We’ve been overwhelmed by the Ukraine talk (and trade) lately, and rightly so – it’s not common that a deadly military conflict breaks out right in the center of Europe.
In no way do I aim to diminish the significance and the tragedy of what’s happening – we’re all hoping to see a quick resolution there.
But, from a purely trader’s standpoint, the general sentiment seems to have completely abandoned one major market theme…
The one, that had completely dominated our lives for over a full two years – that is COVID-19, of course!
Luckily for us, Ben Sturgill, a man with the attention span of a supercomputer, has his eyes scanning through what matters.
Today, Ben’s highlighting Johson & Johnson’s (JNJ) current uptrend, and the stock’s latest shot to push through its long-dreaded resistance.
JNJ’s Pandemic Dilemma
If you listen to the TV pundits, it seems the effects of the pandemic have been fairly black and white.
Some sectors, like airlines, cruises, and anything travel-related, have taken major hits, as their businesses suffered unprecedented damage.
Others, like vaccine makers, IT companies, the Zoom’s of this world, or other work-from-home related stocks, have benefitted big!
But… There’s another category too.
The companies right in the middle, the businesses for whom COVID-19 has provided both major tail- and solid headwinds, leaving investors scrambling to calculate the true effects.
And, you may be surprised to hear that, but JNJ has been exactly one of those, latter category stocks!
See, here are the two sides to JNJ’s coin of the past 2 years:
- The company has clearly BENEFITED from the pandemic, as JNJ sold $2.4B worth of its single shot COVID-19 vaccine, and projects to sell another $3.5B in 2022.
- The company’s core business SUFFERED through the period, as consumers had been more wary of frivolous spending on traditional consumer products.
And that may very explain away the stock’s sluggish performance:
Excluding the March 2020 “COVID-dip”, the stock hasn’t really done all that much, staying range-bound between $140 and $170.
Well, now that we are finally crawling past the pandemic, Ben Sturgill believes the sentiment and appetite for JNJ shares may be changing as well… in a good way!
Ben’s Bullish JNJ Thesis
If you zoom in on JNJ’s chart, you’ll find that over the past few weeks, the stock has actually been on a strong uptrend:
Shares are now approaching the dreaded resistance at $173 again – a level the stock has struggled against for months!
All of that in the face of a crumbling market – talk about relative strength!!
Ben believes the reason for it is simple – as mask and vaccine mandates ease, and COVID vanes from daily headlines, the overhang on the company’s core consumer products business are easing away as well.
Essentially, we’re now having JNJ still enjoying the COVID benefits, but without the COVID risks!
Here’s how Ben puts it:
“With the ‘pandemic’ of sorts coming into a close, consumer product goods and the strong companies that provide the products that stock the shelves are back into the mix.”
Therefore, he believes if JNJ was ever to push through the dreaded $173-$174 resistance, right now could be the perfect time.
As always, though, Ben needs to see some confirmation first:
“There could be some consolidation at this level intraday before the stock makes the attempt at $174 and above.”Should we proceed to the actual trade, here’s one contract he’s eyeing:
JNJ Apr 14 $185 Calls – $.80 (Trigger above $173)
Be sure to check out Ben’s Live Trading room – The Workshop – for actual trade entries and great live market commentary!
