Chart Advisor: Johnson & Johnson (JNJ)

From SIA Charts

1/ Johnson & Johnson (JNJ)

2/ SIA Drugs Equal Weight Index

3/ Point and Figure Chart

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Johnson & Johnson (JNJ)

Courtesy of SIA Charts

Today, we will look at the weakest sector in the SIA Sector Report, which is the SIA Drugs Equal Weight Index (EWI436), and dig into its components where we find the name Johnson & Johnson (JNJ), which may be in a technically vulnerable position. First off, it’s not that Johnson & Johnson has been a market leader, as can be seen in the attached SIA matrix position chart above, where we can see that JNJ has maintained a low rank in the associated SIA S&P 100 Index Report for many years. This is not to say that the stock hasn’t moved higher, but on a relative basis, it has underperformed the other names within the matrix reports and against its direct peers within the Drug sector itself. But the conditions may have become even riskier now that the Drug sector is showing such low relative strength on its own.

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SIA Drugs Equal Weight Index

To highlight this lack of relative strength, we have attached a point and figure (pnf) chart of the SIA Drugs Equal Weight Index, where we have added the SMAX overlay tool to illustrate that once again the sector is underperforming the alternative asset classes like cash, bonds, commodities, currencies, and other market equity indexes. This sector chart is also now in the process of breaking through the positive trend line as it completes several PNF double bottom chart signals. Support is not far below current levels, which have been plotted on the chart with green lines, while the resistance is both at the 3-box reversal level as well as the top line, dating back beyond 2022.

Courtesy of SIA Charts

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Point and Figure Chart

Turning to the next chart, we have established support and resistance on the PNF chart of JNJ, where the shares have been moving sideways for the better part of 5 years. During this time, they have grown by only +3.36%, creating a massive opportunity loss for investors in the company. Fortunately, support is tight, so any slip in the share price will complete a quadruple bottom sell signal on the PNF chart at $139.39, which will be a number to watch to the downside. Meanwhile, shares of JNJ have near-term support at the 3-box reversal level of $145.02, while resistance is at both the $163.32 and $169.92 levels. Should trading move below the $139.39 level, further support is highlighted on the PNF chart at $121.36 and all the way down at the trend line at $99.55, also consistent with the whole number psychological level of $100. Here, the SIA SMAX score is also negative with only 2 of the potential 10 vectors of strength visible. So, to sum up: JNJ shares are relative underperformers within a sector that is at the dead bottom of the SIA Sector matrix, has a negative SMAX score, and may be vulnerable to a quadruple bottom, with resistance tight above and support well below current levels, should the quadruple PNF signal complete to the downside. The one positive that JNJ shares have is that they are part of the US equity market, which is still the #1 asset class. But should that reading lose steam, JNJ shares could potentially be a low RS name in the lowest RS sector.

Courtesy of SIA Charts

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Originally posted 13th February 2025