Johnson & Johnson Headed Even Higher After Big-Volume Lift

NEW YORK ( TheStreet) -- Johnson & Johnson closed above its 200-day moving average Monday for the first time since mid-January. The stock gained just over 1%, extending its winning streak to five straight gains. Now that the heavy overhead 200-day moving average is showing signs of weakening, JNJ is setting up well for a continued bull move.

The stock has been in consolidation mode since late January and has been moving sideways in a narrowing range for over sixteen weeks. During this process, JNJ has been putting on higher monthly lows despite a few somewhat aggressive selling waves. It now appears that this healthy basing pattern has set the stage for a retest of the 2015 peak near $106.50.

The stock has a very solid layer of support near the $102 area. Last month's high is in this key zone as well as last week's high.

At the time of publication, Morrow was long JNJ.

Gary Morrow is president of Yosemite Asset Management, LLC, a registered investment advisory firm in San Luis Obispo, Calif. He manages individual accounts through Charles Schwab and runs a long/short hedge fund. Prior to forming Yosemite, Morrow spent 12 years on the floor of the Chicago Mercantile Exchange trading foreign currency and interest rate futures. He holds a bachelor's degree in economics from Ripon College.

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