Johnson & Johnson (JNJ) Might Be in Trouble

Johnson & Johnson (JNJ) is a holding company, which engages in the research and development, manufacture and sale of products in the healthcare field. It operates through the following segments: Consumer Health, Pharmaceutical, and Medical Devices…

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

JNJ had been holding a major level of support at around $162 (green) since May. The stock ended up breaking below that support yesterday, which means lower prices should be coming, overall. If JNJ were to rally back up to that $162 breakdown area, it may now act as resistance. 

A trader could enter a short position on any rallies up to or near $162 with a stop placed above the level. If the stock were to break back above that $162 zone, a long position might be entered instead.

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