Merck Pulls Back from Record HighDrugmaker Merck has been pushing to new highs, and now it’s pulled back.
The first pattern on today’s chart is a pair of gaps. On February 1, earnings and revenue beat estimates. The second jump on March 27 followed approval of a lung-disease drug. Both of those gaps pushed the stock to record highs.
Next, MRK held last year’s previous all-time high in mid-March. Has old resistance become new support?
Third, the past week saw prices test below the April 26 close of $125.52 but keep closing above it. Is support now established at a higher level?
Next, the 50-day simple moving average (SMA) had a “golden cross” above the 200-day SMA in late January. That may suggest the long-term trend has grown more bullish.
Prices are now trying to stabilize at the rising 50-day SMA. Some dip buyers may see an opportunity at that intermediate-term trend indicator.
Finally, MRK reports earnings on April 25. It’s also an active underlier in the options market, with TradeStation data showing average daily volume of 29,500 contracts per day in the last month. Traders seeing potential of an earnings move could find it a potential candidate for a vertical spread.
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