After $260 Million Verdict, Traders Should Be Careful With a Healthcare Giant

An Oregon jury awarded a talc plaintiff $260 million in a verdict against Johnson & Johnson JNJ so let's review the charts and indicators to see if this is moving the needle.

In this daily bar chart of JNJ below, I can see that prices have bounced off the $144 area twice — once in April and again in May. Prices trade below the declining 50-day moving average line and below the declining 200-day moving average line. The volume histogram is flat. The On-Balance-Volume (OBV) line shows us a slight upwards drift from April. The Moving Average Convergence Divergence (MACD) oscillator is slightly below the zero line and just shy of a potential buy signal.

The JNJ daily chart shows an indicator just shy of a buy signal

In this weekly Japanese candlestick chart of JNJ below, I see a mixed picture. Prices are trading lower in a long-term downward sloping channel but in recent weeks I can see a couple of lower shadows telling me that traders have been rejecting the lows in the $145 area and below. The weekly OBV line is neutral at best and the weekly volume pattern is flat. The MACD oscillator is bearish.

There's a bearish indicator in the JNJ weekly chart

In this daily Point and Figure chart of JNJ below, I can see a potential downside price target in the $123 area.

The daily Point and Figure chart of JNJ reveals a potential downside price target

In this weekly Point and Figure chart of JNJ below, I can see a downside price target in the $123 area just like the daily chart above.

And the weekly Point and Figure chart of JNJ confirms that potential downside price target

Bottom line strategy: The charts of JNJ are in a position to go either way — generate a bounce to the upside or decline to lower lows. A retest of the $142 area could mean that mean lower lows are in the cards. Trade carefully.

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