When I look at the latest advance in Johnson & Johnson (JNJ) , I get the feeling that it is starting to fade. I looked at the charts just a couple of days ago and said, "Prices have shown a little softness since our mid-September review, but a close above $136 would quickly turn things more positive. If you have no position in JNJ, I would be a buyer on a close above $136 and then risk below $131."
Only a couple days have transpired, but prices "look tired," if that is possible. I get this "feeling" in part because I have heard the phrase "melt up" so often lately that I wonder why JNJ is not participating more strongly on the upside.
Let's take one more look at the charts.
In this daily chart of JNJ, above, we can see prices holding just above the declining 50-day moving average line. Other rallies above the 50-day line in the past two months have been stronger. Why is this rally less robust? As a technical analyst, I no reason(s) for you. The daily On-Balance-Volume (OBV) line has only inched a little higher in the past week and the MACD oscillator is still below the zero line.
Not a lot of change in this weekly bar chart of JNJ, above. Prices are above the rising 40-week moving average line. The weekly OBV line is pointed down so we know buyers are not being aggressive on this timeframe. The MACD oscillator is in a bearish mode.
This Point and Figure chart, above, shows some minor distribution for JNJ. A decline to $127 will tip the chart lower and we still need to see a rally to $136 to improve the picture.
Bottom line: Some analysts look at relative strength -- the performance of your stock compared to the major averages. A simple way of thinking about this is when it looks like the rest of the market is rallying and your stock is sitting there (a simple way to say underperforming), you have to ask some questions. Maybe JNJ will get in gear on the upside, but today I have some doubts.