Johnson & Johnson (JNJ) reported their Q1 numbers this morning. They posted a Non-GAAP EPS of $2.30 which is $0.30 higher than estimates, and GAAP EPS of $2.17 beat by $0.74. Revenue was reported at $20.69 billion (+3.3% Y/Y) which beats estimates by $1.21 billion.
Let's check the charts of this member of the Dow Jones Industrial Average (DJIA).
In this daily bar chart of JNJ, below, we can see while the selloff lasted longer than other companies in that it started in early February and ran to late March... the rebound has been stellar.
Prices have retraced most of the decline and are trading above the bottoming 50-day moving average line and the bottoming 200-day moving average line. Few stocks that I have reviewed can say that.
The daily On-Balance-Volume (OBV) line has been slow to respond on the upside but the Moving Average Convergence Divergence (MACD) is now close to crossing back above the zero line for an outright go long signal.
In this weekly bar chart of JNJ, below, we can see that prices briefly broke the lows of the past few years. This is interesting as it is not the typical response as investors seem to have rushed in to take advantage of these temporary bargains.
Prices are back above the declining 40-week moving average line. The weekly OBV line has responded quickly and is back near its best levels. A new high for the OBV line will confirm and foreshadow future gains in JNJ. The MACD oscillator has narrowed and is now close to a new outright go long signal.
In this daily Point and Figure chart of JNJ, below, we can see that a trade at $153.96 will be a new high for the move up and this breakout should precipitate further gains. A potential price target of $183 is being projected.
Bottom line strategy: Long-time investors in JNJ are probably not surprised how well the stock has responded in the past few weeks. Traders and investors can continue to approach JNJ from the long side risking a close below $130. The $175-$183 area is our initial price objective.
(Johnson & Johnson is a holding in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells JNJ? Learn more now.)
