Strong ‘Buy’ Signal Identified for MRK

Yesterday, we looked at a Daily Price Chart for  //links.tradewins.com/a/126/click/10273665/743397264/_f92c36ab84e3b96131835f2d6efb4b4e0ac42e8d/368076a09c190838ea59e04b47a800aed432a58c May 24th, 2024 Strong ‘Buy’ Signal Identified for MRK Dear Reader, Yesterday, we looked at a Daily Price Chart for [Elevance Health, Inc.](, noting that ELV’s 24/52 MACD is above the 18-Day EMA signaling a breakout for the stock. For today’s Trade of the Day e-letter we will be looking at a daily price chart for Merck & Co., Inc., stock symbol: MRK. Before breaking down MRK’s daily chart let’s first review what products and services the company offers. Merck & Co. boasts more than six blockbuster drugs in its portfolio with PD-L1 inhibitor, Keytruda, approved for several types of cancer. Keytruda has played an instrumental role in driving Merck’s steady revenue growth in the past few years. Well-known products in Merck’s portfolio include Keytruda, Simponi, Januvia and Janumet, Bridion, Isentress, ProQuad, Gardasil, Pneumovax 23, RotaTeq and Belsomra. Now, let’s begin to break down the Daily Price chart for MRK stock. Below is a Daily Price chart with the 50-Day EMA and 100-Day EMA for MRK. 50-Day EMA and 100-Day EMA ‘Buy’ Signal The 50-Day Exponential Moving Average (EMA) and 100-Day EMA are moving average indicator lines that can provide buy and sell signals when used together. When the shorter-term 50-Day EMA crosses above or below the longer-term 100-Day EMA, this provides either a buy or sell signal depending on which direction the stock price is moving. - 50-Day EMA line Above 100-Day EMA = Price Uptrend = Buy signal - 50 Day EMA line Below 100-Day EMA = Price Downtrend = Sell signal When the 50-Day EMA (blue line) crosses above the 100-Day EMA (red line) this indicates that the stock’s buying pressure has begun to outweigh the selling pressure signaling a ‘buy’ signal. When the 50-Day EMA crosses below the 100-Day EMA this indicates that the selling pressure has begun to outweigh the buying pressure signaling a ‘sell’ signal. Buy MRK Stock As the chart shows, on December 29th, the MRK 50-Day EMA, crossed above the 100-Day EMA. This crossover indicated the buying pressure for MRK stock exceeded the selling pressure. For this kind of crossover to occur, a stock has to be in a strong bullish trend. Now, as you can see, the 50-Day EMA is still above the 100-Day EMA meaning the ‘buy’ signal is still in play. As long as the 50-Day EMA remains above the 100-Day EMA, the stock is more likely to keep trading at new highs and should be purchased. Our initial price target for MRK stock is 134.80 per share. 119.4% Profit Potential for MRK Option Now, since MRK’s 50-Day EMA is trading above the 100-Day EMA this means the stock’s bullish rally will likely continue. Let’s use the Hughes Optioneering calculator to look at the potential returns for a MRK call option purchase. The Call Option Calculator will calculate the profit/loss potential for a call option trade based on the price change of the underlying stock/ETF at option expiration in this example from a flat MRK price to a 12.5% increase. The Optioneering Team uses the 1% Rule to select an option strike price with a higher percentage of winning trades. In the following MRK option example, we used the 1% Rule to select the MRK option strike price but out of fairness to our paid option service subscribers we don’t list the strike price used in the profit/loss calculation. Trade with Higher Accuracy When you use the 1% Rule to select a MRK in-the-money option strike price, MRK stock only has to increase 1% for the option to breakeven and start profiting! Remember, if you purchase an at-the-money or out-of-the-money call option and the underlying stock closes flat at option expiration it will result in a 100% loss for your option trade! In this example, if MRK stock is flat at 131.10 at option expiration, it will only result in a 4.5% loss for the MRK option compared to a 100% loss for an at-the-money or out-of-the-money call option. Using the 1% Rule to select an option strike price can result in a higher percentage of winning trades compared to at-the-money or out-of-the-money call options. This higher accuracy can give you the discipline needed to become a successful option trader and can help avoid 100% losses when trading options. The goal of this example is to demonstrate the powerful profit potential available from trading options compared to stocks. The prices and returns represented below were calculated based on the current stock and option pricing for MRK on 5/23/2024 before commissions. When you purchase a call option, there is no limit on the profit potential of the call if the underlying stock continues to move up in price. For this specific call option, the calculator analysis below reveals if MRK stock increases 5.0% at option expiration to 137.66 (circled), the call option would make 57.4% before commission. If MRK stock increases 10.0% at option expiration to 144.21 (circled), the call option would make 119.4% before commission and outperform the stock return nearly 12 to 1*. The leverage provided by call options allows you to maximize potential returns on bullish stocks. The Hughes Optioneering Team is here to help you identify profit opportunities just like this one. Interested in accessing the Optioneering Calculators? Join one of Chuck’s Trading Services for unlimited access! The Optioneering Team has option calculators for six different option strategies that allow you to calculate the profit potential for an option trade before you take the trade. Check out Chuck’s PRO Trading Service! I don’t want you to miss a single opportunity to potentially reach your goals. That’s why I want to share [this video]( I made about my PRO Trading Service. I want you to follow in my footsteps for the opportunity to succeed beyond your wildest dreams, so please call my office at (737) 292-4425 and get started today! Wishing You the Best in Investing Success, Chuck Hughes Editor, Trade of the Day Have any questions? Email us at [dailytrade@chuckstod.com]( *Trading incurs risk and some people lose money trading.  --------------------------------------------------------------- See Related Articles [Invest in Healthcare: ELV Breaks Out]( [BAC: ‘Buy’ Bank Stock’s Volume Surge]( [Qualcomm Races to New Highs]( --------------------------------------------------------------- [TradeWins Logo](  © 2024 Tradewins Publishing. All rights reserved. | [Privacy Policy]( | [Terms and Conditions]( | [Contact Us]( If you didn't create an account using this email address, please ignore this email or unsubscribe using the link below. 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