Health care giant Johnson & Johnson (JNJ), which beat earnings-per-share (EPS) estimates on 16 July, but the stock remained below its monthly and quarterly risky levels at $151.95 and $152.87, respectively. The stock is a component of the Dow Jones Industrial average. Johnson & Johnson has a streak of beating EPS estimates 32 consecutive quarters.
The stock closed Tuesday, July 21, at $149.74, up 2.7% year-to-date and 4.6% below its April 23 high of $157.00. The stock is in bull market territory at 37.2% above its March 23rd low of $109.16.
Johnson & Johnson has a P/E ratio of 18.73 and a dividend yield of 2.71%, according to the trends. The company has been struggling with fines related to its role in the opioid of the crisis and the talcum powder cancer costs.
The daily chart for Johnson & Johnson
The daily chart for Johnson & Johnson shows the stock above a golden cross, which was confirmed on Dec. 23. This happened when the 50-day simple moving average rose above the 200-day simple moving average to indicate that higher prices will follow. This follow-up of the stock at its Feb. 6 high of $154.50.
Of this number, the stock has plunged 29% from its March 23rd low of $109.16. It was followed by a 43.8% market bull run from the bottom to the April 23 high of $157.00.
During the decline, Johnson & Johnson has failed to keep its half-yearly pivot of $146.26 on Feb. 25. The 200-day simple moving average failed to hold on the 11th of March. This led to the March 23 low of $109.16.
The V bottom pushed the stock back above its 200-day simple moving average on April 6. This led to the April 23 high of $157.00. The stock moved back above its semi-pivot at $146.26 on April 15, which provides for the upward trend up to the April high.
The semi-pivot at $146.26 then became a pole of attraction between the 13 May and 14 July. Force following its earnings release on July 16, remained shy of the monthly and quarterly risky levels at $151.94, and $152.87. Johnson & Johnson stock is currently trading above its semi-pivot at $146.26.
The weekly chart for Johnson & Johnson
The weekly chart for Johnson & Johnson is positive, with above its five-week modified moving average of $145.14. The stock is also above its 200-week simple moving average, or the return to the average, at $133.15.
The 12 x 3 x 3 weekly slow stochastic reading should rise to 44.91 this week, from 40.43, on July 17. At the end of January, this reading has been above 90 on a scale of 0 to 100, which put the stock in a “swell parabolic bubble” of the training, and bubbles always pop.
Trading strategy: Buy Johnson & Johnson stock on weakness to its 200-day simple moving average at $141.57. Reduce the holdings on the strength of its monthly and quarterly risky levels at $151.94, and $152.87, respectively.
How to use my value levels and risky levels: The share price closing price on Dec. 31, 2019, has been an entry to my proprietary analytics. The annual levels of to remain on the charts. The level of the month of July was based on the last nine-month period firm, the third quarter was based on the last nine quarterly closes, and the second half by 2020 the level was based on the last nine to the half-year closes. New weekly levels are calculated following the end of each week.
My theory is that nine years of volatility between the farm are to assume all possible bullish or bearish event for the stock are taken into account. To capture the volatility of stock prices, investors should purchase shares of the weakness of a plan, the value and reduce the holdings of the strength to a risky level. A pivot is a level value of the risk level that was violated in its time horizon. Hubs act as magnets that have a high likelihood to be re-tested prior to their time horizon expires.
How to use 12 x 3 x 3 weekly slow stochastic readings: My choice of using 12 x 3 x 3 weekly slow stochastic readings has been based on the backtesting of many methods of reading the stock prices of the momentum with the objective of finding the combination that resulted in the least number of false signals. I’ve been following the stock market crash of 1987, so I was happy with the results of more than 30 years.
The stochastic reading covers the duration of 12 weeks, high, low, and close for the stock. There is a row of calculation of the difference between the highest and the lowest compared to the farm. These levels are modified for a fast reading and slow reading, and I found that the slow playback will work best.
The stochastic reading scales between 00.00 and 100.00 with readings above 80.00 considered as overbought and readings below 20.00 regarded as oversold. A reading above 90.00 is considered to be a “swell parabolic bubble” of the training, which is usually followed by a decline of 10% to 20% over the next three to five months. A reading below 10.00 is considered to be “too cheap to ignore,” which is usually followed by a gain of 10% to 20% over the next three to five months.
Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.