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Is Merck a Buy After Covid-Treatment Report? Check the Chart.

Merck is at 52-week highs after the health-care giant reported progress with its Covid treatment. Here's the chart and outlook.

Shares of Merck  (MRK) - Get Merck & Co., Inc. (MRK) Report are running to new 52-week highs, up about 10% on Friday.

Friday is another mixed day for the stock market, but Merck isn’t having much trouble.

The stock is rallying on data from Merck’s antiviral pill, which cuts death and hospitalization rates for Covid-19 by 50%. 

The results were promising enough that the company will cease the current trial and seek emergency-use authorization from the Food and Drug Administration.

The news launched Merck shares higher in the premarket and bulls aren’t giving up the gains just yet. 

The news is also weighing on Moderna  (MRNA) - Get Moderna, Inc. Report, Pfizer  (PFE) - Get Pfizer Inc. Report and Novavax  (NVAX) - Get Novavax, Inc. Report, all of which are down on Friday.

It also comes just a day after Merck agreed to buy Acceleron Pharma for $11.5 billion. In other words, it’s been a busy week for the company.

Can the stock continue to push higher?

Trading Merck Stock

Weekly chart of Merck stock.

Weekly chart of Merck stock.

Shares of Merck were grinding along the 200-week moving average, as the stock was making a series of lower highs.

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While support continued to come into play around the $70 to $72 area, there wasn’t much to be excited about with this one.

With Friday’s rally, however, the Kenilworth, N.J., company's stock cleared that difficult downtrend resistance measure (blue line).

That’s evident on the weekly chart, as Merck topped out well before Covid became an issue and has been trending lower since. 

With the rally, the shares cleared the prior 52-week high and the prior 2021 high at $81.62. It would be bullish for the stock to stay above this mark going forward.

Below $81.62 and bulls will want to see Merck hold up over the 61.8% retracement and the most recent lower high at $79.23. That’s also the third-quarter high, as well as the September high.

Maintaining above that mark keeps Merck in a monthly-up and quarterly-up rotation.

On the upside, let’s see if the stock can reclaim the 78.6% retracement at $82.75, then take out today’s high at $84.34.

Above the latter and there’s room to the high at $88.33, followed by a push over $90.

Does the company’s Covid treatment change the game? I don’t know how it will affect the fight against the virus, but at least for now, it’s changed the charts. 

Above $79 and Merck stock remains bullish, but above $82.70 is even better.