In a recent Real Money column Jim Cramer said it's not always easy to spot the rotations driving this market. But Cramer says he likes to use a "Sore Thumb Index" where the winning stocks "stick out like a sore thumb."
Among the stand-out stocks on Tuesday were several recession names including The Clorox Company (CLX) and Johnson & Johnson (JNJ) . Let's check out the charts of Action Alerts PLUS holding JNJ as the company gets set to report earnings Thursday.
In the daily bar chart of JNJ, below, we can see that prices made a new 2020 high in late April but that strength faded and prices weakened into late June. JNJ has turned upward again in recent days breaking the downtrend from late April. Prices are above the declining 50-day moving average line and above the rising 200-day moving average line.
The trading volume has been declining from the pace seen in March. The On-Balance-Volume (OBV) line has moved sideways from March and suggests a balance between aggressive buyers and aggressive sellers. If we see the OBV line move above its June highs it will be a positive development.
The Moving Average Convergence Divergence (MACD) oscillator is just slightly below the zero line but not far from an upside cross of the zero line so a crossover buy signal could happen soon.
In the weekly bar chart of JNJ, below, we can see a generally positive picture. Prices are above the rising 40-week moving average line.
The weekly OBV line has been strong since late 2018 and is not far from making a new high. The MACD oscillator is narrowing and is close to a fresh outright buy signal.
In this daily Point and Figure chart of JNJ, below, we can see a potential upside price target of $168.
In this weekly close only Point and Figure chart of JNJ, below, we can see a potential longer-term price target in the $217 area.
Bottom-line strategy: JNJ looks ready to break out to new highs. Go long on strength above $150.93 risking a close below $143. Our price targets are $168, $200 and $217.
(Johnson & Johnson and Clorox are holdings in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells these stocks? Learn more now.)
