close icon

JNJ Stock Pattern Suggests Uptrend is Almost Over

Despite its top quality, Johnson & Johnson didn’t fully participate in the post-2009 bull market. JNJ stock is up 224% since the bottom of the Financial Crisis, while the Dow Jones added 354% in the same period.

However, JNJ stock climbed to a new all-time high last week in a breakout that makes the bulls very excited about the future. But are they right to feel optimistic? That is the question we hope to answer with the help of the Elliott Wave principle and the chart below.

JNJ stock breaks out of a triangle Elliott Wave pattern

JNJ’s weekly chart reveals the entire price structure from the 2009 bottom at $46.25. As you can see, it is a textbook five-wave impulse, labeled I-II-III-IV-V. It unfolded within the parallel lines of a trend channel and the sub-waves of wave III are also visible.

The market apparently took the guideline of alternation into account, too. Wave II was a sharp plunge, while wave IV moved sideways in a triangle correction. Triangles precede the final wave of the larger sequence. If this count is correct, the current rally must be wave V.

The theory postulates that a three-wave correction in the other direction follows every impulse. For JNJ stock, this means we can expect a bearish reversal once wave V is over. The anticipated retracement has the potential to erase the entire fifth wave.

A decline back to the support area of wave IV or even lower is very likely. $110 a share seems like a reasonable target in the next couple of years. The risk/reward ratio doesn’t look very favorable to the bulls with the stock around $150.

Similar Elliott Wave setups occur in the Forex, crypto and commodity markets, as well. Our Elliott Wave Video Course can teach you how to uncover them yourself!



Stay informed with our newsletter

Latest Elliott Wave analysis on different topics delivered to you weekly.

Privacy policy
You may also like:

Chipotle Bulls Reach the Promised Land. Now What?

In late-March 2019 we published an analysis, stating that Chipotle bulls were aiming at $900 a share. The stock was hovering around $700 at the time, but the momentum it was gaining made us confident it can rise some more. The Elliott Wave chart our confidence stemmed from is given below. Following a perfect 5-3…

Read More »

Buying Rational Stock Now is Irrational

Rational AG is a German kitchen appliances and processors manufacturer, founded in 1976. With over 750,000 appliances on the market, the company is one of the leaders in the industry. Not surprisingly then, its stock price has been rising for quite a while now. 17 years ago, in March 2003, Rational stock fell to 25.32…

Read More »

Salesforce Bulls To Head for the Exits Soon

Salesforce .com stock fell to $2.25 in August 2004. What followed is nothing short of spectacular. Shares closed at $182.31 on Friday, up 8000% or 34% compounded annually. In other words, CRM multiplied investors’ money by 81 in less than 16 years. However, even traditional valuation measures indicate the stock is getting ahead of itself.…

Read More »

Humana Completes a Pattern it Started 20 Years Ago

It’s been eight months since we last wrote about Humana. The stock was hovering around $260 in May 2019, following a plunge from as high as $356. And while there were plenty of things to worry about, a combination of Elliott Wave and Fibonacci analysis made us optimistic about Humana’s prospects. Instead of joining the…

Read More »

Steel Dynamics Completes Bearish Wave Setup

Steel Dynamics stock climbed 40% throughout the second half of 2019. The share price rose from $25 to almost $36, but that’s after a decline from $52.10 in May 2018. In other words, despite the recent recovery STLD is still down 36.7% in the past 19 months. Can the steel manufacturer stock’s revival continue or…

Read More »

Spirit AeroSystems Not an Elliott Wave Bargain Yet

In the ten years between November 2008 and January 2018, Spirit AeroSystems stock surged 1373%. The rally from $7.14 to $105.20 made anyone who happened to catch even a part of it quite happy. The following two years, on the other hand, not so much. Spirit AeroSystems is down by a third in the last…

Read More »

Shopify Investors Probably Believe in Unicorns, Too

Shopify is a cloud-based commerce platform founded in 2004 and headquartered in Canada. Its market cap is approaching $50 billion, even though the company is not yet profitable. We know from history that profits determine a business’ success in the long-term. In the short run, however, investors’ emotions is what makes a stock rise or…

Read More »

More analyses