LLY - Sell the Good News??
Updated
As compelling as the recent drug breakthrough may have been, it seems to have opened up an opportunity - time to short LLY stock?
Healthcare has shown a lot of strength in general this year, but has lately shown it can move independently of the market. For instance, during the August rally, it declined significantly. However, in this September slowdown, it has instead consolidated at nearly the same price level. You could view a short on this stock as a hedge to whatever you may be doing with the index.
LLY in general has been overvalued for a while, especially comparing to other healthcare stocks and even when accounting for future growth. However, a number of strong supports have formed as the stock has gone higher.
I think that a cautious short position would be good here, but pay close attention to the $320 and $300 level. It looks like it has rejected anything higher than the current levels (see bearish top wick & previous triple top.) There could be some news risk.
Healthcare has shown a lot of strength in general this year, but has lately shown it can move independently of the market. For instance, during the August rally, it declined significantly. However, in this September slowdown, it has instead consolidated at nearly the same price level. You could view a short on this stock as a hedge to whatever you may be doing with the index.
LLY in general has been overvalued for a while, especially comparing to other healthcare stocks and even when accounting for future growth. However, a number of strong supports have formed as the stock has gone higher.
I think that a cautious short position would be good here, but pay close attention to the $320 and $300 level. It looks like it has rejected anything higher than the current levels (see bearish top wick & previous triple top.) There could be some news risk.
Note
This is an irrelevant and old idea, but I am bringing it back from the grave because it was completely wrong. Not only was there basically no retracement on that move, but it only moved higher afterwards (about +30% from $330.) It did, however, manage to reach the super low $315 level in March 2023.This might help show the weakness of things like quadruple tops. Things like double tops have a very simple idea: it goes up, then down, then it goes further up to clear out order stops.
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