Monday, September 14, 2009

Merck Poised for Break-Out

Despite early morning selling across the board in stocks, the averages have rebounded from the day's lows and are pretty close to unchanged as we move towards the stock market close. The resiliancy of the stock market continues to amaze. The numbers don't lie and the long term statistics show that momentum continues strong even while shorter term momentum is running out of steam.

As stock indices were making new yearly highs several weeks ago, I reviewed the list of Dow stocks and could find only a few that were also breaking to new highs. One such stock was Merck and we took some long-term call positions to take advantage of any additional market gains. After falling back some from new high levels, the stock is challenging its previous highs several weeks ago. As the stock market overall seems destined for still higher prices, and as most likely any changes in health care policy will, as usual, turn out to be a blessing for drug and other healthcare companies, a close above 33 could be a signal that Merck is also destined for much higher prices.

This stock could be worth a look if you are still wishing to participate in potential future market gains. Be sure though that you review the addition of this stock to your portfolio with your financial planner to make sure that it fits well into your overall investment strategy.

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