Technical Indicators:
Bullish Evidence
RSI:
Showing Upward Price movement to 70+ range. Has Proven in the past that it has traded above 70 for few days to two weeks.
MACD:
Momentum is going to switch from downward momentum to upward momentum (longer average crossing under shorter average). Seen on the longer term chart (1 year or so) Momentum is far from highs seen in April 09 (well above 1). In other words, momentum has lots of room to the upside.
SMA:
Continued Perfect formation; though some short term risk if prices interact with 50 day SMA.
Volume:
No significant volume that matches marches highs. Though relatively higher than the past two months indication some support for short term movements up. Also confirms a bullish trend up.
Candle Stick Analysis:
Bullish Engulfing forming today.
Bearish Picture:
Resistance:
Experience technical resistance around 30.
Fundamental Risk:
Prolonged permission from FTA to permit Merck Merger.
Summary:
Technical resistance is probably reflecting fundamental risk which may force price to behave in a sideways manor.
Overall the bullish picture seems to be intact with multiple confirmations across trend, pattern, and candle stick analysis.
Its the end of the week. I would suggest adding in if you are long since prices have relatively pulled back from September highs. If you are a bit risk averse due to overall market thesis you could possibly hedge with a put option around entry price. My option duration would be until the end of the year due to tax purposes (though I'm not to sure how expensive this hedge would be, so for example, don't hedge this way if the cost of hedge exceeds your risk/reward ratio expectations).
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