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In last week’s Dow Thirty report, JC Parets and his team at Eagle Bay Solutions look into Johnson & Johnson (NYSE: JNJ) weekly and daily (for Friday) charts. Below, the main takeaways:
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From examining the above chart, the analysts conclude that Johnson & Johnson, structurally, has experienced one of the greatest uptrends in the Dow Jones Industrial Average (INDEXDJX:.DJI). They explain that “the bearish momentum divergence at recent highs” has led them to maintain a more neutral standpoint. Furthermore, they continue to trade in that range, “although in what is looking more and more like a broadening top, which is traditionally bearish.”
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Parets breaks down the issue: “A break of the uptrend line from 2012 gave us downside targets in the mid-90s, which was support last year and resistance in 2013. If momentum breaks out above this downtrend line, it would be a positive. Below the 2012 uptrend line and I want nothing to do with it, particularly with momentum putting in bearish divergences. Relative strength also broke down below this 2-year range. I still don't like this and would continue to approach this more tactically” (see daily chart below).
Short-term, the firm said, back in November, that “prices were flagging above former resistance and a breakout above the upper of the two parallel lines defining this small channel would confirm that is a continuation pattern and” they want to add to longs on this breakout.
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However, the report continues to explain, “when bullish patterns resolve negatively, the market is telling us that larger forces are at work, and that in fact a short-position on a breakdown below the lower of the two trendlines would make a great trade.” And, this is precisely what happened; and shorts could remain so below the highs hit on December 19.
Parets’ conclusion: “This confirmed a bearish momentum divergence and have felt that this market was in trouble. Our downside target near 99 was hit in February. This was based on support last summer and 38.2% Fibonacci retracement of the 2014 rally. I would still maintain a more neutral stance now, especially below a flat 200 day moving average. A bearish development would be a break of recent lows that would take prices down under 96 based on October support and former resistance early last year.”
Crypto Whales Are Loading Up — Are You?
New research shows the biggest crypto buyers are back. And this time? They could hold for the possibility that Bitcoin will surpass $100,000 in 2024. You don’t want to miss the next massive crypto bull run like we saw in 2020 and 2021. To know exactly what’s going on and what to buy… Get Access To Benzinga’s Best Crypto Research and Investments For Only $1.