These three health-care stocks might stand out for their dividends, but how do their charts hold up? Let's take a technical look.
In this daily chart of Abbott Laboratories (ABT) - Get Report , above, we can see a stock has been on the defense for much of the past 12 months. Prices are below the shorter 50-day simple moving average line and the longer 200-day average. Both lines have a negative slope. The on-balance-volume, or OBV, line has a downward bias, telling us that sellers have been more aggressive and the volume of trading has been heavier on days when Abbott has closed lower.
In the lower panel is the 12-day momentum study, which fails to reveal any bullish divergences that could suggest a rally in the third quarter.
Last, note the downside gap and heavy volume at the end of April. This might be a selling climax of sorts.
With no bullish technical clues at the moment, Abbott could be stuck in a $36-to-$44 trading range until buyers or sellers get the upper hand.
Johnson & Johnson
In this daily chart of Johnson & Johnson (JNJ) - Get Report , above, we have a much different story than Abbott. In the past 12 months, holders of Johnson & Johnson have done well by staying long. The stock has been in an uptrend, and here we have prices above the rising 50-day and 200-day moving averages -- trading with the trend.
Prices are pointed up, but we cannot ignore our other technical studies. Volume has not expanded on the advance so far this year. The OBV line is flat or neutral, but in the past month, it has weakened, suggesting that sellers have become more aggressive at current price levels.
Another potential problem is a bearish divergence from the momentum study compared with the price action the past four months. Prices have made higher highs, but each rally higher has been on weaker and weaker price momentum; the rate of acceleration in price has slowed and slowed.
A picture of slowing momentum can foreshadow a turn lower in price. If Johnson & Johnson pulls back, there is some support around $110 and more around $105.
This chart of Gilead Sciences (GILD) - Get Report , above, is similar to the Abbott chart earlier, except that Gilead made new lows for the move down in May, continuing the irregular downtrend of the past 12 months. Prices are below the down-sloping 50-day and 200-day moving averages. The OBV line has been uneven but there are two lows on the chart -- one in September and one this March. Buyers became more aggressive after these lows, but the price rally did not gain traction. This needs more monitoring.
In the lower panel, we do not see any divergences worth pointing out, but a bullish divergence could develop if prices make new lows and the rate of decline slows. Gilead looks like it could make an $80-to-$105 trading range as its most likely future path, but I would not rule out further declines to below the $80 mark.
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