The Buying Opportunity in Amgen

What do you do when

Merrill Lynch

downgrades one of your stocks? For me, the answer is whether the call is a macro call made from the top or a number-cut call made from the bottom.

Yesterday Merrill made a number-cut call on

Time Warner

(TWX)

. I wasn't long it, but if I were, I would have been spooked. Number cuts can be killer in this market.

Just look at the action in

Disney

(DIS) - Get Report

over the last year if you disagree. It has done nothing because the numbers keep coming down.

But this morning Merrill banged down the retailers and biotechs. I don't have much of the retailers save the tag-ends of an aborted

J.C. Penney

(JCP) - Get Report

position put on before I knew how bad things were at

Eckerd

.

However, I have a nice chunk of

Amgen

(AMGN) - Get Report

. I read through the call and I don't share the revaluation thesis on biotech that Merrill is propounding. That doesn't mean it's wrong. I just think that the reasons for the downgrade make it likely that the stock will bounce because the negative comments weren't to red flag Amgen's business.

So, I am using it to buy. Because of the power of Merrill's network, however, I am respectful of the hit that Amgen is going to have to take. No sense being in on a pasting. I passed on opportunities to buy the stock down a buck, and a buck and a half, but I am willing to start down a buck and three quarters, knowing that I may have to pay lower later as the call gets disseminated.

In an otherwise neutral session for the drug stocks yesterday, Amgen was down a couple. If it hadn't been, I would wait even more before I bought. Mind you, if Amgen in particular had been bashed by the fine Merrill biotech team, I would be much less sanguine.

But, at the risk of sounding too much like myself when I was a broker at

Goldman Sachs

(GS) - Get Report

suffering from a downgrade in a stock I had put an individual into, I am using the decline as a buying opportunity.

James J. Cramer is manager of a hedge fund and co-founder of TheStreet.com. At time of publication, his fund was long Amgen, Goldman Sachs and J.C. Penney. His fund often buys and sells securities that are the subject of his columns, both before and after the columns are published, and the positions that his fund takes may change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Cramer's writings provide insights into the dynamics of money management and are not a solicitation for transactions. While he cannot provide investment advice or recommendations, he invites you to comment on his column at

jjcletters@thestreet.com.