Connect with us

Analysis

Johnson & Johnson: Not the One to Go Down?

Published

on

By Dmitriy Gurkovskiy, Chief Analyst at RoboMarkets

With the new season ahead, investors’ fears are fading out. The market is trying to find its bottom and bounce off it, if somewhat timidly. Few investors were bold enough to get into risks before the New Year, most preferred to lock in their hard-earned profits, which subsequently led to the overall downtrend.

There were some other reasons, too, though. The quarterly reports went better and better, which first was a good signal for keeping stocks within the portfolios. However, in Q4 2018, some companies were barely able to meet expectations, while others set their expectations way lower for the future periods. Facebook, for instance, was unable to meet expectations for two times in a row, despite the profits hitting the record highs. Meanwhile, Apple met expectations, but iPhone sales went significantly lower in Q4. General Motors revenues were completely based on automobile prices, while sales plunging, too. Some of these issues are due to the Sino-US trade war, but even without it the market would have gone down anyway, if at some higher price levels. Every company has its limit, and once it’s reached, a correction is inevitable. On the other hand, every company makes progress through innovative ideas, and when it manages to create a new unique product or service, its price goes drastically up.

Speaking of Facebook, Zuckerberg’s company multiplied its revenues more than threefold, from $4B in 2015, to $14B. Alphabet, the parent company of Google, succeeded in growing its revenues from $18B to $34B. Apple earnings are not growing as fast as Google’s, being very choppy, and it looks like the tech giant hit its iPhone sales limit. In 2015, Apple earned $58B, and had only 13% more by late 2018. The management finally opted for not disclosing the sales data, which had a very negative effect.

These figures do not look that impressive at first sight, and one may even think they could be way bigger. On the other hand, however, just think of it: a single US-based company earnings are bigger than the entire GDP in Bulgaria, Luxemburg, or Croatia.

Meanwhile, crude oil lost over 40% over the last three months. The stock indices, led by the S&P 500, followed in the same manner they had followed the rising crude price in 2017. This makes one think the indices will start rising as soon as crude finds support and bounces. Cheap crude is bad for exporters, while for other countries, it is a great tool, as producing nearly each and every product (or at least its packing or shipping) requires oil.

Whether crude has already found its support, or it will continue falling, remains to be seen. Investors are now interested in the crude and indices, but not that much so as to make the things really optimistic and push the prices higher. A fall is quite possible anyway, and the currently open long positions are under considerable risk.

When indices are going down, fear in the markets is so great that people sell even the stocks of the companies that are doing rather good. In order to provide the appropriate reasoning, the analysts usually remind the markets of a piece of negative news, even long-gone and forgotten. The stock then goes well bellow the oversold territory, just to give the investors a better opportunity to buy it later.

One of such oversold companies, with the stock price going down with no particular reason, is Jonson & Jonson (NYSE: JNJ), which includes over 250 child companies throughout the world. Johnson & Johnson produces medicines, hygienic products, and medical equipment. It was founded in 1887 by three brothers: Robert, James, and Edward Johnson.

Financially, the company is very much stable, and its earnings are rising steadily.

The chart below shows the earnings always beat expectations in 2017, which allowed the stock price to hit the historical high.

The price chart shows a very clear uptrend, with the price always being above the 200-day SMA, the latter acting as a support. In mid 2018, however, the stock lost as much as 20%, in a very short time frame. The earnings report was good, but the overall outlook was spoiled by the court decision, upon which J&J was fined at $4.70B.

The complainants affirmed that the baby dust produced by J&J contained asbestos, which may cause ovarian cancer. The similar trials had already been held in 2007, when the company first had to pay $417M to the injured US citizen, but later the decision was revoked, as no proofs for the event of crime were found. At that time, the market barely reacted at that legal action, probably because the amount was not that high.

It is quite high this time, though, so the news could not have gone unnoticed anyways. It was already priced into the stock in July 2018, however, as this is when the court took this decision. Ever since, the price went up again, and good earning reports pushed the price to the new all-time highs.

The ascending trend could well have continued, had it not been for the indices. Those fell considerably, and Johnson&Johnson was unable to stand ground. In order to justify the fall, the company remembered the legal action, which only made this fall steeper.

The situation was so grave that J&J had to announce it was going to buy the shares out for $5B, with the management considering the low price as an attractive investment opportunity.

Meanwhile, a recently concluded research, that had been in progress for decades, showed that American women living in the rural areas suffer from ovary cancer more often than those living in cities, although it is in cities when you find asbestos far more often. This means the connection between asbestos and cancer, if it exists, is not obvious.

