Merck Well Structured Setup

Published on Wednesday, 21 July 2010 06:20 Written by Christopher Lynn

New York, July 21st (TradersHuddle.com) - Shares of Merck & Co. Inc. (NYSE:MRK) closed the trading session at $35.66 near its 50 day and 200 day moving averages currently set at $34.48 and $35.71 respectively. Merck's price action is above the 50 day moving average but below its 200 day moving average, which provide a nice trading setup, with clear reference points.

Merck & Co., Inc. (NYSE:MRK), the global pharmaceutical company that develops, manufactures, and markets a broad range of human and animal health products. Merck's products include Zocor for treatment of elevated cholesterol, Propecia for treatment for male pattern hair loss, Fosamax for preventive treatment of osteoporosis, and Singulair for treatment of asthma. Merck was founded in 1891 and is headquartered in Whitehouse Station, New Jersey.

Merck price action seems to be setting up for a tight range between the 50 day moving average as support and the 200 day moving average serving as resistance.

A tiered approach to enter the stock, appears to be the best way to maximize possible movements from the stock, as traders could enter Merck with a small position and wait for the stock to break out above the 200 day moving average at $35.71, where traders could add to their position as momentum builds with the breakout. The flip side will be if support being referenced at the 50 day moving average set at $34.48 breaks it could mean further downside in the horizon for Merck.