SIA Charts’ relative strength rankings help investors identify opportunities in stocks which are outperforming their peers or index benchmarks on a relative basis. Outperformance often reflects improving investor expectations for strong company growth.
Today, we are going to look at Eli Lilly & Co (LLY) which we last commented on August 16, 2023, when the price of the shares were at $546.62. Now the shares are at $777.29 representing a 42% increase since our last commentary on the stock. Furthermore, when the shares first entered the Favored Zone of the SIA S&P 100 Index back in early April of last year at a price of $354.62, the shares have gained over 112% in a year’s time versus the S&P 100’s gain of approximately 31% over the past trailing 1 year time frame. The shares currently occupy the #4 spot in the SIA S&P 100 Index, up 16 spots in the last quarter.
In looking at the attached Candlestick chart of Eli Lilly & Co, we see that the shares trended strongly upwards over the last 4 years. However, in the past year, the shares picked up steam and have accelerated its uptrend indicating a much stronger accumulation phase. Most recently, it has pulled back slightly from its recent high near $800 to the $750.00 area. However, over the last few weeks, the shares have regained some of its footing inching its way back to the $800 area which will prove to be the next area of upcoming resistance. It will be interesting to see going forward, if the shares can break above this area of resistance and resume its upward trend to fresh all-time highs. The shares currently are exhibiting a positive bullish engulfing pattern.
In the attached Point and Figure Chart at a 2% Scale, we see the share’s strong rally starting in 2018 with a consistent pattern of a rising column of X’s, followed by brief pauses in sideways trading action and then another strong rally of rising columns of X’s. Most recently, the shares really accelerated starting in February of this year, then a brief pullback materialized in April where the shares found support at its 3 Box reversal level. A new rising column of X’s has asserted itself and the shares are at an important inflection point where it is testing its recent high at $795.15. If the shares manage to break above this level, the next area of resistance can be found at $913.38 and then, $1008.45 based on measured moves or which is approximately coinciding with the $1000 psychological round number. Support can be found at its 3 Box reversal level of $720.20 and, below that, the 50% retracement level of $692.23. With a bullish SMAX score (which is a near-term 1 to 90-day indicator comparing an asset against different equal-weight asset classes) of 10 out of 10, LLY is exhibiting short-term strength against the asset classes.
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