Market Overview

Johnson & Johnson Shares Under Pressure For Second Day in a Row

Despite no significant news hitting the wires, Johnson & Johnson (NYSE: JNJ) shares are retreating for the second consecutive day.

After losing over a point in Wednesday's trading, the issue has shed over another point in Thursday's action. Since making its all time high on November 25 (95.99), JNJ has shed over 4% versus the S&P 500 Index decline of 2%.

The issue, which encountered huge institutional selling during its ascent to 95.99, is rewarding those shareholders that sold shares along the way.

Keep in mind, JNJ had gained nearly 37% (at 95.99) in 2013 compared with the index rise of only 25%. The issue, which had been dormant for the better part of two years, played catch up to the broad market in 2013 and may be due for some kind of correction.

Another factor that may be contributing to the decline may be a shift in investor sentiment. While investors had an insatiable thirst for high-yielding stocks in a low interest rate environment, the tide may be turning as the much anticipated taper in 2014 comes to fruition.

Along these lines, the ishares US Preferred Stock ETF (ARCX: PFF) has been breaking down and is rapidly approaching its 52 week low (36.93).

From a technical perspective, it is hard to argue that the rally in JNJ has ended. Most likely, the issue is retracing some of its uncharacteristic move in 2013. In fact, even a decline to 83 (which marks the 50% retracement from the yearly low to high, 70.30-95.99) would change the long-term trend.

For shorter-term investors not willing to ride the issue on the way down, may want to focus on the 91 level. That area is where JNJ put in a series of lows in late October and was the impetus for the move to 95.99.

This significant area is just below Thursday's current low (91.67). Investors looking to sell the issue into strength, may want to target the 94.50 area, as it the area four consecutive highs prior to Thursday's action.

Posted-In: Technicals Intraday Update Movers Trading Ideas

 

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