Shares of Eli Lilly ( LLY - Get Report) are surging today. The stock is up over 3.5% and is headed for a sixth straight gain. Today's powerful news-inspired ramp has driven the stock back up to a very heavy resistance zone.
If Eli Lilly can blow through the $79 area, the stock has plenty of room to run on the upside.
In mid-April, Eli Lilly's sharp rebound off the March low ran out of steam as it began to pierce $78. The stock pulled back in early May before mounting a new rally leg. Two weeks later, the stock stalled again near the $78.50 area, leading to another pullback. From mid-May until late last week, Eli Lilly drifted steadily lower on very light trade, putting in a lower monthly low in the process.
Just as the Brexit panic hit the market, Eli Lilly was beginning to attract buyers. On Friday, the stock opened with a gap-lower open, but by the close it was safely in the green. This extremely divergent action vs. the S&P 500 was an important tell. As this week began, Eli Lilly put in a higher low and has been improving since.
In the near term, Eli Lilly investors should consider the stock a low-risk buy on weakness. A very solid layer of support is in place between $76.25 and $75. If the stock needs some back and fill action before clearing the heavy resistance near the April/May highs and 200 -ay moving average, patient bulls should take advantage.