Trading Johnson & Johnson Earnings - Here Are the Must-Know Levels

Johnson & Johnson will report first-quarter earnings on Tuesday. Here's what the charts say now for the stock.
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Shares of Johnson & Johnson  (JNJ) - Get Report have been quick to rebound from the March lows, up more than 27% from last month’s bottom.

The magnitude of the move is roughly in line with the S&P 500. However, J&J has done much better in 2020, down just 4.8% this year vs. a 14.7% decline for the index. Further, Johnson & Johnson shares are down just 9.8% from their highs, while the S&P 500 is still down 18.6% from its 2020 high.

However, that could all change with the company set to report earnings on Tuesday before the open. J&J joins JPMorgan Chase  (JPM) - Get Report and Wells Fargo  (WFC) - Get Report, which will kick off earnings seasons this week.

While J&J stock doesn’t tend to be very volatile around its quarterly results, the current situation comes with increased uncertainty. With elevated levels of volatility and many companies halting buybacks and yanking guidance, investors can see outsized moves in both directions.

Let’s take a closer look at the charts ahead of Johnson & Johnson’s first-quarter results.

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Trading Johnson & Johnson Stock

Daily chart of Johnson & Johnson. 

Daily chart of Johnson & Johnson. 

The stock finds itself rebounding hard after a brief break of the $115 to $120 zone. Most recently, shares have been consolidated beneath the $140 to $142.50 area, which has historically been resistance for Johnson & Johnson stock over the past few years. That’s reflected in the daily chart above and the weekly chart below.

Once J&J reports earnings its first-quarter results, bulls will want to see the stock reclaim and hold the $140 to $142.50 level as support. If the stock can do so, it puts $150-plus in play.

If the post-earnings reaction is bearish, it opens up multiple levels on the downside.

Weekly chart of Johnson & Johnson. 

Weekly chart of Johnson & Johnson. 

First, let’s see if Johnson & Johnson stock holds the 200-day moving average on a pullback. That mark comes into play near $135. That’s also where the 50-week moving average comes into play, with the 100-week moving average not far below, at $132.

Below those marks and the 200-week moving average near $125 comes into play. It also puts J&J stock into a vital support zone between $120 and $125. If this area fails to buoy the stock, the 2020 lows are possible.

So what’s the bottom line? Let’s see how the stock reacts to the quarterly figures. A move higher needs to clear the $140 to $142.50 area - a modest advance - and then hold this area as support to unlock higher prices. Should Johnson & Johnson disappoint investors, there is room to the downside, but there’s also multiple potential support levels.