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Shares of pharmaceutical company Eli Lilly are moving well today. The stock is up more than 1.5%, putting it on the top five gainers list in the S&P 500. This impressive news inspired rally may prove to be the initial phase of a healthy rebound as LLY begins to leave behind a solid bottom near major support. 

LLY was cruising along nicely as April began. The stock had gained over 35% from its November 23 spike low and appeared ready to blow past its 2016 high. Just a week and a half into the month LLY took an ugly spill following disappointing news from the FDA. The stock opened the April 17 session with a huge breakdown gap immediately ending the rally with a clear take out of the lower band of a powerful four and a half week bull channel.

In mid May it appeared LLY was headed for more downside as the 200 day moving average began to give way. Despite the break further loses were very limited allowing shares to build a new base. The stock now has solid footing underneath and is a low risk buy on weakness. Patient investors should consider the stock a buy between $79.00 $77.50. This key zone includes the January high as well as the 200 day moving average. On the downside a close back below $77.00 would take out the May lows indicating the 200 day moving average remains a heavy overhead presence.

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