BY MARK SEBASTIAN
July 19, 2024
REPLAY
Coming Monday
Johnson & Johnson (Ticker: JNJ)
As you can see, Johnson & Johnson (TIcker: JNJ) is a great pitchfork stock meaning it honors the support and resistance levels created by the pitchfork:
It was struggling to cross the red median line until they had their earnings announcement.
Now it has shot up and looks ready to rally to $159 and then on to the top of the pitchfork at $167.
Thursday’s low lines up with the high of May 17th which gives us the support level at $154.60 and below there at $153.39 the 200 day moving average provides support.
It is a great stock to trade options, I recommend adding it to your watchlist.
Licia
JNJ is a huge company….you might not know this but the company is worth 360 billion dollars post the move on Wednesday. It was a clear winner out of earnings.
The company beat on top line (revenue) and bottom line (earnings)….The reason for the big push higher though was the company raising guidance … .this was unexpected and JNJ made an outsized move.
To put that in perspective, the market was looking for about a 2.4% move…JNJ moved 3.7%.
Now, after the move the PE on JNJ…for JNJ…has gotten a little stretched, it is sky high at 22 on a trailing twelve month basis…but I would like to lay out why…
JNJ is just coming out of a TERRIBLE run of earnings, lawsuits, and other issues….this is the first quarter where the company is clear of many of its hurdles. With the company raising guidance and looking at the last quarter, the PE is entirely reasonable.
I love that his pays almost 5 bucks a year in dividend…even after the run higher its over 3%. Gross margins are great, Price to sales is pretty low…as is the price to book.
JNJ is a solid company and I would be a long term buyer…this is one I would invest in and hold….long term upside is over 200 dollars a share.
But in the short term…Its just coming off a huge move….Ill leave that to Licia…
Johnny John showing some post earnings umph
This is something you don’t see everyday. JNJ post earnings volatility is showing a lot of lift relative for this year. Implied volatility (IV) gets to the low 12s but right now is in the mid-16s. I realizE that is not a lot of range but the fact that IV is not in the basement after a good earnings number is quite surprising.
1 year 90 day realized volatility and 30 day implied volatility for JNJ
The post-earnings volatility is curious.
There is a fair amount of upside skew in JNJ. That usually means there are extra call buyers and these buyers have stuck around post earnings. I like upside call spreads or just some short put spreads out of the money to beat the dividend yield in JNJ.
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Mark Sebastian
Founder & CEO, Option Pit
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