Johnson & Johnson: After an Earnings Beat, Here's What to Expect From the Stock

Can the shares overcome a key price area?

Johnson & Johnson (JNJ) reported an earnings beat Thursday morning as their Pharmaceutical and MedTech divisions outperformed estimates. Let's check out the charts and indicators of one New Jersey's largest employers and a member of the Dow Jones Industrial Average (DJIA).

In the daily bar chart of JNJ, below, I can see that share prices declined to a low in March. JNJ rallied into early April and then corrected lower to another higher low in late May. The stock firmed again in June but did not break above the April levels.

The key area for JNJ to overcome is $166-$167. JNJ trade should trade above the 50-day moving average line Thursday but may stay below the 200-day line for a while longer.

The On-Balance-Volume (OBV) line shows weakness since December suggesting that sellers of JNJ have been more aggressive than buyers. The Moving Average Convergence Divergence (MACD) oscillator has been oscillating around the zero line the past three months.

 

In the weekly Japanese candlestick chart of JNJ, below, I see promise. The shares are trading below the 40-week moving average line but that is not the whole story. I can see lower shadows at the three lows from March to May to July and this tells me that traders are rejecting the lows.

 

The weekly OBV line is firming. The MACD oscillator shows improvement from a low in March -- it is a start.

 

 

In the daily Point and Figure chart of JNJ, below, I can see a potential price target in the $191 area.

 

 

In this second Point and Figure chart of JNJ, below, I used weekly data with a five-box reversal filter. Notice the long-term uptrend? Impressive. The price target is $215.

 

 

Bottom-line strategy: Traders could probe the long side of JNJ at current levels. Risk to $153 for now. My first price target is $191 with $215 possible after that.

 

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