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Actionable news in LLY: ELI LILLY & CO.,

Eli Lilly (LLY) Stock Could Rally Short Term, Long-Term View Bearish

NEW YORK (TheStreet) -- We are conflicted. The short-term chart of newly initiated Action Alerts PLUS holding Eli Lilly (LLY - Get Report) suggests further gains into the end of the year, but the longer-term picture for LLY indicates that declines might lie ahead.

The short-term view of LLY, above, presents some negatives. We can see, for instance, that LLY broke support around $79, but it has managed to rally back to its 50-day moving average. The On-Balance-Volume (OBV) line peaked in July and has been eroding since. It would be nice to cite a bullish divergence, but we don't have one vs. the momentum study. What LLY has going for it is a pretty strong fourth quarter rally for the overall market and a biopharmaceutical industry that could manage to carry it along for a rally towards $90.

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However, the longer-term perspective on LLY, above, points to problems ahead, in our opinion. LLY had been climbing nicely above the rising 40-week moving average until now, and has begun testing that average. A close below the 40-week moving average at some point would be a negative. Note that the OBV line has been...