
Johnson & Johnson Is Poised for a Breakout
Johnson & Johnson (JNJ) - Get Report is the top gainer in the Dow Jones Industrial Average this morning. The stock is up over 1% and is trading well above last week's high. This news-inspired move has a breakout feel to it as a seven-week consolidation period appears to be ending.
Johnson & Johnson is still range-bound, but investors should begin to take a much more positive view of the action if the $115 level is taken out.
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In mid-April, after shares had surged over 20% from the January low, Johnson & Johnson began to show signs of exhaustion. Since April 20, the stock has remained in a very narrow range as a consolidation took hold. A new high was reached in May, but without a new momentum wave, the stock fell back into its sideways pattern.
As this lackluster but healthy action dragged on, Johnson & Johnson gave back very little ground as it managed to extend its streak of higher monthly lows to five straight. With today's bump, a new bull leg could soon be on the way, leaving behind a very solid base in the process.
The big challenge ahead for J&J will be to convincingly clear the $115 area. This level marks the stock's 52-week high set last month. Just below is the April peak near $114.20. Once clear of this area, Johnson & Johnson will have room to run.
As this breakout develops, J&J bulls should consider the stock a fairly safe long near current levels. A close back below the May low of $111.70 would return the stock to consolidation mode while putting off a new rally leg for some time.
Disclosure: This article is commentary by an independent contributor. At the time of publication, the author was long JNJ.