Another research, however, highlighted that using amphibole asbestos led to the growing number of cases of occupational diseases. Amphibole asbestos is nowadays forbidden around the world.

The information on this research came roughly at the same time as the court decision on J&J. Nobody wanted to consider it all in detail, and which kind of asbestos it was about.

The whole story was so much overblown that each and every US citizen can now claim compensation from Johnson&Johnson. If this goes around the thousand of cities and towns J&J operates in, it could well lead to bankruptcy.

How you want to act in this market situation, remains up to you. You’ve got the crazy tumult on the one hand, and the logic on the other. The logic says the scandal is pretty much overblown, and those who initiated it are sure to lose in the end. Who is going to win then? Those who will control their emotions and take a weighted decision on buying the underpriced stock. This is because, now, the stock is far more likely to rise than to fall, both according to the overall situation and the fact that the trials started as early as in summer 2018.

Disclaimer

Any predictions contained herein are based on the authors’ particular opinion. This analysis shall not be treated as trading advice. RoboMarkets shall not be held Company for the results of the trades arising from relying upon trading recommendations and reviews contained herein.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

Rate this post:

Important for improving the service. Please add a comment in the comment field below explaining what you rated and why you gave it that rate. Failed Trade Recommendations should not be rated as that is considered a failure either way.
0 votes, average: 0.00 out of 50 votes, average: 0.00 out of 50 votes, average: 0.00 out of 50 votes, average: 0.00 out of 50 votes, average: 0.00 out of 5 (0 votes, average: 0.00 out of 5)
You need to be a registered member to rate this.
Loading...

4.6 stars on average, based on 23 rated postsHaving majored in both Social Psychology and Economics, I went on to continue my education in post graduate. Later I worked as a team lead of a tech and fundamental analysis lab in the Applied System Analysis Research Institute. This helped me to acquire all necessary skills and experience to become a successful trader and analyst, as well as a portfolio manager in an investment company. I'm a pro in the financial field and the author of articles for various international media. I also hold the position of Chief Analyst at RoboMarkets.




Feedback or Requests?

Analysis

Crypto Update: Coins Drift Lower but Damage Remains Limited

Published

on

The major cryptocurrencies continue to trade in narrow ranges following last week’s decline and this week’s failed rally attempt. While Bitcoin is stuck near the $3600 support, the other top coins have been losing ground today, with Ethereum dipping below the $120 level, Ripple violating the $0.32 price level and Litecoin testing the $30-$30.50 support zone yet again.

Trading volumes and volatility remain very low across the board, but correlations are still high between the majors, and despite the quiet environment, we haven’t seen bullish signs in the market. That said, the trading ranges that developed this week are still intact, and although the overwhelmingly bearish long-term picture still makes the continuation of the decline more likely, a failed break-down pattern could still develop in the segment, should the top coins recover above their weekly highs in the coming days.

For now, our trend model remains on sell signals on both time-frames in case of most of the majors, and traders and investors should still stay away from entering new positions here, with still no bullish leadership being present.

BTC/USD, 4-Hour Chart Analysis

Bitcoin is still relatively stable even in the very quiet environment, and the most valuable coin is trading right at the $3600 support/resistance level. BTC formed a volatility compression pattern in recent days, and that formation points to a more significant move in the coming days, with a move out of it being inevitable as soon as this weekend.

Bulls are still looking for a move above $3850, towards the key zone between $4000 and $4050, but the bearish long-term setup continues to favor a dip below $3600, with support zones still found near $3250 and $3000, and traders and investors should still not enter positions here.

ETH/USD, 4-Hour Chart Analysis

Ethereum failed to get close to the $130 resistance level again, and as it dipped below primary support, the test of the swing low near $112 is likely in the coming days. The coin remains on sell signals on both time-frames in our trend model, and a move towards the key support zone and between $95 and $100 is likely in the coming weeks, barring a quick reversal above $130. Further resistance is ahead at $145, $160, and near $180 while the bear market low is found near $80

Ripple Under Pressure Again in Weak Environment

EOS/USD, 4-Hour Chart Analysis

Altcoins continue to trade without a clear direction despite today’s dip, but the bearish drift of the recent days means that the key support levels could be in focus during the weekend, should the volatility compression finally end. The few major coins showing signs of strength haven’t been able to maintain the bullish momentum, like EOS, which gave back yesterday’s gains today.

XRP/USDT, 4-Hour Chart Analysis

While the market of Ripple is still very quiet, the coin fell below the $32 support yet again, and it remains relatively weak compared to its closest peers. It is also on sell signals on both time-frames in our trend model, and a dip below $0.30 will likely be the next significant move. Further strong support is found near the $0.26 level, with resistance ahead near $0.3550 and $0.3750.

