Merck's current strength is viewed as a liability; the speaker anticipates a downside move and has positioned for it via a put spread expiring in ~100 days.

Uh another one with a big runup is Merc, which is your second pick here in the big three. They came out with a really positive trial news. perhaps were one step closer uh to curing melanoma or having at least a profound treatment for it.

Uh but losing, you know, maintaining their momentum. They're up about 14% but falling off of those highs. How are you looking at Merc?

So, what am I doing in here? Okay, I'm using Merc's relative strength, which has been great. Okay, and it's held up and it's up about 40% year-to date and it's completely unscathed, okay, in terms of some of the recent sellside activity. that recent sellside activity as I said it really started to hit the XLV and a few of the healthcare stocks in the last two trading sessions and you can see Merc completely and totally unfazed by that selling.

So the relative strength of Merc okay uh literally being its liability down the road is what I'm looking for.

All right, so for Merc, I think this one's going to be a little bit tougher. I'm going to give myself a bit more time for the trade to actually develop for that. Okay, this is not so much a short-term trade as this is going to be, if you will, an investment to the downside.

The options trade is going out to the D18. Again, D18 options expiration. All right, that's 100 days out. I'm going to be buying the 140 puts, buying the 140 puts, selling the 130 puts against it.

This one's done for a $2.95 debit. Again, a very simil uh similar conceptual setup to what I did in raw stores. this one being applied to the health care sector specifically to Merc which as I said uh relative strength is great versus the rest of the sector but uh as we well know you know markets often move you know the sector moves and the individual stocks will then move with it

So, here's some of our lines starting with those highs. 15692. This triangular shape is what we've seen develop recently after a big gap to the upside here. Before that, we had more of a rising wedge type shape here, which uh often is regarded as being a little bit more of a bearish type of setup.

But, as you can see, it can really go either way. What you're looking for is a breakout beyond either of those two boundary lines. Same deal here. We have now uh this uh kind of more triangular type shape here.

We have our extreme low after the push to the upside near 145. Our extreme high 15692. So if we were to move lower, some traders might be looking for the gap to be filled near about 138 or so.

That's our our green lines that we have highlighted here on our chart. Now we also find ourselves slipping below our 5-day exponential moving average during the past few sessions here.

That comes in at 14918. At this point, we have our teal 21-day EMA coming in at 14,562. That would represent a breach of our lower trend line in this case. So, that could be a supportive area traders would be looking for.

We can see now as well, we have a green upward sloping trend line on the RSI here that is in danger of being broken today as well. We sit at 57 right now. So again, a break below the 50 midline would be noteworthy if we were to move beyond that uh that trend line that we have there.

We have our volume profile showing that there were some takers in terms of trading activity up here at these elevated levels. 148 to 153 is where the bulk of that happened here.

Things start to pick up again much more notably between about 126 to 130 uh back down here if we were to fill the gap and move lower.

All right, right now Merc is at 14765 down about a half of a percent as Rick just highlighted there.