Johnson & Johnson's Rally Does Not Move the Needle

Shares of Johnson & Johnson (JNJ) rallied Wednesday on news of the company's potential talc litigation settlement. Let's check closer to see if this can reverse the downward path of the stock the past 12 months.

In the daily bar chart of JNJ, below, I can see that share prices gapped higher on the opening. The shares jumped above the still declining 50-day moving average line. The slope of the 200-day line is negative and the line intersects around $168.

The On-Balance-Volume (OBV) line shows a small rounding pattern in March suggesting limited buying ahead of this news. The Moving Average Convergence Divergence (MACD) oscillator improved in March but is still below the zero line.

In this weekly Japanese candlestick chart of JNJ, below, I can see a bottom reversal pattern in March. The shares are below the declining 40-week moving average line.

The weekly OBV line shows only a modest uptick. The MACD oscillator is narrowing and still far from a cover shorts buy signal.

In this daily Point and Figure chart of JNJ, below, I can see that today's rally has not turned the chart bullish. A downside price target in the $125 area is showing.

In this weekly Point and Figure chart of JNJ, below, I can see the same downside price target of $125.

Bottom-line strategy: I am reluctant to recommend the long side of JNJ as the recent rally did not have much of a base preceding it.

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