LTC/USD, 4-Hour Chart Analysis

Litecoin is trading just above the key $30-$30.50 support zone, and it sill failed to get anywhere near the next major zone near the $34.50 price level. Given the hostile long-term setup and the short-term sell signal our trend model, traders should stay away from the coin here, with a move toward the $26 level being likely in the coming weeks. Further strong resistance is ahead near $38 and $44 and with another support level found near $23.

Featured image from Shutterstock

Disclaimer:  The analyst owns cryptocurrencies. He holds investment positions in the coins, but doesn’t engage in short-term or day-trading, nor does he hold short positions on any of the coins.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

Rate this post:

Important for improving the service. Please add a comment in the comment field below explaining what you rated and why you gave it that rate. Failed Trade Recommendations should not be rated as that is considered a failure either way.
0 votes, average: 0.00 out of 50 votes, average: 0.00 out of 50 votes, average: 0.00 out of 50 votes, average: 0.00 out of 50 votes, average: 0.00 out of 5 (0 votes, average: 0.00 out of 5)
You need to be a registered member to rate this.
Loading...

4.7 stars on average, based on 443 rated postsTrader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.




Feedback or Requests?

Continue Reading

Analysis

Binance Coin Update: Wyckoff Breakout in Progress

Published

on

Binance Coin (BNB/BTC) is the altcoin market’s ultimate comeback kid. It was dead in the water on November 17, 2018 when it broke support of 0.0014. The market flipped the support into resistance two days later on November 19 to confirm the breakdown.

Binance Coin was supposed to enter a long bear winter. However, the market had other plans as it whipsawed everyone who panic sold the breakdown. In this article, we show how the Wyckoff Breakout is in progress in Binance Coin.

Wyckoff Spring

On November 28, 2018, Binance Coin dropped to as low as 0.001233. At that point, participants were convinced that the market broke down from either the large head and shoulders pattern on the longer time frame or a descending triangle on the shorter time frame. Even though the market was ripe for a bounce, almost everyone expected it to be the dead-cat type. Nevertheless, Binance Coin showed why it is always best to be prepared for both bull and bear scenarios.

The market suddenly rallied and took out both the head and shoulders neckline and the diagonal resistance of the triangle in one fell swoop. It then flipped both resistances into support on December 20, 2018. This is a classic example of a Wyckoff Spring.

BNB/BTC bear trap

As you can see, this price action is bullish. The smart money most likely accumulated positions from August 14 to November 17, 2018 while Binance Coin was range trading between 0.0014 and 0.0016. The breach below the support was the smart money’s method to tap into more liquidity. They shook the tree in order to accumulate more positions in a short amount of time. When they were done, they triggered the rally and the reversal.

Now that we know the smart money accumulated between 0.0014 and 0.0016, we can form the expectation that they will defend this range. More importantly, with the bear trap sprung, we can assume that Binance Coin is ready for the next stages of the model: the throwback and the markup.

Throwback

According to the Wyckoff model, Binance Coin is scheduled for a pullback before it can launch a bull run. The brief retracement is actually bullish. It would flip the former resistance into a firm support. This would enable the market to trend higher.

Wyckoff Model (Source: ScanStockCharts)

So far, Binance Coin has gone through the first three phases: accumulation, spring and breakout. The market is now trading above 0.0016, which used to be the range high. However, it is starting to show signs of weakness. Binance Coin is showing a bearish divergence on the daily RSI while trading close to overbought territory. On top of that, it is creating a rising wedge on the daily chart, which is a bearish pattern.

BNB/BTC bearish signals  

These signals are aligned to the next step of the Wyckoff Model, which is the throwback. The pullback will be healthy for the market. It will enable technical indicators to cool off as well as allow the market to establish a new base of buyers.

If you’re considering placing long positions in the market, the throwback to 0.0016 is a very good chance to do so.

Markup

Should Binance Coin pull back and stay above 0.0016, then the market would be ready for the next phase: the markup. This would be the start of the market’s bull run.

From Binance Coin’s market structure, we can see three heavy resistances: 0.002008, 0.0002287, and 0.00258. These would be the target prices to look for.

BNB/BTC heavy resistances

If all goes well, those who will be buying the throwback can potentially grow their investments by over 60%.

Bottom Line

Binance Coin is an altcoin that should be languishing in a bear winter. Instead, the market has managed to reverse its fortune through the Wyckoff model. It is likely that this market is on the brink of a massive bull run.

