4 Trade Ideas for Johnson & Johnson: Bonus Idea

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

Johnson & Johnson, $JNJ, comes into the week pulling back from an all-time high. For the past month as price has trended higher momentum has diverged lower. The RSI is now pulling back in the bullish zone with the MACD crossed down and moving lower. The 50 day SMA is at the 38.2% retracement of the last leg higher.

There is support lower at 179.50 and 177.50 then 176.30 before 174.25 and 173.25 then 171.50. Resistance higher is at 183 and 186.25. Short interest is low under 1%. The stock pays a dividend with an annual yield of 2.50% and will begin trading ex-dividend May 23rd. The company is expected to report earnings next on July 19th.

The May options chain shows the biggest open interest at the 180 and then 170 strikes on the put side. On the call side is much bigger and focused at 175 and 185. In the June options open interest on the put side is spread from 180 to 140 while it builds from 165 to a plateau from 180 to 190 on the call side then fades after 240. July options show have biggest open interest at 180 and it tails to 145 on the put side, with a focus from 180 to 195 on the call side.

Johnson & Johnson, Ticker: $JNJ

Trade Idea 1: Sell the stock short on a move under 180 with a stop at 184.

Trade Idea 2: Sell the stock short on a move under 180 and add a May 185 Call ($1.83) while selling the June 165 Put ($1.63).

Trade Idea 3: Buy the June 180/165 Put Spread ($4.30) while selling the May 170 Put (88 cents).

Trade Idea 4: Buy the June 180/170-165/160 Broken Wing Split Put Butterfly ($3.25).

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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 April in the books, saw equity markets off to their worst start in over 80 years and in downtrends.

Elsewhere look for Gold to continue the short term pullback while Crude Oil consolidates in its uptrend. The US Dollar Index continues a strong move higher but is at resistance while US Treasuries continue to trend lower. The Shanghai Composite looks to bounce in its downtrend while Emerging Markets continue to trend lower.

The Volatility Index looks to remain elevated and possibly continuing higher making the path easier for equity markets to the downside. Their charts also look strong, especially on the longer timeframe. On the shorter timeframe both the QQQ and SPY could us a reset on momentum measures as both are extended. If that happens it might be time for the IWM to take the lead. Use this information as you prepare for the coming week and trad’em well.

If you like what you see above sign up for deeper analysis and trading strategy by using the Get Premium button above. As always you can see details of individual charts and more on my StockTwits page.

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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