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 after a strong move higher off the 200 day SMA and 61.8% retracement of the last leg higher. It ended the week making a higher high. The RSI is rising in the bullish zone with the MACD crossed up and about to turn positive. The Bollinger Bands® are starting to open higher as well. An AB=CD pattern gives a target to 198.50 in mid-August.

There is resistance at 184 and 186.50. Support lower comes at 181.50 and 179 then 176 and 174 before 172.75 and 169.50. Short interest is low under 1%. The stock pays a dividend with an annual yield of 2.48% and has traded ex-dividend since May 23rd. The company is expected to report earnings next on July 19th.

The July options chain shows strong open interest on the put side every $5 strike down to below 160, biggest at 175. On the call side it is biggest at 180 and 190. The July 22 Expiry chain covers the earnings report and shows an estimated move of about 4.5% between now and expiry. The open interest is light but biggest at the 170 put and 180 call. In the August chain open interest is spread from 180 to 160 on the put side and 10 time bigger and focused at 190 on the call side.

Johnson & Johnson, Ticker: $JNJ

Trade Idea 1: Buy the stock on a move over 183 with a stop at 179.

Trade Idea 2: Buy the stock on a move over 183 and add a July 22 Expiry 180/175 Put Spread ($1.65) while also selling the August 195 Call ($1.00).

Trade Idea 3: Buy the July 22 Expiry/August 190 Call Calendar ($1.50) and sell the July 22 Expiry 170 Put (75 cents).

Trade Idea 4: Buy the August 170/185/195 Call Spread Risk Reversal ($1.80).

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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 only 4 trading days left in the 2nd Quarter, saw that equity markets had mounted a strong rebound off of the lows and set up for at least short term continuation.

Elsewhere look for Gold to continue to consolidate while Crude Oil pulls back from the highs. The US Dollar Index pause in its move to the upside while US Treasuries continue their downtrend. The Shanghai Composite looks to continue the trend higher while Emerging Markets continue to move lower.

The Volatility Index looks to slowly ease from elevated ground making the path easier for equity markets to the upside. Their charts are looking stronger following the week’s move, especially on the shorter timeframe. On the longer timeframe the moves required to call a confirmed reversal are still far above, about 5% more for the QQQ and 7% for the SPY to make a higher high. It will take another 9% for the IWM to get there. Those moves would only be first steps. 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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