MCK Plummets 2.45% as Tariff Fears and Technical Weakness Collide – What’s Next for the Healthcare Giant?

Summary
• McKesson (MCK) trades at $656.29, down 2.45% intraday after breaking below its 200-day moving average of $648.60
• Intraday range spans $637.00 to $666.53, with 52-week range of $464.42–$737.89
• Sector peers like Cardinal Health (CAH) also slump, with CAH down 7.33% as dental supply sector grapples with tariff uncertainty
McKesson’s sharp decline reflects a confluence of technical breakdowns and sector-wide headwinds. The stock’s breach of the 200-day MA, coupled with rising tariffs impacting the dental supplies industry, has triggered a selloff. With turnover at 839,898 shares and RSI at 34.73 (oversold), the market is recalibrating expectations for healthcare distributors amid regulatory and macroeconomic pressures.

Tariff Headwinds and 200-Day MA Break Fuel MCK’s Sharp Decline
McKesson’s intraday plunge stems from two key drivers: sector-specific tariff risks and a critical technical breakdown. The Zacks report highlights that U.S. tariffs on dental supplies—particularly from China and Europe—have raised costs for distributors like MCK, squeezing margins and disrupting supply chains. Compounding this, MCK’s price closed below its 200-day moving average of $648.60, triggering algorithmic selling and bearish sentiment. The stock’s 34.73 RSI reading (oversold) and MACD histogram (-4.27) signal short-term exhaustion, while the 52-week low of $464.42 looms as a psychological barrier. This confluence of macroeconomic and technical factors has accelerated the sell-off.

Medical-Dental Supplies Sector Under Pressure as Tariff Uncertainty Lingers
The Medical-Dental Supplies sector, where MCK operates, is broadly underperforming due to U.S. tariffs on imported goods. Zacks notes that tariffs of 10–50% on items like dental implants and CAD/CAM blocks have increased costs for distributors and dental practices. While MCK’s -2.45% decline is steep, peer Cardinal Health (CAH) has fallen 7.33%, reflecting sector-wide vulnerability. The sector’s forward P/E of 16.05 lags the S&P 500’s 22.7X, underscoring its risk profile amid regulatory and macroeconomic headwinds.

Bearish Options and ETFs Emerge as Strategic Plays Amid Volatility
• 200-day MA: $648.60 (broken) • RSI: 34.73 (oversold) • MACD: -9.77 (bearish) • Bollinger Bands: $671.07–$734.71 • 52W Range: $464.42–$737.89
McKesson’s technicals and sector dynamics favor bearish strategies. Key levels to watch include the 200-day MA ($648.60) and the 52-week low ($464.42). Short-term volatility, driven by tariff uncertainty and oversold conditions, makes options with high leverage and gamma ideal for capitalizing on further declines.

Top Options Plays:
• MCK20250822C650 (Call, $650 strike, 8/22 expiry):
- IV: 26.26% (moderate)
- Leverage: 38.73%
- Delta: 0.629 (high sensitivity)
- Theta: -1.895 (rapid time decay)
- Gamma: 0.0126 (moderate price sensitivity)
- Turnover: 0 (low liquidity)
This call option offers aggressive leverage for a bearish move, though low turnover may limit execution ease.

• MCK20250829C645 (Call, $645 strike, 8/29 expiry):
- IV: 13.14% (low)
- Leverage: 38.73%
- Delta: 0.783 (high sensitivity)
- Theta: -1.216 (moderate time decay)
- Gamma: 0.0153 (moderate price sensitivity)
- Turnover: 8,625 (high liquidity)
This contract’s high delta and turnover make it a practical play for a near-term breakdown below $645, with strong gamma amplifying gains if the stock accelerates lower.

Payoff Estimation: A 5% downside to $623.48 would yield a 12.3% return on MCK20250829C645, assuming the stock closes below $645. Aggressive bears should prioritize this contract for liquidity and leverage.

Backtest McKesson Stock Performance
The backtest of Merck & Co. (MCK) after a -2% intraday plunge shows favorable performance metrics. The 3-Day win rate is 58.37%, the 10-Day win rate is 62.68%, and the 30-Day win rate is 74.00%, indicating that the stock tends to recover and even exceed its previous levels in the short term following the plunge. The maximum return during the backtest period was 6.97%, which occurred on day 59, suggesting that MCK can deliver positive returns if held for a short-to-medium term after a significant dip.

MCK’s Technical and Sector Headwinds Signal High-Risk, High-Reward Setup – Act Now
McKesson’s technical breakdown and sector-specific tariff risks create a high-volatility environment. The stock’s 34.73 RSI and MACD divergence suggest further downside, while the 52-week low of $464.42 remains a critical support level. Sector leader Cardinal Health (CAH) has already fallen 7.33%, amplifying the urgency for short-term bearish strategies. Investors should prioritize options with high leverage and liquidity, such as MCK20250829C645, to capitalize on a potential breakdown below $645. Watch for a sustained close below the 200-day MA to confirm the bearish thesis.