The last time I reviewed the charts of Eli Lilly & Co. (LLY) was a month ago, but a lot has transpired in the past four weeks. In January I wrote, "The long-term picture of LLY is bullish and I want to be a buyer. Investors could go long at current levels risking a close below $82 and traders should wait for a close above $88 before going long. The $100-$104 area is my price target."
That advice had its good and bad points. Investors who bought would have been stopped out on the decline this month while traders never got a close above $88 to go long.
How do the charts and indicators of Action Alerts PLUS holding LLY look now?
In this updated daily bar chart, above, we can see that from late January LLY skidded below the 50-day and the 200-day moving averages. The slopes of both these indicators are now negative. The volume of trading was heavy as prices fell and the On-Balance-Volume (OBV) line declined.
The Moving Average Convergence Divergence (MACD) oscillator fell below the zero line for an outright sell signal at the beginning of February and now the two moving averages are narrowing for a possible cover shorts buy signal.
In this weekly bar chart of LLY, above, going back four years instead of our normal three-year look-back, we can see that prices have broken below the now declining 40-week moving average line. The last time the 40-week line turned negative was in the beginning of 2016 and that did not play out well.
The weekly OBV line has dipped recently but the longer-term picture is still neutral. The weekly MACD oscillator has turned lower and could generate an outright sell signal if it crosses below the zero line.