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On the SPOT™ blog (05/01/2023) [L..]

This morning (PST) the markets appear to be mixed in that Dow and S&P seem slightly green and Nasdaq appears to be slightly red. In the focus was the news that First Republic bank got auctioned off to JP Morgan Chase and ISM reported manufacturing April number rose and was better than expected (it still showed Manufacturing GDP contracted but number seems to have improved compared to prior month). I think the focus will soon shift to the rate hike decision as FOMC meeting takes place this week.

Today, let's revisit Eli Lilly (ticker LLY) as it reported its quarterly results and appears to be a lot in the news lately related to its Mounjaro that is fast tracked at FDA for drug to reduce weight. In its most recently reported quarterly results, LLY missed on bottom line but did beat on the top line. It saw ~$1.5B decline in sales of its Covid-19 antibodies. Expenses seemed to have increased perhaps due to costs of new product launches and investment in manufacturing facilities. LLY also announced drastic price reduction to make insulin affordable and accessible for people with diabetes (If I remember this right, I think this is effective end of the year). However, LLY raised its revenue and earnings guidance for 2023 that is above estimates. We discussed LLY recently here when it has visited the discounted zone so let me skip over to gScores for trading insights.

LLY's overall gScore today is -0.4 and its micro-gScores are as listed below:

Price

1/10

RSI

-7/10

Bollinger Bands

-10/10

MACD

-10/10

KF

-9/10

OLS

-10/10

MFI

-3/10

Stochastic

-2/5

Options data

2/10

Analysts' recommendations

10/10

Sentiments score

-2/5

  • Price micro-gScore seems pretty low. Price rose this morning (PST) and the number of consecutive days that it has been rising, still appears to be in the bottom quantile. Current price appears to be in the top quantile of its last 52-week range

  • RSI is showing overbought level and rising. The number of days in overbought level appears to be in the middle quantile

  • Current price appears to be near its upper Bollinger band

  • MACD showed buy signal when the price was $315.02. The number of days in this +ve trend appears to be in the top quantile

  • KF is showing that current price is significantly above its "filtered" average

  • OLS model is showing that its 1Y and 5Y LS lines both have a +ve slope. This makes me feel confident in using dollar cost averaging when building a position in this stock. Current price appears to be well above both its 1Y and 5Y "expected" average

  • MFI is showing above average level and rising

  • Stochastic is showing above average level

  • Options data seems mixed in that its short ratio (<2.4) is healthy but its calls/puts with respect to current price appears to be bearish

  • Analysts' recommendations seem great

  • Sentiments score is somewhat -ve

So, LLY appears to be inching towards premium zone. This stock seems to be street's darling and is closer to its 52-week high. It still seems to have some more room to run so if I'm in it for the short-term then I'd consider taking profits if the price falls for two consecutive days. If I'm in it for the long-term then I'd hold. If/when the gScore gets back into the buy zone then I'd consider adding to my position or to get back in. If/when that happens with all micro-gScores in the +ve then I'd buy in small quantities over the rest of the year while keeping an eye on its quarterly results (to understand the impact of insulin price drop for next year) and FDA decisions to decide on the buy-quantity. You would obviously decide for yourself.

Below are the technical analysis charts for LLY as generated by Gammath SPOT:


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