Top Trade Ideas for the Week of April 22, 2013: Bonus Idea

• Posted by Greg Harmon
• on April 22nd, 2013

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

Merck, Ticker: $MRK

Merck, $MRK, is trying to move higher out of a bull flag on its next leg higher out of a Cup and Handle with a target of 55. The Relative Strength Index (RSI) is bullish and the Moving Average Convergence Divergence (MACD) is rising, both supporting more upside price movement. There is resistance at 48.67 and then 53 from 57.50 and 62.30, the last 3 all prior to 2001. Support lower is found at 46.50 and 45.60 followed by 45, 44.50 and 43.50.

Trade Idea 1: Buy the stock on a move over 47.50 with a stop at 46.50.

Trade Idea 2: Buy the May 48 Calls (offered at 63 cents late Friday) on a move over 47.50.

Trade Idea 3: Sell the May 46 Puts (37 cents) on a move over 47.50.

Trade Idea 4: Buy the May 46/48 bullish Risk Reversal (26 cents) on a move over 47.50.

Trade Idea 5: Buy the June 46/48 bullish Risk Reversal (10 cents) on a move over 47.50.

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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 Saturday which, moving beyond the April Expiry for options the markets are a bit more damaged and showing more mixed signs of strength and weakness. Gold looks to continue to bounce in a bear flag while Crude Oil sits at long term support/resistance but looks better lower. The US Dollar Index is again showing signs of strength while US Treasuries continue higher. The Shanghai Composite and Emerging Markets remain biased to the downside with the Chinese market potentially ready to reverse that trend. Volatility looks to remain subdues and may have given a key signal on its spike keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ. Their charts are mixed though with the QQQ the strongest and the IWM the weakest. 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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