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Dropping coverage of MER at $63.75

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Today's trading at $63.75 has PremierMarkets.com dropping coverage of Merrill Lynch (NYSE:MER). We profiled the stock bullish in our profiled portfolio on May 11th at $69.50 when the stock broke a spread-quadruple top at $69. We had established a bullish price objective of $97 and followed with a stop at $63.75. Today's trading at $64 broke a spread-triple bottom and also violated the bullish support line, or longer-term trend.

Merrill Lynch - $1 box

Traders are never sure if such a pattern of trading is just a shake-out and bear trap, but under current market conditions PremierMarkets.com is going to drop coverage of our bullish play in MER. We gave the stock as much room as we felt comfortable with, but the stock just couldn't hold.

Current PremierMarkets.com Profiled stocks/options

I've arranged bullish trades in the upper portion of the portfolio. Each is weighted as profiled when coverage began. For example, shares of Dynamic Materials (NASDAQ:BOOM) represented just 1/4 position, while Amsouth Bancorp (NYSE:ASO) was profiled as 1/2 position. In the middle of the portfolio, I've grouped together the covered call in Qualcom (NASDAQ:QCOM) which was a 1/2 position. Then at the bottom of the portfolio I've grouped together bearish trades that we profiled as short. Bristol Myers Squibb (NYSE:BMY) was profiled as a 1/2 position and Intel (NASDAQ:INTC) was profiled this morning as a full position. By "weighting" trades, traders and investors are better able to control risk in their portfolio. The main number every trader should be concerned with is the bottom line of their account. When it starts turning negative, there is often times a "trouble child" responsible for a negative result. Today, our trouble child was MER. That stock removed itself from the portfolio when it traded $63.75.

Jeff Bailey
Senior Market Technician

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