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Has Buyout Rumor Buying Broken Mead Johnson Out Of Its Bearish Trading Pattern?

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Has Buyout Rumor Buying Broken Mead Johnson Out Of Its Bearish Trading Pattern?

Mead Johnson Nutrition CO (NYSE: MJN) shareholders have had a wild ride in the past year. The stock plummeted from a high of over $102 in early 2015 to nearly $65 in January of 2016. However, since that low point, Mead Johnson has been on fire, surging more than 15 percent as rumors of a buyout continue to swirl.

In fact, in February, a source told Benzinga that Danone has been in talks to potentially acquire Mead Johnson in a deal that values the company at $18 billion.

Related Link: Is The Market Betting On A Mead Johnson Takeover?

The M&A fate of Mead Johnson remains up in the air for now, but has the rumor rally improved the technical outlook for the stock?

There’s no question that the stock has plenty of short-term momentum, but bulls are also pointing to a possible longer-term breakout as well. This chart shows how Mead Johnson has recently pushed above one bearish resistance line that had been in place for almost a year.

Unfortunately for bulls, there is very little in the charts to conform the breakout, as the stock has yet to demonstrate a consistent bottom or any higher highs or higher lows.

For now, the key support level to watch is the $65 level that served as support back in January. A successful re-test of this level or the establishment of a higher support level at some point in the near future could indicate a longer-term bullish turnaround.

In terms of resistance, a push above the November high of $83.59 would also be a extremely bullish development.

Disclosure: the author holds no position in the stocks mentioned.

 

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