Happy New Year!
Did you participate in the countdown to ring in the New Year?
How many fireworks displays have you seen over the past weekend?
In the past, I would bring my camera gear and watch the fireworks at Marina Bay. This year, I counted down at home with my family. Must be the age.
2026 could turn out to be extra volatile, as what we’ve experienced on 2 Jan when Nasdaq futures. It roared to life, soaring 1.46% before giving all back and more when the session closed.
It’s the time to be extra vigilant and nimble.
Let’s continue to practice good trading habits to enjoy longevity in this business.
Before I analyze this week’s stock pick, let’s review last week’s #PowerStocks pick: Prudential Financial (PRU).
Review Of Last Week’s Pick Of The Week
Prudential Financial (PRU) was last week’s #PowerStocks pick.
It’s the world’s 30th largest insurance company, worth over $40b.
The shares of Prudential Financial have been pulling back for some time, so I expected them to rise. However, its shares are still under its resistance zone, so there’s no entry yet.
Am I revising my trade plan?
Head over to my Telegram Channel to find out!
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I know and understand that the allure of high returns without effort is highly attractive. It breaks my heart when I hear of people falling for impersonation scams.
To protect you from scams, please note that my team and I WILL NEVER solicit for any investment.
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Why Is Swing Trading Merck (MRK) Worth It?
Source: merck.com
Merck is a world-renowned healthcare company that provides medicines, vaccines, therapies, and more.
Blessed with a $265b market capitalization, Merck is the world’s 6th largest pharmaceutical company.
Unlike many large companies whose shares exhibit lethargic price movement, its shares are highly active, consistently surging.
After a 11.1% rise over 2 weeks, its shares have begun to pull back.
This is great news because I would like to buy its shares and capture its next explosive upmove.
What’s my game plan?
Where’s a favorable price area to buy its shares at?
Continue reading to get the details.
P.S. What if I told you that you could drastically gain control over your emotions of fear and greed, and master the stock market in a short amount of time?
My team and I have worked tirelessly to help you achieve results fast.
Click on the banner below to claim your stock course for free (limited time) now!
Performance Of US Stock Market vs Merck (MRK)
The very 1st thing I want to know is the trend of Merck’s shares.
Knowing the trend of its shares allows me to determine whether I’d look for a buying or shorting opportunity because following its price trend will sharply increase my chances of profitability.
Looking at the chart above, its shares are in a steady and strong uptrend. Hence, I’d like to find an opportunity to buy its shares.
What’s next?
I’ll compare the performance of its shares against the S&P 500.
Why?
I want my hard-earned money to work hard for me. A stronger performing stock is likely to continue bringing a larger-than-market return. So, I’ll take another look at the comparison chart above.
While the S&P 500 has risen by 2% over the past 3 months, the shares of Merck have risen by a jaw-dropping 19.3%! That’s almost 10x outperformance!
I’m excited. I can’t wait to buy its shares for an explosive swing trade.
Should I do just that now?
How Explosive Is Merck (MRK)?
No, I shouldn’t rush to buy its shares without a deeper analysis.
Since I plan to buy its shares and capitalize on its next upmove rather than accompanying it when it pulls back, my holding period will be around a week or 2. Therefore, I want its shares to have the ability to explode upwards.
Have the shares of Merck been able to explode upwards consistently?
Marking out the explosive upmoves for the past 11 months has left me stunned.
There are 20 explosive upmoves, with each measuring between 4.6% and 29.1%!
I got more excited when I discovered the size of Merck.
This company enjoys a mid-sized market capitalization of over $265b! It’s no easy feat for the shares of such a company to explode in price consistently.
Additionally, I appreciate that Merck enjoys a market capitalization of over $265b, as this provides an extra layer of security against manipulation. I don’t wish to lose my hard-earned money to manipulation that could be easily prevented!
Here comes the golden question: Is it time to buy the shares of Merck for an explosive swing trade?
Key Price Levels
Timing is crucial for many things in life. This includes stock trading and investing.
Buying an explosive stock at the wrong time can result in significant losses and emotional distress. This will cause you to lose confidence, and you’ll doubt yourself even when a fantastic trading opportunity arises straight from under your nose!
Is there a way to tell whether the time to buy the shares of Merck is here?
Fortunately, yes!
You can do so by uncovering its key price levels (also known as support and resistance zones). And that’s what I’ve done in the chart above.
After rising 11.1% in under 2 weeks, a pullback is here.
Where are the shares of Merck likely to pull back to?
Referring to the chart above, its shares are likely to fall to around $105 before heading higher once again.
And this scenario has occurred!
Therefore, I want to buy its shares for an explosive swing trade now to ride its next huge upmove.
Here’s a pro tip: Instead of staring at your screen, consider setting a price alert on your broker’s platform to be notified so that you can spend precious time with your loved ones.
Which Instrument Should You Consider Using?
Do you ever wonder about the instrument used to trade explosive stocks?
With 3 main trading instruments available – stocks, contract-for-difference (CFD), and options, you wonder which suits you best.
Since stocks (as an instrument) is easy to understand, I shall focus on CFD and options.
Here are the main similarities and differences:
CFD works like a mirror to stocks. When a stock rises $1, its CFD rises $1.
However, due to its unique pricing mechanism, your options price doesn’t rise by the same amount. In fact, depending on the market conditions, the price of your options contract may even drop!
Your CFD broker will charge you a finance fee for lending you money for your trade. However, no lending is required for options, so there is no finance charge.
Because there’s a finance charge by your CFD broker, CFD is not the ideal instrument for mid to long-term trades. On the other hand, options allow you to implement different strategies across time horizons.
Both CFDs and options are leveraged instruments because they allow you to control a larger market position with a smaller amount of capital.
While CFDs do not have an expiration date, options traders must pay attention to the expiration date of their options contracts.
You must be thinking, “What’s the beauty of trading options?”
Options are like smartphones. You can choose to use a smartphone for its basic or advanced functions.
And options don’t have to be all about Math and dry!
It can be made easy to understand through real-life analogies.
In the same way, you can implement basic and/or highly advanced strategies depending on your level of comfort.
Options allow you to be versatile in adapting to the shifting market conditions and capturing opportunities in the process.
Are you a CFD or options trader?
I’m glad to be fluent in both.
Finally, this is for educational purposes. Please perform your due diligence.
All images are taken from pexels.com, pixabay.com, sectorspdrs.com, tradingview.com, and unsplash.com, unless otherwise mentioned.
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Many new traders are often left confused by conflicting signs and signals.
Worse still, ~80% of traders lose money.
This is because trading isn’t just about skill alone.
It includes the mastery of your emotions.
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