Eli Lilly & Co. (LLY) opened sharply lower this morning. As a technical analyst I get to let others ponder the company news that produced this downside price gap. Above my pay grade as they say. The charts may help us to go forward on what to expect and what to worry about.
In this daily chart of LLY, below, we can see that prices broke below all the lows this year -- the March low, the June low and the recent November low. The slope of the both the 50-day and the 200-day moving averages were already pointing down.
The On-Balance-Volume (OBV) line has been declining for the past two months, signaling that sellers have been more aggressive with heavier volume being traded on days when LLY has closed lower. The MACD oscillator has been below the zero line since mid-October and the two lines/averages of the oscillator just crossed to a new sell signal.
In this three-year weekly chart of LLY, below, we can see that the 40-week moving average line has been declining for months. The OBV line has also been in a downtrend.
Last, the MACD oscillator on this weekly timeframe has slipped to a new sell signal.
Support? $65 is a possible support level and so is the $60 level. Maybe LLY rebases in the $65-$60 area. Time will tell, but a weekly close below $70 will turn the $70-$75 area to resistance. After a peak in 2015 above $90 it will probably take several months of base building before LLY looks better on the charts.