Eli Lilly, $LLY, moved out of a sideways consolidation and into a rising channel over the fall. It ran against rising trend resistance into 2019 before breaking that to the upside in February. A strong sell off to start March saw it continue lower to retest the break out level and hold. Now it is moving higher and closing in on the prior high.
The RSI is in the bullish zone with the MACD positive and looking to cross back up. Short interest is high at 10.1%. There is no resistance over 130.75. Support lower comes at 126.60 and 123 then 119 and 117.50. The company is expected to report earnings next on April 30th. The stock pays a 2.01% dividend and it went ex-dividend last on February 14th.
The April monthly options chain shows the large open interest at every “5” tick on the put side from 110 to 125 with some as well at 130. The 120 and 125 calls are biggest in that expiry. The May 3 expiry, which is the first to cover the earnings date, just opened so has little activity. The May monthly options show the 125 call strike the only one with big open interest.
Eli Lilly, Ticker: $LLY
Trade Idea 1: Buy the stock on a move over 130.75 with a stop at 127.50
Trade Idea 2: Buy the stock on a move over 130.75 and add a May 3 Expiry 128/123 Put Spread ($3.60) while selling the June 135 Calls ($2.15).
Trade Idea 3: Buy the April/May 130 Call Calendar ($1.30) and sell the April 124 Puts ($1.00).
Trade Idea 4: Buy the May 130/135 Call Spread ($2.00) and sell the May 120 Puts ($1.40).
After reviewing over 1,000 charts, I have found some good setups for the week. These were selected and should be viewed in the context of the broad Market Macro picture reviewed Friday which heading into the last week of the 1st Quarter, sees equity markets have hit a speed bump.
Elsewhere look for Gold to resume its uptrend while Crude Oil continues higher. The US Dollar Index despite all the noise remains in a broad consolidation while US Treasuries are breaking higher. The Shanghai Composite continues in the uptrend while Emerging Markets fall back into consolidation.
Volatility looks to remain low but building putting some pressure on the equity index ETF’s SPY, IWM and QQQ. Their charts are showing some divergence with the IWM pulling back in a short term trend reversal while the SPY holds and consolidates and the QQQ continues to higher highs. Use this information as you prepare for the coming week and trad’em well.
The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.