Shares of Eli Lilly and Company (LLY) have steadily gained relative strength over the past several months after slipping deep into the unfavored zone of the SIA S&P 100 Index Report in late 2024. During that period the stock moved dangerously close to a major breakdown as shares pulled back to the low $600s this past summer.
The current rally aligns with a meaningful improvement in relative strength across the Drug sector within the SIA Sector Report, where the sector has also advanced into the favored zone. With sector strength providing support and with LLY appearing in the favored zone of multiple SIA reports, the shares have produced a notable technical breakout on the point and figure chart with a move past $967.61.
This breakout gained additional momentum as the stock moved through the highlighted consolidation zone on the attached weekly candlestick chart. In this region the 21 week exponential moving average crossed back above the 40 week simple moving average. Three strong green weekly candles in late October and November, combined with a pickup in volume during a period of broader market unrest, have drawn renewed attention to the health care sector as a whole. They have also emphasized the stability and leadership of major drug stocks in particular.
LLY now carries a perfect SMAX score of 10 out of 10, reflecting exceptional relative strength across multiple vector readings measured against five alternative asset classes. This may be viewed as another strong near term indicator of growing relative strength.
The attached point and figure chart, scaled at 2% and using the SIA Matrix Overlay Tool, clearly illustrates the historical growth of LLY shares when they move into the green zone of the SIA S&P 100 Index Report. When LLY last entered the favored zone, the shares advanced from the low $200s to $900 with only brief pauses in the neutral zone. While not infallible, owning names that reside in the favored zone has been a rewarding strategy for advisors who work to identify alpha for their clients, and LLY appears to be a name worth adding to the watch list.
Support on the point and figure chart is currently located near $938.83, which represents the former resistance level from 2024 that has now been cleared. Additional support can be seen near $850.33. New resistance has been calculated using the point and figure vertical count methodology based on prior consolidation levels. These calculations identify $1,144.43 and $1,263.54 as notable upside objectives should the current rally get more legs.
From a news flow perspective, Eli Lilly has found an ally in President Trump, as the company recently reached an agreement to make its GLP‑1 weight‑loss drugs more accessible to patients. In exchange, Eli Lilly receives regulatory and tariff incentives, clearing some of the hurdles that other industries face, including slow approvals, trade barriers, and pricing challenges. The deal represents a notable collaboration between the government and the company to expand access to these treatments.
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