MRK investors herd to book profits while the going is good
18 Dec, 201813 min read
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MRK ranked among the worst performers today. On a longer term basis, investors in MERCK & CO., INC. made -0.03% per day. Tuesday's performance of -1.2% was a underperformance compared to it's daily average.
MRK showed a bullish trend over the last 3 months. During this period MRK delivered +6.22% and saw a maximum drawdown of -6.31%. There was a long signal during this period which returned +6.22%.
MRK has been outperforming the SP500 index in recent time. It showed significant outperformance (compared to the SP500 index) from 9 Mar, 2018 to 13 Dec, 2018. Over the last 2 years 11 months and 14 days, MRK outperformed the SP500 index on 52% days.
During the last three months MRK was mostly profitable and delivered on average +0.1% per day. It's best return during this period (of +2.53%) was on Tuesday, 16 Oct, 2018. While it's worst loss in the same period (of -3.2%) was on Friday, 14 Dec, 2018. The longest stort-term trend during this period was 5 profitable days, which started on 16 Oct, 2018 and went on till 22 Oct, 2018. This bullish trend returned +4.4% to investors.
The last 12 months saw MRK's investors making profits in 10 months and incurring losses in 2 months. During the last year, MRK delivered profits in more months than SP500 index. MRK significantly outperformed SP500 index in Apr 2018, when it returned +10.51% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. MRK had a longer winning streak of profitable months than SP500 index. It went up in 9 straight months (from Mar 2018 to Nov 2018) during which period it delivered +41.26%. It is interesting to note that both MRK and SP500 index significantly outperform during months when quarterly/annual results are announced.
I never attempt to make money on the stock market. I buy on the assumption that they could close the market the next day and not reopen it for five years.
-- Warren Buffett
MRK is currently seeing overall increase in volatility. In comparison, the SP500 index is seeing increase in volatility. During the last three months, there was a significant surge in MRK's volatility from 24 Sep, 2018 to 29 Oct, 2018. While there was a significant surge in the SP500 index's volatility from 19 Sep, 2018 to 29 Oct, 2018.
Advanced/professional short-term investors should note that MRK has negative skewness in it's return distribution. This indicates that investors may need to stay invested through long periods of drawdown before expecting a recovery.
Investors trading in MRK derivatives at this moment can consider 'Covered Call' options strategy to receive better risk-adjusted returns.
SP500 index has more chance of extreme outcomes than MRK. Therefore, SP500 must receive a lower allocation than MRK in your portfolio. SP500 index usually has shorter drawdown period than MRK.
Based on your interest in MRK you may find it interesting to know that LULU, SQ and RHT are mid caps that have all shown remarkable performance and qualify to be on every investor's watchlist.
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