Stocks This Week: Buy Merck

There are contrary S&P cycle influences in the coming week. This is post-options expiration week (OPEX) in April which is not as negative an effect as in other months as we can see below. The dynamic weekly S&P cycle has been accurate in the last year. The second graph depicts this cycle. Note that it bottoms at the end of the week. The likely resolution is likely to be a slight pullback, much like the prior week, followed by a rally.

S&P in Post OPEX Week in April

S&P Weekly Cycle

Merck appears highly ranked on the technical and cycles-based screens. Seasonally, this is a strong patch for the stock. Over the last 43 years, Merck has risen about 81% of the time from March 31^st through July 1^st. The monthly histogram depicts the seasonal strength. The weekly price graph reveals a series of higher momentum lows running back 3 years. Its monthly counterpart shows that a 14-year relative strength downtrend line has been broken to the upside. This implies many years of relative outperformance. The earnings report on April 27th will likely be met with buying. By late May, the share price may be in the $120-$125 area or higher.

Merck Seasonal Histogram (Expected Return)

Merck Weekly Graph

Merck Monthly Graph