To circle back to an often-discussed and relevant issue of drawing trend lines in technical analysis, it is much more of an art than a science. Rather than draw the magical voodoo on the chart that will make you rich, the idea is to capture the character of the market at any given time. In the case of Johnson & Johnson, you might draw your trendlines differently than I have on the monthly chart below. However, the character of the chart is that it has, by and large, been working sideways for about a decade.
The attempted breakout to new highs in 2008 was ephemeral and quickly met with a crash to multi-year lows. Since then, price recovered and grinded sideways. Thus, the elusive diamond consolidation pattern appears to be in play, especially given the strength we have seen out of JNJ over the past two months.
Long-time readers of mine know that I avoided the 2010 “Flash Crash” after identifying the prior diamond topping pattern on the major index charts in late-April of that. However, the diamond is not always a bearish topping pattern. In fact, on long-term charts of secular bull runs it tends to be a mere consolidation pattern (albeit a particularly tedious one) that eventually resolves much higher.