JNJ On the road to disaster due to $417 Million Lawsuit Loss?

22. Aug. 2017

Fundamentals:
It seems Johnson & Johnson are on the road to disaster following a $417 Million Dollar verdict in baby powder case.
This is just the start of JNJs troubles as there are an incredible 4,800 Pending claims in the US Courts alone, over JNJs talc products.
The announcement from the article explains "LOS ANGELES—A jury on Monday awarded a woman with ovarian cancer $417 million in a case against Johnson & Johnson, the latest hit to the pharmaceutical company in widespread litigation over the alleged harms of its baby powder." - Sara Randazzo of the Wall Street Journal

Technicals:
After careful analysis, it seems that a WXY consolidation wave on the Intermediate period, has just completed and we may possibly see the start of an Impulse wave Down on the Intermediate time period, IF a breakout of structure occurs. Support and Resistance shows the possible formations during the downtrend.
Mustard and Ketchup EMAs have continued with the Uptrend since 2015 however due to the Fundamental issues facing JNJ, we can now expect a crossing of the Mustard, Ketchup EMAs with the Water EMA to confirm the downtrend move SHORT. Although TDI shows continued upwards band movement, RSI line shows close to overbought position above 60.0000.

In my opinion, I shall wait for more market data to occur, especially at market open to see if it will open with a GAP. If a GAP is present on Open today, that could be a precursor to future market sentiment as JNJ still has a whopping 4,800 pending claims to deal with and if the payouts are going to be in the vicinity of $400 Million, using this current case as a precendent, multiplied by 4,800 (in the USA alone - Not mentioning cases in other countries to be filed), I don't like the look of JNJs chances of surviving in the future. JNJ has enjoyed solid growth since the early 1990s, however putting customer's health at risk together with incompetent practices, usually equals a disaster which could be irrepairable. If price action breaks structure on the BLUE trendline (marked on my chart), I will start SHORTING this stock with large volume.
If price action breaches the RED trendline, another large volume will be shorted for maximum profit.

Informational Reference: Wall Street Journal
Article Here: wsj.com/articles/johnson-johnson-hit-with-417-million-verdict-in-baby-powder-case-1503340649?mod=e2tw

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DISCLAIMER: This chart is for sharing and educational purposes only and is not intended to be a signal service or similar.
This chart analysis is only provided as my own opinion, based on my own analysis and comes with absolutely no warranty that this analysis is correct, whatsoever. Do not trade this chart if you do not have your own strategy. Trade only with your own strategy at your own risk. Plan your trade and trade your plan... and IF in doubt, stay out.

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