Merck stocks trend following trade idea: How to play the long term trend decelerating higher

Introduction

VolatilityMarkets Trend Following Trade.

According to AQR the quantitative hedge fund and Yale University, over the past 100 years markets moved in trends. Trends are successive upwards and downwards movements in price that occur at a greater frequency than would be predicted by randomness alone. The following trade idea is a trend following trade idea which takes the assumption that the market will continue moving in the way it has over the previous sessions. Trend Trading, however is different than scalping due to the time horizon of the trade as trend following trades will take a week while scalping is done on a daily or intraday basis.

Market summary

Price

Merck last price was $ 108.87.

Trend analysis

In the short term Merck has been accelerating higher. In the long term Merck has been decelerating higher.

Value analysis

Over the past 21 days, the Merck price increased 10 days and decreased 11 days.

For every up day, there were 1.1 down days.

The average return on days where the price increased is 1.3711%

The average return on days where the price decreased is -1.1214%

Performance

Over the past 21 Days, the price has increased by 1.12% percent.

Over the past 21 days, the average return per day has been 0.0533% percent.

Trade idea

Taking into account the long term trend decelerating higher, we propose a long trade idea with an overnight time horizon..

Trend trade idea

Buy $ 154,191 USD of Merck, take profit at $ 110.0786 level with 50.02% odds for a $ 1,711 USD gain, stop out at $ 108.1639 with 50.0% odds for a $ 1,000 USD loss through an overnight time horizon.

Intraday predictions

Merck trend analysis

Merck last price was $ 108.87. The short term trend accelerating higher is stronger than the long term trend decelerating higher. This trade goes long when the last change was higher and accelerating .

Merck value analysis

Over the past 21 days, the Merck price increased 10 days and decreased 11 days. For every up day, there were 1.1 down days. The average return on days where the price increased is 1.3711% The average return on days where the price decreased is -1.1214% Over the past 21 Days, the price has increased by 1.12% percent. Over the past 21 days, the average return per day has been 0.0533% percent.

Merck worst/best case scenario analysis

Within 1 week, our worst case scenario where we are 95% certain that this level won't trade for Merck, is $ 106.8018 , and the best case scenario overnight is $ 110.9382 . levels outside of this range are unlikely, but still possible, to trade. We are 50% confident that $ 108.1639 could trade and that $ 110.0786 could trade. These levels are within statistical probability.

Expected range

Within 1 week, our worst case scenario where we are 95% certain that this level won't trade for MRK, is $ 106.8018 , and the best case scenario overnight is $ 110.9382 . levels outside of this range are unlikely, but still possible, to trade.

We are 50% confident that $ 108.1639 could trade and that $ 110.0786 could trade. These levels are within statistical probability.

Probability Vs Payout Chart:

This graph contrasts the percentage payout of holding a position vs the probability that the payout occurs. The red and green columns represent the probability of stopping out and taking profit and their associated payouts.

Key Takeaways:

• Price today $ 108.87

• Over the past 21 days, the Merck price increased 10 days and decreased 11 Days.

• For every up day, there were 1.1 down days.

• The average return on days where the price increased is 1.3711%

• The average return on days where the price decreased is -1.1214%

• Over the past 21 Days, the price has increased by 1.12% percent.

• Over the past 21 days, the average return per day has been 0.0533% percent.

• Over the past 21 days, The price has on average been decelerating: $ -0.0595 per day higher

• Over the last session, the price increased by $ 2.92

• Over the last session, the price increased by 2.6821 %

• Over the last session, the price accelerated by $ 2.64