Johnson & Johnson Breaks Down Sharply on the Charts So Take Action

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Johnson & Johnson Inc. (JNJ) is part of the club of 30 or a member of the Dow Jones Industrial Average (DJIA). JNJ is off something like $14.44 and it is responsible for around 100 points of the loss of the DJIA today. Ouch. It may be responsible for a lot more according to a Reuters story, but that is for someone else to discuss. Let’s stick to the charts and indicators.

In this daily bar chart of JNJ, below, we can see the big high/low range (so far) of today’s trading. Prices sliced through the rising 50-day moving average line and is very close to the rising 200-day moving average line. The 200-day line intersects around $132-$133 now and that is the area of the October low and the early August high so we might see support develop there but in this market environment would not bet on it. The daily On-Balance-Volume (OBV) line stalled in November and was already weakening in December. We know that sellers are more aggressive today but isn’t it interesting that they were more aggressive this month? The trend-following Moving Average Convergence Divergence (MACD) oscillator crossed to the downside in November for a take profits sell signal and it is close to the zero line now for an outright sell signal.

In this weekly bar chart of JNJ, below, we can imagine that prices are down near the rising 40-week moving average line and we could even close below that line today. The weekly OBV line was moving up from June but that trend could end soon. The weekly MACD oscillator was bullish but is now likely to cross to the downside.

In this Point and Figure chart of JNJ, below, we can see the column of “O’s” marking the decline so far today. This chart is projecting a possible downside price target in the $114 area.

Bottom line strategy: we can’t do much about the JNJ products we used over the years but we can take action if we own JNJ and it has fallen below our purchase price or stop loss. Yes JNJ has survived other unfortunate news events in the past but I would not take that as a good technical reason to hold the stock.

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2018-12-14 12:05:00

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