Johnson & Johnson (JNJ) shares fell 7.6% on Tuesday after the healthcare giant failed to settle thousands of legal claims related to its talc-based baby powder. The company announced that a judge rejected its plan to resolve the cases using a “prepackaged bankruptcy plan” for a subsidiary, marking its third unsuccessful attempt to settle. As a result, J&J will return to the tort system to contest the claims.
Despite the sharp drop, J&J shares have risen 6% this year, outperforming the S&P 500, which has declined by 4% in the same period. The recent fall, however, positioned J&J as the biggest decliner on the S&P 500 on Tuesday, closing at $153.25.
Technical Analysis: Key Levels to Watch
J&J shares have been trading within a descending channel since reaching a record high in April 2022. On Tuesday, the price fell below both the 50- and 200-week moving averages, with the Relative Strength Index (RSI) dipping below 50, indicating increased selling pressure.
Support Levels:
Investors should monitor the $147 level, as it marks a trendline support stretching from January 2018 to June 2022. Further declines could push the stock to around $137, where another trendline connects past peaks from 2017 to 2020.
Resistance Levels:
Any recovery may face resistance at $167, aligned with previous peaks in March and September. A breakout above this could see the shares climb to $180, where investors may consider profit-taking near historic highs from 2021 and 2022.