4 Trade Ideas for Merck: Bonus Idea

Here is your Bonus Idea with links to the full Top Ten:

Merck, $MRK, comes into the week moving up towards resistance after a month long pullback from a new all-time high. The RSI is rising back towards the bullish zone with the MACD about to turn positive. There is resistance at 110 and 112.25 then 115. Support lower is at 108 and 106.25 then 105.25 and 102.75. Short interest is low under 1%. The stock pays a dividend with and annual yield of 2.67% and will begin trading ex-dividend on March 14th. The company is expected to report earnings next on April 27th.

The March options chain shows highest open interest at the 105 strike on the put and then tailing lower to 92.50. On the call side it is spread from 100 to 120, biggest at 110. In the April chain open interest is spread from 115 to 92.50 on the put side. It is biggest at 97.50 then 110 and 115 on the call side. The May chain is just starting to build open interest and is active at the 105 put and the 110 and 115 call strikes.

Merck, Ticker: $MRK

Trade Idea 1: Buy the stock on a move over 110 with a stop at 105.

Trade Idea 2: Buy the stock on a move over 110 and add an April 105/97.50 Put Spread ($1.32) and selling the May 120 Call (99 cents).

Trade Idea 3: Buy the April/May 115 Call Calendar ($1.07) while selling the April 97.50 Put (62 cents).

Trade Idea 4: Buy the May 100/110/115 Call Spread Risk Reversal (85 cents).

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After reviewing over 1,000 charts, I have found some good setups for the week. These were selected and should be viewed in the context of the broad Market Macro picture reviewed Friday which with the February options expiration in the books, saw equity markets showing resilience holding up well despite an onslaught of negative inflation news and shifting narrative to further FOMC tightening.

Elsewhere look for Gold to continue its short term pullback while Crude Oil consolidates in a tight range. The US Dollar Index continues to drift to the upside in the downtrend while US Treasuries continue a short term downtrend. The Shanghai Composite looks to continue the pullback in consolidation while Emerging Markets pullback in their uptrend.

The Volatility Index looks to remain normal and stable making the path easier for equity markets to the upside. Their charts look strong, especially on the longer timeframe holding in consolidation after making higher highs. On the shorter timeframe both the QQQ and SPY are holding over support while the IWM has started to move higher out of a bull flag. Use this information as you prepare for the coming week and trad’em well.

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The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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