Johnson & Johnson (JNJ) is expected to report their latest earnings on Tuesday before the market opens. In our June 22 review we wrote that "JNJ has been in an uptrend since 2012 but a decline to the $155 area in the weeks ahead could break that long-term trend." Prices have weakened but the $155 area has not been reached.
Let's check the health of JNJ again.
In this updated daily bar chart of JNJ, below, we can see that prices have been working lower since April. A new low for the move down was made earlier this month. Prices have bounced to the upside to test and break the declining 50-day moving average line. Trading volume has been uneven.
The On-Balance-Volume (OBV) line made a low in early September and another equal low in October. This is subtle bullish divergence. The Moving Average Convergence Divergence (MACD) oscillator made a low in September and a much higher low in October for another bullish divergence.
In this weekly Japanese candlestick chart of JNJ, below, we see a bearish picture. Prices trade below the declining 40-week moving average line. The candles do not yet show us a bottom reversal. Lower shadows would be a good sign but they are not visible in recent weeks.
The OBV line has been in a decline since the middle of May. The MACD oscillator is in a bearish alignment.
In this daily Point and Figure chart of JNJ, below, we can see a downside price target in the $137 area.
In this weekly Point and Figure chart of JNJ, below, we can see the same $137 price target.
Bottom line strategy: I have no special knowledge of what JNJ will tell shareholders Tuesday morning. In the short-run JNJ could rally further but three out of four charts (above) suggest further price weakness is possible.
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