Merck & Co. Inc. (MRK) is very overbought on a number of time frames but we could reach higher highs after a sideways or lower correction. I last reviewed the charts of MRK back in early May when I wrote that, "Traders who went long in March after our last update should continue to hold longs. Additional longs could be purchased above $61. $64-$66 are the first target followed by the $75 area. Raise sell stops to just below $57." Traders should be long and profitable with prices up at $70 now. Raise stop protection to $65 now and be prepared for a lower correction to unwind the overbought conditions.
In this daily bar chart of MRK, below, we can see that prices are above the rising 50-day moving average line. The 200-day line has bottomed and started to rise. In June you can see that the 50-day line crossed the 200-day line for a bullish golden cross. The daily On-Balance-Volume (OBV) line has moved up from February to make new highs and confirm the rally. The slow stochastic indicator in the lower panel shows readings in the 90's which is well into overbought territory.
In this weekly bar chart of MRK, below, we can see that prices are above the rising 40-week moving average line. The weekly OBV line is bullish and close to a new high. The weekly slow stochastic indicator is in overbought territory.
In this Point and Figure chart of MRK, below, we can see a potential price target of $75.66.
Bottom line strategy: With daily and weekly slow stochastic readings in the 90's short term traders should raise stop protect or book some profits rather than suffer through a correction. The corrects in May , June and July have been shallow so the next correction could be deep.