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Abbott Labs Virus Tests Lift Stock - What Do the Charts Say Pre-Earnings?

Abbott Labs marches toward new highs as it tackles coronavirus testing, and the earnings report is on deck. Here's a look at the charts for the stock.

Abbott Labs  (ABT)  stock is higher on Wednesday despite a 2.5% dip in the S&P 500 Index.

The action comes with the stock just off its 52-week high and ahead of its earnings report due Thursday before the open.

Earnings season kicked off earlier this week and thus far has been unimpressive. But that’s as bank stocks like Wells Fargo  (WFC) , Bank of America  (BAC)  and others move lower on their quarterly reports.

One of the bright spots came from Johnson & Johnson  (JNJ) . While management cut its full-year guidance, the health-care icon's shares still rallied after a top- and bottom-line beat and a 6.3% increase in its dividend.

Investors also remain upbeat on Abbott Labs as it continues to roll out new coronavirus testing kits. 

On Wednesday, Abbott introduced its third different type of testing kit, this time an antibody test to join its molecular and point-of-care tests.

As the stock rises, so do investors’ expectations. But a strong quarterly result and outlook could be enough to push Abbott Labs stock to new highs. 

Let’s look at the charts.

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Trading Abbott Labs Stock

Weekly chart of Abbott Labs stock. 

Weekly chart of Abbott Labs stock. 

Above is a three-year weekly chart, emphasizing just how strong Abbott Labs stock has been over the past few years.

When the February selloff hit Abbott, the stock danced around its 50-week and 100-week moving averages. 

At various times, these moving averages acted as both support and resistance, which is to be expected when the S&P 500 falls about 35% from peak to trough in just one month, while the Volatility Index undefined roars to its highest levels since the Great Recession.

Eventually, Abbott Labs shares traded down to $61, a major breakout level from 2018, before reversing higher. 

On the rebound, the shares reclaimed the 100-week moving average, which turned to support, then reclaimed the 50-week moving average, which also became support.

Now struggling with $90 resistance from earlier this year, the bulls want to see Abbott take out this mark on the earnings report. If it can, look for the shares to make new 52-week highs over $92.45. Over that level and a push to $100 will surely be on investors’ minds.

The levels on the downside are easy to map because we know where the stock has been and to which levels it has responded. 

So look for the 50-week moving average near $82.75 to support Abbott Labs on a pullback. Below that opens the stock to a correction down to the 100-week moving average near $75.50. Below that and $72 may be the next level to watch.

But with Abbott Labs’ involvement in the coronavirus crisis, I wouldn’t expect too large a pullback in this high-quality stock.