What Johnson & Johnson's 'Chart Watchers' Need To Know

Johnson & Johnson JNJ has been a go-to blue chip in the consumer goods/pharma space ever since the 2009 market low.

The stock has run from the mid $40s to current levels (and all-time highs) above $108, all while paying a healthy dividend north of 2.5 percent.

So, what do the "chart watchers" need to know?

•What The Bulls See...

• A healthy 2.6 percent dividend yield

• A price-to-sales ratio of 4.09

• Strong net profit margins of 23.27 percent that spin off positive levered free cash flow of $14.42 billion annually

• Cash of $33 billion versus $15.27 billion in debt

• A current ratio of 2.61

• A debt-to-equity ratio of 19.94 percent

What The Bears See...

• A PE of just over 17 based on next year's consensus EPS estimates, which seems high compared to estimated 2015 growth rates in revenues and earnings of 1 percent and 4 percent respectively

• A market capitalization of $304 billion versus an enterprise value of $287 billion

The Technical Take

Technicians note that Johnson & Johnson shares may have completed five waves higher as the stock met the projections for the fifth wave.

Related Link: Why Pfizer Is At A Technical 'Fork In The Road'

Those projections were generated by the “5 = 1” rule where the fifth wave will approximately match the first wave in magnitude. In theory, they note, the stock should pull back and consolidate some of the recent gains.

The most likely pullback targets are also Fibonacci-generated and come in at $94.39, $85.19 and $70.32.

All three of those levels correspond with horizontal lines of support and the first of those levels roughly corresponds with uptrend line support.

Once a pullback runs its course, the technicians are calling for even more upside to occur; perhaps that will take the stock to the upper edge of the new uptrend channel between $132 and $140.

Overall

Johnson & Johnson looks good as a buy candidate, but ideally on a pullback to support. Perhaps the market momentum will continue to lift the stock higher.