The early strength in the stock gave the Dow a nice boost at the open, too.
Sellers, however, were quick to step in — or put another way, buyers were quick to step out. And J&J shares are now up just 1% on the day and are barely off the session low.
Investors woke up to news that Johnson & Johnson plans to split into two companies in an effort to unlock value for holders.
While Moody’s has said the split could put J&J’s triple-A rating at risk, that doesn’t seem like enough of a reason to sell the stock.
Not when the company is performing so well, as noted when it reported earnings almost a month ago.
That said, the stock has not been performing all that well. Today’s action reminded investors what a nice rally feels like, but it was too short-lived.
Can it continue higher?
Trading Johnson & Johnson Stock
With Friday’s gap up, Johnson & Johnson stock opened above the 50-day and 200-day moving averages, as well as the weekly VWAP measure.
But the shares could not reclaim the 21-week moving average. That doesn’t mean the stock was doomed from the start, but it’s an area of interest on the chart.
If a fade was in play, investors would have wanted to see J&J stock find support at the 200-day moving average and the weekly VWAP measure.
That would have been a great area for some consolidation, followed by a potential push over today’s high and the 21-week moving average.
The latter part of that setup is still possible if the stock can go on to reclaim the 200-day moving average and the $165.50 to $166 area.
A move over the 21-week moving average will have us looking at the $170 to $172.50 area as our next zone of interest.
On the downside, let’s keep an eye on the $163 to $164 area.
There Johnson & Johnson stock finds the declining 50-day moving average, but the rising 10-day and 21-day moving averages. A test of this area will also fill today’s gap.
A move below this week’s low near $162 and sub-$160 could be on the table.
For now, watch the 200-day on the upside and $163 to $164 area on the downside.