Saturday, January 27, 2007

JNJ Analysis for 01.27.2007

Monthly chart shows resistance at $70 range, with a double top now in place. The first top was made in May 2005, and it was a 1.618 fib area. Sellers there created a bearish engulfing candle that started a corrective move down to a .618 fib level where it made a morning star pattern for the current move back up to test the top at the $70 area. Currently, every test of the $70 high has been met with selling over the last 4 months. Current support is at the $66 area. IF that breaks, THEN look for the stock to trade down to $61.30 area, which is a .618 fib level and prior LIS.

The weekly chart currently shows the short term weakness more clearly than the monthly chart. We ended the week with a big bearish engulfing pattern, indicating that the sellers came out in force. Look for continuation next week. First short term target is the .382 fib level at the $64.57 range.

Sellers came out in force all this week. Price is currently trading below small LIS at $66.80 area. Friday's price action closed below all the moving averages, especially the 89sma. Look for continuation next week.

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