4 Trade Ideas for Johnson & Johnson: Bonus Idea

Here is your Bonus Idea with links to the full Top Ten:

Johnson & Johnson, $JNJ, printed a high in February and then started moving lower. It accelerated to a bottom in March before reversing. It finally met resistance in April as it printed a new all-time high. The price has traded in a $20 range for the last 9 months. It is heading to the top of that range coming into this week.

The RSI is pushing higher in the bullish zone with the MACD rising and positive. The Bollinger Bands® are opening higher while the pushes up against the top line. There is no resistance above 156. Support lower comes at 153.50 and 152 then 149 and 146 before 143.75 and 140.50 then 136.50. Short interest is low under 1%. The stock pays a dividend with an annual yield of 2.61% and started trading ex-dividend on November 23rd. The company is expected to report earnings next on January 26th.

The January options chain shows the biggest open interest at the 145 and 140 strikes on the put side but it is big at 135 and 130 as well. On the call side it is much bigger at 160 and then 150 before 155. The January 29 expiry options have just started trading but have growing open interest at the 167.50 and 160 call strikes. In the February chain the biggest open interest is at the 150 and 140 put strikes. It is much bigger on the call side from 155 to 170. The March options have big open interest form 155 down to 130 on the put side and twice as big from 145 to 170 on the call side.

Johnson & Johnson, Ticker: $JNJ

Trade Idea 1: Buy the stock on a move over 156 with a stop at 152.

Trade Idea 2: Buy the stock on a move over 156 and add a January 29 Expiry 150/145 Put Spread ($2.20) while selling the February 170 Calls ($1.67).

Trade Idea 3: Buy the January/March 160 Call Calendar ($3.50) and sell the January 145 Puts (89 cents).

Trade Idea 4: Buy the March 145/155/170 Call Spread Risk Reversal ($1.70).

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After reviewing over 1,000 charts, I have found some good setups for the week.  These were selected and should be viewed in the context of the broad Market Macro picture reviewed Friday which with December Options Expiration in the books, and heading into the short Christmas week, sees equity markets looking ready to end the year strong.

Elsewhere look for Gold to continue its short term uptrend while Crude Oil ramps up its move higher. The US Dollar Index continues to sink while US Treasuries pullback but in a broad range. The Shanghai Composite looks to continue in broad consolidation over support while Emerging Markets continue in an uptrend.

The Volatility Index looks to remain low and drifting lower making the path easier for equity markets to the upside. Their charts also look strong, especially on the longer timeframe. On the shorter timeframe the IWM is the strongest heading higher without pause. The SPY and QQQ are flashing reversal signals, so may be in for some short term digestion. Use this information as you prepare for the coming week and trad’em well.

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The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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