Jim Cramer tells Real Money readers we saw a "jailbreak" moment Thursday that set free a breadth of stocks, signaling more good things to come.
The first news was the FDA approval of Eli Lilly's (LLY) latest drug for Alzheimer's. While the news was widely expected, it's another feather in the cap of Lilly, which has seen its shares rise 38% so far this year.
Let's check out the charts today.
In the daily bar chart of LLY, below, we can see that the shares made a bull flag pattern this month. The sharp rally in early June on heavy volume was the "pole" and the pullback on light volume was the "flag" drooping in the wind. Thursday's rally looks like the resumption of the uptrend. The distance traveled by the "pole" should be repeated now. The slopes of the 50-day and 200-day averages are positive.
The daily On-Balance-Volume (OBV) line has been strong since early December and its rise confirms and supports the price gains we have seen this year. The Moving Average Convergence Divergence (MACD) oscillator is bullish and crossing to the upside now for a fresh buy signal.
In the weekly Japanese candlestick chart of LLY, below, we can see that prices and indicators are in gear on the upside. LLY is in a long-term uptrend above the rising 40-week moving average line.
The weekly OBV line is in an uptrend and the MACD oscillator crossed to the upside in early June for a new buy signal.
In this daily Point and Figure chart of LLY, below, we can see a nearby price target of $242.
In this weekly close-only Point and Figure chart of LLY, below, we can see a potential price target of $353.
Bottom-line strategy: We last reviewed the charts of LLY back on Feb. 23 where we saw a pullback before renewed gains. LLY declined into late April before rallying to a new high Thursday. Add to longs or go long LLY at current levels. The round number of $300 is our first price objective with $353 after that. Risk to $205 for now.