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 making a short term higher high. It is also pushing open the Bollinger Bands® and has crossed above the 50 day SMA. The RSI is rising back into the bullish zone with the MACD crossed up and approaching a move to positive. All of this is in the context of price holding over the 200 day SMA since February 2022 and making an intermediate term series of higher highs and higher lows. A move over the May high at 119.65 will continue this trend higher. There is resistance at 116.60 and 118.50. Support lower comes at 113 and 112 then 110 and 108. Short interest is low under 1%.

The stock pays a dividend with an annual yield of 2.55% and has traded ex-dividend since June 14th. The company is expected to report earnings next on August 1st. The July options chain shows biggest open interest at the 110 put and the 120 call. In the August chain it is spread from 115 to 100 on the put side and builds from 110 to a peak at 125 on the call side. The September chain has biggest open interest at the 105 put and 120 call.

Merck, Ticker: $MRK

Trade Idea 1: Buy the stock on a move over 115 with a stop at 108.

Trade Idea 2: Buy the stock on a move over 115 and add an August 110/105 Put Spread (90 cents) while selling a September 125 Call (85 cents).

Trade Idea 3: Buy the July/August 120 Call Calendar ($1.13) while selling the August 105 Puts (73 cents).

Trade Idea 4: Buy August 105/115/120 Call Spread Risk Reversal ($1.50).

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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 5 trading days left in the second Quarter, saw equity markets take a break, pulling back following several strong weeks.

Elsewhere look for Gold to continue its pullback while Crude Oil drops in broad consolidation. The US Dollar Index continues in consolidation while US Treasuries also consolidate. The Shanghai Composite looks to continue the new short term move lower while Emerging Markets also term lower in the short term.

The Volatility Index looks to remain very low and stable making the path easier for equity markets to the upside. Their SPY and QQQ charts look strong, especially on the longer timeframe. On the shorter timeframe both the QQQ and SPY could have now reset on momentum measures as both were extended. The IWM had the worst week giving up nearly the entire move since the breakout and looking weak on both timeframes. Use this information as you prepare for the coming week and trad’em well.

If you like what you see above sign up for deeper analysis and trading strategy by using the Get Premium button above. As always you can see details of individual charts and more on my StockTwits page.

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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