4 Trade Ideas for Johnson & Johnson: Bonus Idea

• Posted by Greg Harmon
• on July 25th, 2022

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

Johnson & Johnson, $JNJ, comes into the week reversing off a higher low and the 20 day SMA. The RSI is also turning up at a higher low with the MACD falling and negative. There is support at 170 and 168 then 166.75 and 164.50. Resistance higher sits at 173 and 174 then 175 and 177 before 179.50 and 181.50. Short interest is low under 1%. The stock pays a dividend with an annual yield of 5.63% and will begin trading ex-dividend on August 22nd. The company reports earnings next on October 18th.

The August options chain has peak open interest at the 175 put and dropping to 150. On the call side it builds from 175 to a peak at 190. The September options chain shows open interest on the put side spread from 180 to 155 with the call side building from 175 to a peak at 190. The October chain has peaks in open interest at 180 and 160 on the put side, and a build from 175 to 190 then taper to 220 on the call side.

Johnson & Johnson, Ticker: $JNJ

Trade Idea 1: Buy the stock on a move over 172.50 with a stop at 169.

Trade Idea 2: Buy the stock on a move over 172.50 and add an August 170/165 Put Spread ($1.40) while selling the September 180 Call ($1.66).

Trade Idea 3: Buy the August/October 180 Call Calendar ($2.75) while selling the September 160 Put ($1.70).

Trade Idea 4: Buy the October 160/175/185 Call Spread Risk Reversal (75 cents).

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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 one week left in July, saw equity markets display a second straight week of highly positive correlation, but this time in a move up out of consolidation.

Elsewhere look for Gold to continue its pullback while Crude Oil pulls back in the uptrend. The US Dollar Index continues to pullback in its trend higher while US Treasuries bounce in their downtrend. The Shanghai Composite looks to continue the short term move lower while Emerging Markets continue in a downtrend. The Volatility Index looks to continue back towards normal levels making the path easier for equity markets to the upside.

Their charts are starting to look stronger as they move up out of consolidation, especially on the longer timeframe. All still have work to do before a full blown reversal can be called. On the shorter timeframe continuation of the moves by the IWM and SPY to fill the gaps and the QQQ higher, with momentum shifting into bullish ranges would get some cash off the sidelines. 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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