 

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

Rate this post:

Important for improving the service. Please add a comment in the comment field below explaining what you rated and why you gave it that rate. Failed Trade Recommendations should not be rated as that is considered a failure either way.
0 votes, average: 0.00 out of 50 votes, average: 0.00 out of 50 votes, average: 0.00 out of 50 votes, average: 0.00 out of 50 votes, average: 0.00 out of 5 (0 votes, average: 0.00 out of 5)
You need to be a registered member to rate this.
Loading...

3.8 stars on average, based on 309 rated postsKiril is a CFA Charterholder and financial professional with 5+ years of experience in financial writing, analysis and product ownership. He has passed all three CFA exams on first attempt and has a bachelor's degree with a specialty in finance. Kiril’s current focus is on cryptocurrencies and ETFs, as he does his own crypto research and is the subject matter expert at ETFdb.com. He also has his personal website, InvestorAcademy.org where he teaches people about the basics of investing. His ultimate goal is to help people with limited knowledge of finance and investments to create investment portfolios easily, and in line with their unique circumstances.




Feedback or Requests?

Continue Reading

Analysis

EOS Price Analysis: EOSIO 1.6 Update Enhances Speeds and is Cost Effective; Downside Price Risks Remain for EOS/USD

Published

on

  • EOSIO developers have released 1.6 upgrade, which sees enhanced speeds and is more cost efficient.
  • EOS/USD price action is ranging; given current behavior, a breakout may just be imminent.

The EOS price on Friday is seen trading down in minor negative territory. The price is caught in a very stubborn range. This behavior being observed could prove to be damaging in the coming sessions if the bulls do not break above resistance. EOS/USD is being dictated by a tough acting supply area, which is seen tracking from $2.60-$2.50 range. Then to the downside, a near-term demand zone is keeping the price propped up for now, $2.35-$2.25.

EOS/USD is moving within this consolidation mode, which has come into play since breaching a vital part of the bull’s recovery. An ascending trend line was seen tracking from 7th December 2018, right up until it was breached by the market bears on 10th January 2019.  This had coincided with the price running into chunky resistance at the psychological $3.00 price mark. It has not convincingly been above this region since the back-end of November 2018.

EOSIO 1.6 Release

EOSIO developers, who have been working on a system upgrade, have now announced the release of an upgraded version 1.6.0 of EOSIO. In terms of the impact of this development, they have instantly been noticeable and signaling a large improvement.  This new release does boast further features and fixes to improve upon the cumulative patches, which were implemented to enhance v1.5.

Details were provided by the company within an official Medium blog post. Updates on the EOSIO software will enhance efficiency for the peer-to-peer networking layer in addition to seeing real-time transactions improve overall transaction speed. They further stated that this release is something that had been planned as part of their progressive goals to improve their performance. They have intentions to maintain the fastest protocol across the market.

The development team tweeted, “Tests show upwards of a 35% increase in likely transaction speed. We are projecting noticeable improvements to sustainable transactions per second. In addition, reduced CPU costs, and lower latency on all EOSIO based blockchains.”

Technical Review – EOS/USD

EOS/USD daily chart.

The key for a new committed trend is to see a breakout from the confinements of the mentioned supply sitting above and demand zone below. Given the earlier detailed break below an ascending trend line, vulnerabilities remain, with the range-block formation.

Should the bears manage to force a drop below $2.25, then a new wave of selling will likely come into force. The next major area of support should be noted down towards the December 2018 low. $1.83 and then then $1.55 regions should be sought for potential comfort.

Disclaimer: The author owns Bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

Rate this post:

Important for improving the service. Please add a comment in the comment field below explaining what you rated and why you gave it that rate. Failed Trade Recommendations should not be rated as that is considered a failure either way.
0 votes, average: 0.00 out of 50 votes, average: 0.00 out of 50 votes, average: 0.00 out of 50 votes, average: 0.00 out of 50 votes, average: 0.00 out of 5 (0 votes, average: 0.00 out of 5)
You need to be a registered member to rate this.
Loading...

4.6 stars on average, based on 110 rated postsKen has over 8 years exposure to the financial markets. During a large part of his career, he worked as an analyst, covering a variety of asset classes; forex, fixed income, commodities, equities and cryptocurrencies. Ken has gone on to become a regular contributor across several large news and analysis outlets.




Feedback or Requests?

Continue Reading

Recent Posts

A part of CCN

Hacked.com is Neutral and Unbiased

Hacked.com and its team members have pledged to reject any form of advertisement or sponsorships from 3rd parties. We will always be neutral and we strive towards a fully unbiased view on all topics. Whenever an author has a conflicting interest, that should be clearly stated in the post itself with a disclaimer. If you suspect that one of our team members are biased, please notify me immediately at jonas.borchgrevink(at)hacked.com.

Trending