Sell Johnson & Johnson After Vaccine Pause? See This Chart First
Johnson & Johnson (JNJ) - Get Report shares were down about 2.5% on Tuesday, coming under pressure after the Centers for Disease Control and the Food and Drug Administration “suspended use of the drugmaker's coronavirus vaccine” amid concerns of blood-clotting cases.
J&J’s vaccine was being used to help stop the spread of COVID-19, alongside vaccines from Pfizer (PFE) - Get Report and Moderna (MRNA) - Get Report.
Pausing the J&J vaccine is obviously a negative for the company. But let’s remember, Johnson & Johnson has a lot more going for it than just that. So too does the country, for that matter.
While the vaccine has played a role in the vaccination efforts for the U.S., it has been dwarfed by the number of shots given from Pfizer or Moderna.
Further, many are not willing to bail on a high-quality company like J&J over a pause in its COVID-19 vaccine efforts. Let's look at the charts.
Trading Johnson & Johnson
Daily chart of Johnson & Johnson stock.
Chart courtesy of TrendSpider.com
Keep in mind, J&J will report earnings before the open on April 20. We have to take that into account when looking at the chart.
Right at the end of December, Johnson & Johnson stock broke out over range resistance near $154.50. It later retested this level and held it as support - albeit after giving bulls a bit of a scare first.
So far, the 21-week and 100-day moving averages continue to hold as support. However, J&J stock is flirting with a break of these measures on Tuesday.
Should we see a bit more selling pressure into earnings (or after earnings for that matter), let’s keep an eye on this $154.50 level and the 200-day moving average just below that.
As long as this zone holds as support, dip-buyers have a reasonable risk-reward setup on the long side.
Below the 200-day moving average is where things get tricky. While it’s possible we see a false breakdown, a move below these measures opens Johnson & Johnson stock up to its previous trading range where $138 was support and $154 was resistance.
So use caution on a close below the 200-day moving average.
On the upside, bulls need to see a move back over the 10-week and 50-day moving averages. Above these measures puts the March high in play near $167, followed by the all-time high up at $173.65.
