close icon

JNJ Stock Preparing for a Bullish Breakout

JNJ stock did not start the year in the best way possible. The share price fell from an all-time high of $148.32 on January 17th to as low as $118.62 on May 29th, erasing 20% of the company’s market capitalization. Such declines come to remind us that even the best of blue chip stocks do not always rise. On the other hand, price drops often provide a great buying opportunity. Is JNJ stock’s plunge a chance to buy the dip or the start of a bigger crash? The chart below looks encouraging.
jnj stock elliott wave analysis
The hourly chart of Johnson & Johnson allows us to put the recent plunge into Elliott Wave perspective. It looks like JNJ stock has drawn a textbook A-B-C simple zigzag correction with an ending diagonal in the position of wave C. It is also interesting to notice that wave B is a smaller simple zigzag, labeled (a)-(b)-(c), where wave (b) is a triangle.

According to the theory, once a correction is over, the larger trend resumes. In JNJ stock’s case, the larger trend is clearly to the upside, so it makes sense to expect more strength from now on towards a new all-time high near $150 per share. The proper way to take advantage of the anticipated recovery is to wait for a decisive breach of the upper line of the ending diagonal and then put a stop-loss order right below the bottom of wave 5 of C at $118.60. As long as this level holds, the positive outlook remains valid. Given that JNJ stock has already slightly breached the 2-4 line of the diagonal, the situation currently provides an excellent risk/reward ratio of 5.6. So to answer the question from the first paragraph, it definitely looks more like a buy-the-dip opportunity than the beginning of a bear market. The bulls are still alive and kicking.

Did you like this analysis? Learn to do it yourself with our Elliott Wave Video Course!



Stay informed with our newsletter

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

Privacy policy
You may also like:

Boeing Getting More Risky as it Rises, Not Less

Of course, all stocks are riskier at a higher price, but after Boeing ‘s phenomenal performance in the last two years, it is very easy to forget that it can actually go down, as well. It is a risk which must never be neglected. BA just climbed to a new all-time high and the last…

Read More »

JNJ Stock Had a Nice Run Lately. Time to Sell?

Less than four months ago, JNJ stock was trading below the $120 a share mark, down 20% from its all-time high of $148.32. A 20% decline is a pretty serious thing for investors, especially when we talk about blue chip stocks, which are considered to be less volatile and therefore safer bets. In fact, many…

Read More »

MCD Stock Won’t Stay in That Range Forever

It has been a while since April 3rd, when we published our last update on McDonald’s. In that highly bullish article we shared our view that MCD stock ‘s recovery was poised to continue and eventually reach $180 a share. MCD was trading near $157.70 back then. Over five months later, it is still hovering…

Read More »

Twitter Stock Remains in Pullback Mode

When Twitter stock touched $14.12 on April 17th, 2017, it was just a few cents away from a new all-time low. Fourteen months later, in June 2018, TWTR was trading in the vicinity of $48 a share following a phenomenal 238% surge. Unfortunately, just when the company turned free cash flow positive and everyone was…

Read More »

AMD Stock is Up 190% in 2018. Be Careful Now

Our first and so far only article about Advanced Micro Devices Inc. was published on January 4th, 2018, when AMD stock was hovering around $11.55 a share. Back then the Elliott Wave analysis of AMD’s daily chart made us think the cryptocurrency mining boom was going to propel the stock price to a new high…

Read More »

BAC Stock on Its Elliott Wave Path to the North

A little over two months ago, on July 2nd, we published an article about Bank of America stock. The price was then hovering near $28.20 a share, following a decline from as high as $33.05 in March. Fortunately, despite the 15% plunge, the Elliott Wave Principle (and the company’s fundamentals, by the way) suggested BAC…

Read More »

Hibbett Stock is an Elliott Wave Bargain

The last time we wrote about Hibbett Sports Inc., a relatively small sports shoes and apparel retailer, was more than half a year ago, on February 20th. While Hibbett stock was trading around $25 a share, our Elliott Wave reading of its price chart made us believe the stock is headed higher in the long-term,…

Read More »

More analyses