support in March 2023. It was also support in December 2024. Price levels that had previously been support can become so again because of trader and investor psychology.

Sometimes, people who sell shares while a stock is at a support level come to regret their decision to do so if the price rallies after. Many decide that if they eventually can, they will buy their shares back at the same price they sold them for.

As a result, if the stock eventually reverses and drops back to the support level, they place buy orders. If there are enough of them it will create support at the price again.

This is what happened with Amgen. If it continues to trend lower there is a good chance that it finds support at this important price again.

There is also a good chance that it rallies and reverses off of this level for a third time.

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