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Fast Money 360: Merck

Considering shares of Merck are little changed over the past 3 months, how should you game this stock ahead of earnings, Friday?

Seems like a good time for Fast Money 360.

Find out what fundamentals, technicals and insights from the options world all suggest lie ahead for this stock.

FUNDAMENTALS

Seamus Fernandez of Leerink Swann is bullish and tells the desk Merck is his top pick in the group.

“We don't expect any surprises this quarter,” he says, not even from vaccine results which some market mavens say will come in weak. “As far as we're concerned (vaccine weakness) is not a major issue for Merck,” he says.

”We are buyers of the stock. I like it here,” he concludes.

CHARTS

Oppenheimer’s Carter Worth sees it a little differently.

After examining patterns in its chart Worth tells us, “Merck's trading action going into earnings suggests that whatever is said - it will have very little impact on the stock.”

In other words he’s not bearish, but he’s not particularly bullish either.

What’s the trade?

Worth thinks the stock is fairly valued and dead money right here.

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OPTIONS

Brian Stutland of Stutland Equities is keeping his eye on the volume of puts that are trading in this name.

”We’ve seen options traders over the last couple of weeks go out buying protection, buying put protection to the downside,” he explains. That suggests options traders are bracing for a pullback.

If it comes should you take it as opportunity? Not necessarily.

Stutland says, “I’d want to see that super spike in volatility in the options market before I started to buy Merck. Certainly, that’s the time when you get in.”





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Trader disclosure: On July 28, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Finerman owns (AAPL); Finerman owns (BAC); Finerman’s firm owns (BAC); Finerman owns (CVS); Finerman’s firm owns (CVS); Finerman owns (FLS); Finerman’s firm owns (FLS); Finerman’s firm owns (GLW); Finerman owns (JPM); Finerman’s firm owns (JPM); Finerman’s firm owns (RIMM); Finerman’s firm owns (SKS); Kelly owns (BP) puts; Jon Najarian owns (GLD) puts; Jon Najarian owns (AAPL) call spreads; Jon Najarian owns (MSFT) and short calls; Jon Najarian owns (COP) and short calls; Jon Najarian owns (RRC) and short calls; Jon Najarian owns (MSFT) and short calls; Jon Najarian owns (SYMC) and short calls; Jon Najarian owns (RIMM) and short calls; Jon Najarian owns (IACI) and short calls; Jon Najarian owns (LVS) and short calls; Jon Najarian owns (MGM) and short calls; Jon Najarian owns (XOM) and short calls; Jon Najarian owns (MOS) and short calls; Cortes owns (RSX), (GS), (MS); Cortes is short the S&P 500; Cortes is short the Yen; Cortes is short US Treasuries; Terranova owns (AMZN), (EMC), (CREE), (BRCM), (LRCX), (COP), (AXP), (BMO), (CSX), (PEP), (CVS), (GS), (PCP), (C), (APA), (FCX), (JOYG), (MMM), (MOS), (UAUA), (WYNN), (GOOG), (BBY), (SU), (KOL), (XBI), (SWN), (BAX), (JNPR); Terranova is short (GLD)

For Brian Kelly
Accounts managed by Kanundrum Capital own (ELX)
Accounts managed by Kanundrum Capital own (ORI)
Accounts managed by Kanundrum Capital own (VIV)
Accounts managed by Kanundrum Capital own (BAK)
Accounts managed by Kanundrum Capital own (AAPL) calls
Accounts managed by Kanundrum Capital own (UNG)
Accounts managed by Kanundrum Capital are short (GLD)
Accounts managed by Kanundrum Capital are short (RKH)

For Joe Terranova
Terranova works for (VRTS)
Terranova is chief market strategist of Virtus Investment Partners, LTD.
Virtus Investment Partners owns more than 1% of (CASS)
Virtus Investment Partners owns more than 1% of (LDR)
Virtus Investment Partners owns more than 1% of (LPHI)
Virtus Investment Partners owns more than 1% of (MGRC)
Virtus Investment Partners owns more than 1% of (XLB)
Virtus Investment Partners owns more than 1% of (XLP)
Virtus Investment Partners owns more than 1% of (XLY)
Virtus Investment Partners owns more than 1% of (XLI)
Virtus Investment Partners owns more than 1% of (XLK)
Virtus Investment Partners owns more than 1% of (XLU)
Virtus Investment Partners owns more than 1% of (SUBK)
Virtus Investment Partners owns more than 1% of (WDFC)
Virtus Investment Partners owns more than 1% of (YDNT)
Virtus Investment Partners owns more than 1% of (DRYS)

For Dennis Gartman
Funds managed by Gartman own (SJT)
Funds managed by Gartman own (FAX)
Funds managed by Gartman own (BPT)

Tavis McCourt
***No Disclosures***

David Levy
***No Disclosures***

Mike Khouw
***No Disclosures***

Late Addition
Leerink Swann placed an Outperform rating on MRK on February 3, 2006. Leerink Swann LLC is willing to sell to, or buy from, clients the common stock of Merck & Company, Inc. on a principal basis.

CNBC.com with wires

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