One of our stocks in focus is JNJ US (Johnson & Johnson).

Share price is testing important short-term support trend line. Breaking below $132.50 will be an important bearish signal. Price has entered the Ichimoku cloud and is in a neutral trend. Breaking below the trend line will increase the chances of breaking below the Kumo (cloud) and providing a bearish signal according to Ichimoku terms.

According to my Elliott wave view, there are high chances 5 waves from $109 area are complete. So a pull back towards $128-122 is justified.

Zooming out we get an even worrisome picture as a bigger 5 wave pattern could already be complete as well….

With bearish divergence signs from the RSI and a 5 wave pattern most probably complete, we might be standing at a major top with a major reversal coming. So bulls should be very careful…this is not an opportunity to take profits for bulls but an opportunity on the short side. I will be opening short positions once we break my support levels with stops at the highs.

Conclusion

JNJ US could be at the very early stages of a big decline as an impulse wave pattern since the lows of 2015 might be complete. Bulls need to be very cautious. Could the negative verdict from the Talc cancer case be the first among the 5,500 cases the company faces and loses? Bloomberg post here. This would be a terrible blow for the company and the stock market price will soon reflect the worries, fears and the concern this result creates.

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