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December 6 Chart of the Day - Johnson and Johnson

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Much has been posted about Johnson and Johnson (JNJ) the past few weeks as it was recently disclosed that Berkshire Hathaway exited their estimated $54M position in the company as of September 30, 2023.

So we wanted to analyze the chart to see if we could determine why Warren Buffet, often referred to as the Oracle of Omaha, decided to make this move.

On the monthly chart we can see that since the global pandemic price made a series of higher highs and higher lows setting a new all time high (ATH) at $186.89 in April of 2022.

But since then price has been making a series of lower highs and lower lows.  That's a potential reason Mr. Buffet said "no mas"...

From a price action technical analysis perspective price retraced from the ATH in a typical fashion before deciding to turn back up at the 50% retracement off the validated Fibonacci.

We're not certain when or how Berkshire exited their position but we'd imagine it was closer to one of the lower highs.  Perhaps it was a planned exit spread out over several days/weeks rather than all of a sudden one day hitting the SELL ALL button.

One thing we are confident in is down on the weekly chart we can see that price established a change control zone roughly between $152-$157.

Change control zones are one of the five price action tools we teach when charting anything.  By definition, they are an area that represents where neither the bulls nor bears are in charge.  Price can slash though the zone with seemingly reckless abandon, price can respect the top or bottom from outside it or within it.  Or, price can trade aimlessly sideways within it.  When price breaks away from the zone it can often get drawn back to it like a magnet. And in this case we see all of the above are true.

Trading at $157.04 earlier on Wednesday that makes 11 trips through the change control zone and a whopping 12 times that price respected the zone from either below or above since the spring of 2020.

Many would consider this a "magnet" area for price and perhaps Buffet and his team had enough...

So what's next? 

We don't make predictions...

Nobody knows for sure but using these 5 price action tools traders and investors can develop levels of interest in both directions.

  1. Support/Resistance
  2. Trend
  3. Fibonacci 
  4. Supply/Demand Zones,
  5. Change Control Zones

Take a look at the charts and let us know what you think.  

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