Eli Lilly & Co (LLY) posted a second-quarter beat Tuesday driven by Mounjaro, the firm's diabetes injection, and future growth products. It seems that Mounjaro is waiting for weight loss approval.
Let's check LLY's charts and indicators.
In the daily bar chart of LLY, below, I can see a huge upside price gap as traders and investors reacted to the latest news from Lilly. Part of this price may be filled but you have to respect the sheer size of the move. LLY is trading above the rising 50-day moving average line and above the rising 200-day moving average line.
The trading volume has weakened the past three months or so as the shares moved sideways. Trading volume should be very strong Tuesday. The On-Balance-Volume (OBV) line has been strong since early March but turned neutral the past five weeks.
The Moving Average Convergence Divergence (MACD) oscillator is just slightly above the zero line but should turn to the upside for a fresh outright buy signal.
In the weekly Japanese candlestick chart of LLY, below, I can see that the shares have been in a longer-term advance the past three years. LLY trades above the rising 40-week moving average line.
The weekly trading volume has not expanded in the direction of the trend (up) but the weekly OBV line has moved in the right direction. The candles do not show us any top reversal patterns nor upper shadows.
The MACD oscillator has been above the zero line for the vast major of time in the past three years. Impressive strength.
In this daily Point and Figure chart of LLY, below, I can see Tuesday's rally with the price gap filled in. An upside price target in the $697 area. Let's round it up to $700.
In this weekly Point and Figure chart of LLY, below, the software yields a price target in the $711 area.
Bottom-line strategy: In
my June review of LLY I wrote that "traders should raise stops to $405 from $390. $500 remains my price target for now."
Today traders should raise stop loss orders to $465 from $390. I will not talk anyone out of taking some profits at $500. The round number of $700 is potentially the next longer-term price target.
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