Johnson & Johnson (JNJ) is an American multinational corporation founded in 1886 that develops medical devices, pharmaceuticals, and consumer packaged goods. Its common stock is a component of the Dow Jones Industrial Average, and the company is ranked No. 36 on the 2021 Fortune 500 list of the largest United States corporations by total revenue.
JNJ January 2023 Daily Chart
In the last analysis, we predicted that the JNJ share price will continue to fall. The ideal was to make a zigzag ABC correction that would complete wave (Y) of ((Y)) and thus wave II to continue the rally. Well, the market fell building the expected structure and bounced from the 100% Fibonacci extension zone.
JNJ May 2023 Daily Chart
In the new chart, we adjust the daily count. We can see that wave I ended at 186.62 and the next 7 waves down completed wave ((W)) at 150.11. The change comes after analyzing the Dow Jones Stock Index and ETFs such as XLV and IHE. By examining these instruments, we can see that the most logical thing is for the JNJ rally to fail. Therefore, it is better to call the current rise as connector ((X)) and then see 3 more waves to the downside. We are marking 2 possibilities. The first that the price reaches 170.30 and falls or that it reaches the equal legs at 176.88 before the sellers enter the market.
XLV May 7th 2023 Daily Chart
In the latest daily update of the Health Care Select Sector SPDR Fund (XLV), we can see how the market could be developing a flat correction, and even, the wave ((B)) could build a triangle that would likewise send the fund to the downside. Near term, we see that we must finish wave (2) and for that, the price should move a little higher before entering in bearish movement. As you can see, the structure is very similar to the JNJ stock.
IHE May 7th 2023 Weekly Chart
In the iShares US Pharmaceuticals ETF (IHE) chart, we can see after completing wave I the fund fell in 3 waves to end wave ((W)). From here, the wave ((X)) has two outputs. The first is for the price to break above 190.17 (blue line) to complete a flat correction. This would be the best to have a clear corrective structure before continuing lower. The other possibility (red line) is that the wave ((X)) is a triangle. The we should see more sideways movement before continuing with the higher degree correction.
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Headline: Johnson & Johnson (JNJ) Shares Entering a Bull Trap
The stock of Johnson & Johnson (JNJ) is entering a bull trap. This is a situation where prices may appear to be going up but fail to reach resistance levels and begin to trend downwards.
For investors in JNJ, this is an unwelcome development. The stock, which had been on a consistent upward trajectory, has seen its share price drop by almost 5% from its recent highs. After dropping from a support resistance of $165, the stock currently trades at around $158.
Analysts believe that there is now a likelihood that the stock may test its 200-day moving average at $155, which is a major indicator of resistance. The stock’s bad news about a looming lawsuit involving the company’s baby powder may have also hurt investor confidence, putting the stock in a precarious position.
Investors in Johnson & Johnson (JNJ) should proceed with caution as the stock may see a further dip in prices if the stock fails to break past the $155 support. This could mean that the bulls may not be able to prevent the stock price from decreasing.
In light of this situation, investors are advised to pursue a wait-and-see approach and wait for the dust to settle. JNJ is still one of the most reliable dividend paying stocks and a potential recovery could come on the back of good news.
However, until then, investors should investigate further before entering into any trades in JNJ shares. As such, those presently invested should remain vigilant and exercise caution when placing orders. With the right analysis, investors can avoid being caught in a potential bull trap.
