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 at short term resistance over its 200 day SMA. A break higher would look for a target of 173 on a Measured Move higher. That would fill the gap from August. The RSI is deep in the bullish zone with the MACD flat but positive. There is resistance at 163.25 and 164.75 then 166.25 and 169.50 before 172.25 and 174.50. Support lower sits at 160.25 and 159. Short interest is low und 1%. The stock pays a dividend with an annual yield of 2.93% and will begin trading ex-dividend February 26th.

The company is expected to report earnings next on January 23rd. The January options chain shows biggest open interest this week at the 160 and 155 put strikes as well as the 170 and 175 call strikes. In the January 26 Expiry the biggest open interest is at the 150 put and the 165 call. The February chain has biggest open interest at the 140 put and the 160 call strikes. Finally, the March chain has open interest spread from 160 to 140 on the put side and builds from 145 to a peak from 165 to 175 on the call side.

Johnson & Johnson, Ticker: $JNJ

Trade Idea 1: Buy the stock on a move over 163.25 with a stop at 159.

Trade Idea 2: Buy the stock on a move over 163.25 and add a January 26 Expiry 160/155 Put Spread (99 cents) while also selling the February 170 Call (80 cents).

Trade Idea 3: Buy the January 26 Expiry/February 170 Call Calendar (54 cents) and sell the January 26 Expiry 155 Put (32 cents).

Trade Idea 4: Buy the March 155/165/175 Call Spread Risk Reversal ($1.00).

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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 heading into January options expiration, saw equity markets split with strength in the large caps and tech heavy Nasdaq, but small caps continuing to tread water.

Elsewhere look for Gold to continue the rebound higher while Crude Oil consolidates in a tight range. The US Dollar Index continues to drift to the downside in consolidation while US Treasuries possibly reverse their uptrend. The Shanghai Composite looks to continue the downtrend while Emerging Markets consolidate in a broad range.

The Volatility Index looks to remain very low and stable making the path easier for equity markets to the upside. The charts of the SPY and QQQ look strong, especially on the longer timeframe. On the shorter timeframe both the QQQ and SPY could succumb to momentum divergences in the short run. The IWM continues to struggle, stuck in a 21 month range. 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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