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 consolidating under resistance in a 6 month uptrend. It has the Bollinger Bands® open higher to allow a move with the consolidation bringing price back inside them. The RSI is deep in the bullish zone with the MACD level and positive. There is resistance at 123 and then back to 2024 at 124 and 128 followed by 129.50 and 132 before the all-time high at 133. Support lower sits at 120.50 and 116.50 then 111.50. Short interest is low at 1.2%. The stock pays a dividend with an annual yield of 2.78% and will trade ex-dividend on March 16th.

The company is expected to report earnings next on April 30th. The March options chain shows the biggest open interest at the 75 and 105 strikes on the put side, and at the 100 and 120 call strikes below price and the 125 strike above as the biggest. In the April chain open interest builds from 125 to a peak at 95 then tails on the put side, and is focused at 100 and 115 on the call side. Finally, in the May chain, open interest is light on the put side, but large and focused at the 135 call strike.

Merck, Ticker: $MRK

Trade Idea 1: Buy the stock on a move over 123 with a stop at 119.

Trade Idea 2: Buy the stock on a move over 123 and add a March 120/110 Put Spread ($2.43) while selling the May 135 Calls ($2.29).

Trade Idea 3: Buy the March/April 130 Call Calendar ($1.51) while also selling the March 115 Put ($1.19).

Trade Idea 4: Buy the May 110/125/135 Call Spread Risk Reversal ($1.03).

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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 heading into the last week of February and after the Supreme Court ruling that tariffs were illegally put in place, saw equity markets show resilience holding steady on the week.

Elsewhere, look for Gold to continue to drift between $5000 and $5100 digesting the long move up while Crude Oil moves slightly higher in the consolidation range. The US Dollar Index is continuing to show some weakness holding near a 4 year low while US Treasuries look to hold in the upper end of the consolidation zone. The Shanghai Composite looks to come back in action after the holidays to a pause in the uptrend while Emerging Markets continue to add new all-time highs in their uptrend.

The Volatility Index looks to continue to hold in the normal range making it easier for equities to move higher. The charts of the SPY and the IWM remain strong on the longer timeframe with the QQQ starting to recover from a roll lower. On the shorter timeframe all 3 are in consolidation ranges with the top at the highs but with negative momentum divergences that could lead to short term moves lower. 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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