MERCK (Pharmaceutical)

Continuing with Merck I am analysing the Stock as on Mar 21, 2017 post my initial analysis on Mar 08, 2017, its trend than on and its future probable trend. I have used Fibonacci Retracement and followed it up with MCAD and RSI to understand the stock trend.

The stock as discussed on Mar 08, 2017 is on a reversal and decision to exit the stock was prudent. Since than the stock has dropped by 2.8% and from its peak of 66.58 the stock has dropped 3.7%. On using Fibonacci Retracement it can be deduced that from the major peak that the stock has achieved on Mar 04, 2017 the stock has already retraced about more than 23% of its major gain from 58.87 on Dec 31, 2016. The RSI is below its average and about to touch 30 and the current volume on downside is more than the average daily volume for the stock. MCAD is also way below its average indicating a sharp selling volume and about to cross Zero line.

The indications clearly show a sharp reversal in the stock price and the current Fibonacci Retracement that I have calculated indicates that the stock could see a low of 62.74 to 60.69 giving a short seller, good opportunity of 2.5% to 5.1% over the next couple of weeks. Both RSI and MCAD are indicating a downward trend with no signs of reversal in the trend in close vicinity.

At this point I would short sell the stock and ride the downward trend until we have a clear indication of reversal. The selling volume seems to indicate a possibility of sharp downward movement and may take the stock below its major trough of Dec 31, 2016 of 58.87.