Johnson & Johnson Stock Dips Amid Talc Lawsuit Setback: Key Levels to Watch

Essential Insights

• Johnson & Johnson's shares sharply declined, leading the S&P 500 losers after the company’s talc-related settlement plan was rejected by a judge.
• The stock faced selling pressure near the upper boundary of a descending channel, dropping below both the 50- and 200-week moving averages during Tuesday’s session.
• Investors should monitor critical support around $147 and $137, alongside resistance near $167 and $180.

Shares of Johnson & Johnson (JNJ) experienced a significant drop after the court dismissed the company's proposed settlement concerning thousands of lawsuits alleging its talc products cause ovarian cancer. This rejection marks the third attempt by J&J to resolve these claims through bankruptcy proceedings.

Following the court's decision, the company will proceed with litigation in the tort system to contest the allegations. Despite the recent decline, J&J shares have gained approximately 6% year-to-date, outperforming the S&P 500's 4% decrease.

Below is a detailed technical analysis of Johnson & Johnson’s weekly chart, highlighting pivotal price points for investors.

Descending Channel Analysis

Since reaching an all-time high in April 2022, Johnson & Johnson's stock has been trading within a well-defined descending channel, repeatedly touching its upper and lower trendlines.

Recently, the stock encountered resistance near the channel's upper trendline and fell below both the 50- and 200-week moving averages. The Relative Strength Index (RSI) also dropped below 50, indicating increased selling momentum.

Key support and resistance levels are crucial for anticipating potential price movements.

Critical Support Levels

The $147 level serves as an important support zone, aligning with a trendline connecting multiple peaks and troughs from January 2018 through June of the previous year.

If selling intensifies, the stock could break below the lower trendline of the descending channel, potentially declining toward $137. This area corresponds with a trendline linking the June 2017 peak and similar price action up to October 2020, offering a possible entry point for investors.

Key Resistance Levels

On the upside, resistance near $167 could challenge any upward movement, as this level lies just above the descending channel's upper boundary and aligns with peaks from March and September, as well as trading activity since February 2021.

A successful breakout above $167 might propel shares toward $180, where profit-taking may occur near notable peaks from August 2021 and December 2022, just below the stock’s record high.

This analysis is for informational purposes only and does not constitute investment advice. Please review our warranty and liability disclaimer for more details.

As of this article's publication, the author holds no positions in the securities mentioned.

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