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Does Johnson & Johnson’s Potential Coronavirus Vaccine Make It a Buy?

The stock market opened cautiously higher on Monday but Johnson & Johnson stormed out of the gate, rallying to a quick 6.5% gain on the day.

Driving shares higher was a coronavirus-related announcement that the company has picked a lead candidate for its Covid-19 vaccine. Phase 1 trials should begin no later than September, with emergency doses ready by early 2021.

The company hopes to make a major impact by providing a billion doses of the vaccine and “is committed to bringing an affordable vaccine to the public on a not-for-profit basis for emergency pandemic use."

While this is a positive step, it will do little to help the current situation - short of a morale boost. Still, it’s got shares of J&J moving higher, a stock that is still 15.5% off its 2020 highs.

Does this news make it a buy or should investors wait for better prices? Let’s look at the charts.

Trading Johnson & Johnson

If Johnson & Johnson stock can clear this area, it puts the 50-week moving average near $135 in play. Above that and the $140 to $142 breakout area is on the table.

On the downside, bulls will want to see the 200-week moving average hold as support. This level has been significant over the past few weeks and investors will want to see it provide price stability in the coming weeks and months.

Below the 200-week moving average puts the $115 level in play. This mark was support after shares briefly broke below it last week. Should JNJ stock flush below $115, technically speaking the $100 to $102.50 zone is in play.

For now, see if Johnson & Johnson can reclaim the $132 level on the upside, and hold the 200-week moving average on the downside. 

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