Current trend

The shares of Johnson & Johnson, one of the leading retail holdings, are correcting at 161.00.

The management announced its intention to acquire V-Wave Ltd., a company focused on developing innovative treatments for patients with heart failure, for 1.7B dollars. The deal will be the fourth this year after signing agreements to purchase ShockWave Medical Inc., which specializes in developing cardiovascular diseases for 13.10B dollars, skin disease drug manufacturer Numab Therapeutics AG for 1.25B dollars, and biotech startup Proteologix Inc. for 850.0M dollars.

Against the expected deal with V-Wave Ltd. RBC Capital analysts maintained their rating on the issuer's shares at the buy level and the target price around 175.0 dollars. According to experts, the V-Wave bypass implant will be in demand on the market and will allow the company to expand its customer core by an average of 800.0K patients annually.

In its Q2 financial report, Johnson & Johnson reported revenue of 22.45B dollars, which exceeded the projected 22.34B dollars but was behind the 25.53B dollars received in the same period a year earlier. Earnings per share (EPS) amounted to 2.82 dollars, which also was higher than both the 2.72 dollars forecast and 2.80 dollars last year.

Support and resistance

On the daily chart, the quotes are holding near the annual high of 163.00.

Technical indicators are in the state of a buy signal, which is not stable enough against a local correction: fast EMA on the Alligator indicator are consolidated above the signal line, and the AO oscillator histogram continues to build correction bars.

Resistance levels: 162.60, 170.00.

Support levels: 159.00, 152.00.

Trading tips

Long positions may be opened after the price consolidates above the resistance level of 162.60, with the target at 170.00. Stop loss – 158.00. Implementation period: 7 days or more.

Short positions may be opened after the price consolidates below the support level of 159.00, with the target at 152.00 and stop loss 162.00.