Johnson & Johnson (NYSE: JNJ)

Johnson & Johnson, together with its subsidiaries, researches and develops, manufactures, and sells various products in the health care field worldwide. It operates in three segments: Consumer, Pharmaceutical, and Medical Devices.

Take a look at the 1-year chart of J&J (NYSE: JNJ) below with my added notations:

JNJ had formed an up-channel in 2019. A channel is formed through the combination of a trend line support that runs parallel to a trend line resistance. JNJ breaking through channel support last week will likely mean lower prices, overall.

The Tale of the Tape: JNJ broke out of the bottom of its channel. The stock has moved lower, as expected, but likely has a long way to go. Bearish trades could be entered on rallies, specifically on any rally up to the prior channel support.

Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.

No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key!

Good luck!
Christian Tharp, CMT