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 at resistance and a new all-time high. The Bollinger Bands® are open higher with the RSI into overbought territory and the MACD leveling and positive after a pullback. Price remains close to the 20 day SMA though, not extended. There is no resistance above 128. Support lower comes at 125 and 120.50 then 118. Short interest is low under 1%. The stock pays a dividend with an annual yield of 2.41% and will begin trading ex-dividend on March 14th.

The company is expected to report earnings next on April 25th. The March options chain shows biggest open interest at the 120 then 110 strikes on the put side and at the 125 then 130 and 120 strikes on the call side. The April chain has biggest open interest at the 105 put strike and the 130 call. Finally, in the May chain the biggest open interest is at the 120 put and both the 115 and 130 call strikes.

Merck, Ticker: $MRK

Trade Idea 1: Buy the stock on a move over 128.25 with a stop at 124.

Trade Idea 2: Buy the stock on a move over 128.25 and add a March 125/120 Put Spread (98 cents) while selling the May 140 Call (86 cents).

Trade Idea 3: Buy the March/April 135 Call Calendar (95 cents) while selling the April 120 Put ($1.02).

Trade Idea 4: Buy the May 120/135/145 Call Spread Risk Reversal (8 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 signs of stalling with momentum divergences in the SPY and QQQ.

Elsewhere look for Gold to continue in consolidation while Crude Oil consolidates in a broad range. The US Dollar Index continues to drift to the upside over support while US Treasuries continue their downtrend. The Shanghai Composite looks to re-open and continue the downtrend while Emerging Markets consolidate near long term resistance.

The Volatility Index looks to remain very low and stable making the path easier for equity markets to the upside. Their charts continue to look strong, especially on the longer timeframe. On the shorter timeframe both the QQQ and SPY seeing a negative divergence on momentum measures which could resolve with a pullback. If that happens it might be time for the IWM to take the lead, and it has been teasing to the upside. 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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