Two stocks worth following in April
By Paul Reid
13 April 2023
Sometimes it’s easy to get stuck with a small selection of stocks on your watchlist. It actually makes sense. To trade stocks requires research, and trading 20 different stocks at one time is difficult… it’s hard to stay current on so many.
Two stocks are back on trader’s radars that may be gearing up for something very interesting. Let’s see if they are a good fit for your portfolio.
Johnson & Johnson shares outlook before the earnings
Shares in Johnson & Johnson (JNJ) have been trading in a bearish momentum throughout the first quarter of 2023, but now we are seeing a correction to the upside in recent sessions.
The company is expected to report its earnings for the fiscal quarter ending March 2023 on Tuesday, 18 April, before market open. The consensus EPS is $2.50 (USD) compared to the result for the same quarter last year of $2.67.
Johnson & Johnson has been paying dividends since 1972 and is one of the very few companies to do that for such a long period of time. This suggests that investors buying shares are in for the long term, and with a payout ratio of more than 60% and a dividend yield of more than 2.70%, the commitment of the company towards its shareholders is clear.
On the technical side, the price has been trading in a downward movement throughout Q1, but it has rebounded significantly, making back almost 50% of the losses incurred in the first 3 months.
The price is currently trading outside the Bollinger bands, indicating great volatility in the market. The $166 level was a strong technical resistance area since it consists of the 50% level of the daily Fibonacci retracement and also the 100-day moving average.
With the Stochastic oscillator recording overbought levels and with the strong technical resistance still in play, we might see some minor correction to the downside prior to the earnings release. If this is the case, then we might see some support around the $157 price area, which consists of the crossing of the 50-day moving average on the 23.6% level of the Fibonacci retracement.
Banking turmoil took its toll on Bank of America’s shares
Bank of America Corporation (BAC) share price was trading in a slightly upward trend because of the bank failures that hit mainstream media and drove BAC down.
The company is expected to report its earnings for the fiscal quarter ending March 2023 on Tuesday, 18 April, before market open. The consensus EPS for the quarter is $0.80 compared to $0.80 during the same quarter of last year.
Bank of America was affected by the banking turmoil in early March that resulted in pushing share prices down by more than 25%. Since 31 December 2022, the current ratio of the bank has been at 78%, meaning that they do not have the ability to repay their short-term liabilities with the assets currently in possession. This could be seen as a red flag by potential investors and traders.
From a technical analysis perspective, the price moved in a sideways momentum over the last couple of weeks after the consecutive bank failures. Clearly, investor confidence is still not regained, despite measures from central banks.
Currently, the price is facing resistance on the 20-day moving average, while the Stochastic Oscillator is at the overbought level.
The Bollinger bands are contracting, showing dried-up volatility in the market. The $29 price area is a strong resistance since it is made up of the 23.6% level of the daily Fibonacci retracement, and also the area where the price failed to break above since mid-March.
Two stocks offering potential trading opportunities, but they are not alone. We’re going to see a lot of surprises due to the coming financial downturn, so be sure to dig deep into JNJ, BAC, and other stocks before trading. How do the charts look right now?
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This is not investment advice. Past performance is not an indication of future results. Your capital is at risk, please trade responsibly.
Paul Reid is a financial journalist dedicated to uncovering hidden fundamental connections that can give traders an advantage. Focusing primarily on the stock market, Paul's instincts for identifying major company shifts is well established from following the financial markets for over a decade.
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