MRK - Merck and Company Incorporated $76.06 (+1.63)

A leading manufacturer of human and animal pharmaceutical products, Merck (MRK) is expected to reap the benefits of a strong trend in prescription drug sales. Current estimates suggest that MRK will show a 13% increase in its bottom line from strong performers like Vioxx (arthritis), Zocor (anti-cholesterol), and Singulair (asthma). With the drug sector being an enticing defensive play, MRK has attracted plenty of buying, which has consequently sent shares above tough resistance at $75. Currently, the company has 5.4 billion shares authorized with 2.3 billion shares outstanding, so a 2:1 stock split is possible, but not probable at this point. Most recently, shares have resumed their upward course from a sharp pullback early last month. From this low the stock has maintained a strong uptrend, fueled by good buying (about 5.0m shares). If good volume can continue as prices climb, then we expect the stock to run to $77.38 (previous high) before meeting with resistance. Just higher, the $80 and $81.13 (52-week high) level should pose additional resistance. However, if the stock should consolidate prior to advancing, then expect good support at $75. Additional support should be potent at $73.50, braced by Friday's intra-day low of $73.63 and the 10-dma of $73.59. Set stops below this level to protect against further declines. Low risk entry points will occur if MRK can rebound sharply from support on good volume (5.0m shares or better). We'll be looking to time our entry and exit points with support and resistance, since earnings are not due out for another couple of weeks (10/23). 23rd.until July.

Picked on October 1st @ $76.06 Change since picked 0.00

PHCC - Priority Healthcare Corp $75.00 (-1.25)

Priority Healthcare is attempting to fill a niche in the pharmaceutical industry. The Company is a national distributor of specialty drugs and medical supplies. They are on the outside of the traditional medical system and they provide self-injectable biopharmaceuticals and disease treatment programs to individuals suffering from chronic illnesses including hepatitis, cancer, arthritis and HIV among others. Their products can be obtained through outside clinics, their specialty pharmacies and even the mail. Earnings suggest that Priority Healthcare is filling a profitable niche. Current First Call consensus estimates are looking for profits of $0.35/share when the Company reports on October 20th. If the numbers are in line, it will be a nice increase over the same quarter a year ago, which saw the company earn $0.23/share. PHCC split its shares 3:2 back in May. Currently there are enough authorized shares to declare a 2:1 split, which has become more probable due to the share price's ascent into new all time high ground. There is some excellent support for the stock from analysts. Six of the ten analysts covering the stock currently have issued "Strong Buy" recommendations. With an average daily volume of only 180.8 thousand shares, this play may not be for everybody. It does not take much buying or selling to make this stock move. Stops are also difficult to execute on low volume stocks, so be careful. The relative strength of healthcare stocks has helped PHCC to take out its old high of $75.38 last week. The old high was established in late June. On Thursday the stock crossed $80.00 only to pull back a little, due to overall market pressure. The $80.50 level is now the resistance PHCC must breach before it can resume its move into higher ground. Support comes at the 5-dma, now at $73.89. Volume was healthy during last week's advance. The MACD is positive but it may be slowing its ascent. OBV did pick up last week but it is a long way from matching the enthusiasm registered the last time PHCC was making new highs. These technical indicators are probably being held back by terrible market conditions. That being said, PHCC appears to be one of the few stocks strong enough to make some substantial headway if we get a recovery. Our initial stop is $70.00. If we are not stopped out we will exit this position before the earnings release.

Picked on October 8th @ $75.00 Change since picked +0.00