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Technician Breaks Down Johnson & Johnson

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In last week’s Dow Thirty report, JC Parets and his team at Eagle Bay Capital analyzed Johnson & Johnson (NYSE: JNJ) from a technical standpoint.

From examining the above chart, Parets says that Johnson & Johnson, structurally, has experienced one of the greatest uptrends in the Dow. "The bearish momentum divergence at recent highs,” however, has led his team to maintain a more neutral standpoint. 

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Parets breaks it down further: “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."

The report continues: "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.

"Our downside target near 99 was hit in February," Parets added.

"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," he concluded.

Posted-In: Eagle Bay Eagle Bay Capital Eagle Bay Solutions JC ParetsAnalyst Color Technicals Trading Ideas

 

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