Stock quotes in this article: JNJ
In this daily bar chart from JNJ, below, we can see that price rallied from December but stopped short of its August zenith. JNJ pulled back to close below the 50-day moving average as well as the 200-day moving average. The On-Balance-Volume (OBV) line rolled over from December and tells me that JNJ sellers have been more aggressive. The trend following MACD (Moving Average Convergence Divergence) oscillator has moved lower for a take profit sell signal and is now poised to cross the zero line for an outright sell message.
In this weekly Japanese candlestick chart from JNJ, below, we can see a weakened and potentially vulnerable setup. Prices show a long rise but in recent months a lower high in December compared to August. Prices are testing the upward 40-week moving average line. The weekly OBV line shows a long upside and only the beginning of a lower turn in January. The MACD oscillator surprisingly shows weakness starting in September, with the strength of the advance quickly fading.
In this daily dot-and-digit chart from JNJ, below, we can see a downside price target of $156.
In this weekly Point and Figure chart from JNJ, below, we can see an upward price target of $205. If our daily Point and Figure chart is correct and there is a decline to $156 or lower, this weekly chart should generate a bearish target.
Basic strategy: The drop in the stock market in recent weeks has not spared too many equities and that is worrying. JNJ is in a longer term uptrend, but that may not be enough to sustain the rally. I have no particular knowledge of what JNJ might report on Tuesday but I wouldn’t be a buyer before the news. Avoid the long side for now.
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