The healthcare group continues to do well…and the recent rally has taken one big cap name from this group up to a key technical juncture: Johnson & Johnson (JNJ). Back in the fall, JNJ was able to successfully test its 200 week moving average for the third time in less than two years. Its 17% rally off those autumn lows has taken the stock back up near its all-time highs of the $150. In other words, it’s testing its “double-top” highs from 2018…which is also the top line of an ascending triangle pattern. (As you can see from the chart attached below, the bottom line of that pattern is its 200 week MA.) Therefore, if JNJ can break above the $150 level in a meaningful way, it’s going to be very, very bullish for the stock.
We do need to point out, however, that JNJ become quite overbought on both a short-term and intermediate-term basis. Of course, the same thing can be said about a lot of stocks. In fact, this could have been said about a lot of stocks over the past several weeks…and yet many of these stocks have kept on climbing. Therefore, JNJ just might be able to break-out immediately…even though it is quite overbought.
So what’s our take on the stock right now??? Well, we think the stock will probably pull-back a little bit over the near-term to work-off his overbought condition (or at least take a “breather” with a sideways move) before it breaks above the important $150 level in powerful way. However, if/when JNJ does break above that key resistance level of $150 in a meaningful way (whether now or after a breather), it’s going to be very bullish for the stock.
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Matthew J. Maley
Chief Market Strategist
Miller Tabak + Co., LLC
Founder, The Maley Report
275 Grove St. Suite 2-400
Newton, MA 02466
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