We looked at the charts of Johnson & Johnson (JNJ) back on Dec. 31, when we wrote, “This is the time and the place to go long JNJ. Risk to $146 for now. The $181 area is our first upside price target.” With prices a lot closer to our first price target of $181, another review seems like a good plan.
In this daily Japanese candlestick chart of JNJ, below, we can see that prices broke out of a long sideways consolidation pattern at the end of December. The rally has pushed higher and prices gapped (the Japanese call it a window) higher Tuesday. Tuesday’s candle pattern is potentially negative as prices rejected the highs and closed back down near the opening. The weekly candle so far does not look bearish. Prices are firmly above the positively sloped 50-day and 200-day moving averages. The On-Balance-Volume (OBV) line has been moving higher and that helps confirm the price advance and tells us that buyers of JNJ have been more aggressive. The trend-following Moving Average Convergence Divergence (MACD) oscillator is in a bullish alignment above the zero line.
In this weekly Japanese candlestick chart of JNJ, below, we see a very constructive chart. Prices are in an uptrend above the rising 40-week average line. The weekly OBV line is very strong and so is the MACD oscillator.
In this updated daily Point and Figure chart of JNJ, below, we can see that the uptrend has been very strong since December (look for the “C” on the chart). A new, higher price target of $234 is projected.
Bottom line strategy: Continue to hold longs recommended in December. Raise sell stops to $160. Our price targets are $181, the round number of $200 and then the $234 area.
Get an email alert each time I write an article for Real Money. Click the “+Follow” next to my byline to this article.