Shares of Johnson & Johnson (JNJ - Get Report) are moving modestly higher on Tuesday, closing higher by 1.1% at $138.02 after the company released its first-quarter earnings report.

The move is putting J&J stock on watch for a potential breakout now that it's got some positive momentum behind it. Shares have been rangebound for almost two months, but a top- and bottom-line earnings beat is helping to jar it from this range.

The company reported first-quarter earnings of $2.10 per share, 6 cents ahead of estimates, while revenue of $20.02 billion came in $470 million ahead of expectations and represented flat year-over-year growth. Let's see if this will be enough to jump-start the stock.

Johnson & Johnson is a holding in Jim Cramer's Action Alerts PLUS member club.

Club analysts said: "All in, it was a strong quarter for the company and once again demonstrated management ability to execute. That said, we continue to believe that the main overhang on shares relates to the ongoing talc litigation. ... Regarding the talc litigation, while we acknowledge the impact this has and will continue to have on shares, we reiterate our view that Johnson & Johnson has the science on its side and as a result, believe shares will prove cheap in the long-run as cases against the company wind down."

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Trading Johnson & Johnson Stock

8-month daily chart of Johnson & Johnson stock.
8-month daily chart of Johnson & Johnson stock.

Heading into the afternoon portion of the trading session and Johnson & Johnson stock could use a pick-me-up. At first, shares were pushing over $140, a key level that has kept a lid on the stock all through March. But after an early push through this mark, J&J stock is having trouble staying above it.

If investors want Johnson & Johnson stock to breakout, they need to push it through this level. Otherwise, a return down to the $136 level is possible, where we will need to re-evaluate the stock.

Should it pull back rather than break out, it is important that Johnson & Johnson stock stays above this $135 to $136 level. Not only does this area sport the 20-day and 50-day moving averages, but also the 38.2% Fibonacci retracement for the 52-week range.

Below this area and the downside may still be somewhat limited, given that the $134 level and the 200-day moving average aren't too far away. Still, it will be very discouraging to see J&J stock initially rally on earnings and fall to this point so quickly.

On the upside, bulls needs to see Johnson & Johnson stock clear $140. If it can, it puts the gap fill near $146 back on the table; should JNJ stock get that far, new all-time highs are possible over $148. Let's see how the stock closes on Tuesday and perhaps how it shakes out the rest of this week.

This article is commentary by an independent contributor. At the time of publication, the author had no positions in the stocks mentioned.