Best Stocks for 2008: Technical view on Merrill Lynch (MER)

For 25 years, Steven Halpern, editor of TheStockAdvisors.com, has surveyed the leading financial newsletter advisors asking for their favorite stocks for the coming year. This article is one of 100+ ideas in the Best Stocks for 2008 report.

"My favorite conservative choice for 2008 is Merrill Lynch (NYSE: MER)," says Yola Edwards, editor of the technically oriented Yola Edward's Charts.

"The jobs market is holding up very well and the risk of recession in the United States appears unlikely given the Federal Reserve's accommodating monetary policy to stave off recessionary threats and contain the subprime fallout.

"Merrill Lynch suggests that year-end 2008 will be marked by a 2.50% Fed funds rate with further easing to 2% by the first half of 2009.

"Among those hardest hit in the subprime credit crisis was Merrill Lynch & Company, which plunged almost 50% from its January highs of $94 in what appears to be a fourth wave correction. Technically, the recent November weekly lows at $50.50 formed a tweezers bottom and offered the stock support from which it has rallied.

"At a minimum we could expect a 38.2 % rally from the lows suggesting a possible upside target to about $67.50 over the next month. However, over the next year we can anticipate the stock to rally 61.8%, from its recent low, to about $77.38 as it bases and works through the corrective phase."