Shares of drugmaker Eli Lilly (LLY) got a price target bump by Mizuho on the strength of weight-loss drug tirzepatide. I need to lose about 15 pounds, but I am working on it without taking another drug. Let's check out the charts and indicators.
In this daily bar chart of LLY, below, we can see a weakening picture. Prices are pulling back after a short-term bounce, following a deeper April correction. LLY is getting close to a test of the rising 50-day moving average line. The rising 200-day moving average line intersects down around $260 and it could be tested in the weeks ahead. The last test of the 200-day line was in February. The On-Balance-Volume (OBV) line has moved sideways since August and has failed to confirm the price gains. The Moving Average Convergence Divergence (MACD) oscillator is pointed down towards the zero-line.
In this weekly Japanese candlestick chart of LLY, below, we can see that prices tripled in the past three years. LLY is pulling back but still stands above the rising 40-week moving average line. The weekly OBV line is different from the daily line. Here the line shows a bullish rise for the past three years. The MACD oscillator is above the zero-line, but narrowing toward a potential bearish crossover.
In this daily Point and Figure chart of LLY, below, we can see a potential upside price target in the $475 area. A trade at $276 could begin to weaken the picture.
In this weekly Point and Figure chart of LLY, below, we can see the same $475 target as the daily chart.
Bottom line strategy: In our April 28 review of LLY, we recommended that, "In the short run the better-than-expected numbers from Lilly may keep the stock buoyant, but the divergences noted above tell me to at least be cautious or even defensive going forward." Traders should be more cautious on LLY now. Take profits and raise stops on any remaining longs to $275 from $271.
