What does Jim Cramer think about Eli Lilly & Co. (LLY) ?
"I would start a position right here, and buy more under $100," said Jim Cramer, responding to a caller during Monday night's "Mad Money" program's Lightning Round.
A move below $105 would break a support level, in my opinion, so let's check on the charts of LLY today.
In this daily bar chart of LLY, below, we can see a small top pattern in March and early April. Prices declined through April, and then went sideways into early June when the weakness resumed.
LLY is now trading below the declining 50-day moving average line and the cresting 200-day line. The On-Balance-Volume (OBV) line has been drifting lower since late March and suggests that sellers of LLY have been quietly and slowly more aggressive. The Moving Average Convergence Divergence (MACD) oscillator has been below the zero line since the middle of April.
In this weekly bar chart of LLY, below, we can see that prices are below the cresting 40-week moving average line. There is a huge volume spike or surge right at the top of the price chart. The weekly OBV line has been in a sharp decline from February which tells us that sellers of LLY have been more aggressive. The Moving Average Convergence Divergence (MACD) oscillator is now below the zero line giving us an outright sell signal.
In this Point and Figure chart of LLY, below, we can see that a trade at $104.44 should weaken this chart and open the way to a downside price target in the $95 area.
Bottom line strategy: LLY may be an excellent company that should be bought, however, with prices in a downtrend with a $95 price target I would defer purchases until prices hold.