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Upside Target on Johnson & Johnson Stock After Its Earnings Beat

Johnson & Johnson stock is rallying after beating on earnings expectations. Here's where the stock could go now.

Johnson & Johnson  (JNJ) - Get Johnson & Johnson (JNJ) Report shares are trading higher on Tuesday, up about 3% on the day after reporting earnings before the open.

Earnings climbed more than 18% year over year, easily beating expectations. Despite a near-11% gain in revenue though, the company’s sales total came up shy of analysts’ estimates.

So far though, investors seem willing to overlook the shortfall, given that J&J raised its full-year earnings and revenue outlook.

While Moderna  (MRNA) - Get Moderna, Inc. Report and Pfizer  (PFE) - Get Pfizer Inc. Report get most of the vaccine attention, Johnson & Johnson is still riding pretty solid momentum from its COVID-19 vaccine sales.

With the FDA’s recent green light on a Johnson & Johnson booster shot, that should help keep driving the company's sales higher. 

After a prolonged pullback, let’s look at shares of J&J.

Trading Johnson & Johnson Stock

Daily chart of Johnson & Johnson stock.

Daily chart of Johnson & Johnson stock.

In late August, Johnson & Johnson stock pulled back from all-time highs down to the 50-day moving average.

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Bulls were hoping this was the end of the correction and shares would resume the march higher.

What ensued was anything but, as shares fell in nine out of 10 sessions, and in 16 out of 20 sessions.

The four-week skid eventually found support at $157.50 — just above the prior all-time high and the 21-week moving average — before Tuesday’s post-earnings rally.

While today’s action is encouraging, J&J stock isn’t out of the woods quite yet. 

From here, bulls need to see the stock reclaim the 200-day moving average. Above that opens the door to the 50-day moving average.

Johnson & Johnson stock needs to push through these areas, but the area I’m really watching is the $170 to $171 area. In this zone, the stock will find the 61.8% retracement of the current correction, as well as the intersection of multiple trend lines.

If J&J stock can push through that zone, it will open the door back toward the $180 high and the 161.8% extension at $182.52.

On the downside, a move below $160 puts Johnson & Johnson stock below several short-term daily moving averages and the daily VWAP measure. That opens the door to $157.50 support, then the $154.50 area.