Johnson & Johnson, $JNJ, was consolidating under resistance for 2 months before breaking out to the upside last week. This gives a target to 154. The RSI is rising and bullish with the MACD moving higher and positive. There is resistance at 143.25 and 144.60 the 147 and 148.70. Support lower comes at 140.25 and 138 then 136.85 and 135. Short interest is low under 1%. The stock pays a 2.7% dividend and will trade ex-dividend beginning May 24th. The company is expected to report earnings next on July 16th.
The May options see the biggest open interest on the put side at the 135 strike with size also at 140 and 132. On the call side it is biggest at 145 then 140 and 143. In the June chain the open interest on the put side is spread from 105 to 135. But on the call side it is very big and focused at 145. The July options, covering the next earnings report, are building open interest and see it spread from 110 to 135 on the put side. It builds from 135 to a peak at 145 then tails to 160 on the call side.
Johnson & Johnson, Ticker: $JNJ
Trade Idea 1: Buy the stock now (over 140.25) with a stop at 139.
Trade Idea 2: Buy the stock now (over 140.25) and add a June 140/135 Put Spread ($1.35) while selling the July 150 Calls (90 cents).
Trade Idea 3: Buy the May/July 145 Call Calendar ($2.00) and sell the May 135 Puts (20 cents).
Trade Idea 4: Buy the July 135/145 bull Risk Reversal (60 cents).
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 with another FOMC meeting in the books and the April employment report behind, saw equity markets strong and moving higher again.
Elsewhere look for Gold to continue lower in its pullback while Crude Oil joins it as it turns lower. The US Dollar Index is also reversing lower while US Treasuries reverse to the upside. The Shanghai Composite ended its short week pulling back but Emerging Markets are now poised to reverse back higher.
Volatility looks to remain at very low levels keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ. Their charts all look strong on the weekly timeframe. On the daily timeframe it does looks like the QQQ is ready to consolidate while the IWM takes the lead, with the SPY driving higher as well. Use this information as you prepare for the coming week and trad’em well.
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.