Are Elan, Pfizer, Lilly and J&J Buys After a Failed Drug Test?
Friday or early next week will likely find bargain hunters picking up shares cheap to flip over. If Thursday appears to be closing below Wednesday's low, I may join with the bargain hunters for a quick hit-and-run weekend carryover. LLY data by YCharts
Bargain hunters and short-sellers covering positions could push the price up about 50% to 60% in relation to the gap-down price. Looking at the chart, I expect short-term resistance for Elan near $12.75, Pfizer at $24, Johnson& Johnson at $68.50. Round numbers often attract like a price magnet and repel, causing a bounce.Expect a lot of Elan volume to trade near $11.50 a share Tuesday, but also be prepared for a closing under the opening price, and more than a 25% chance of a close under $11.50. PFE data by YCharts
If you are scrutinizing today's drop to signal a buying opportunity, you are likely going to find the end of the day Wednesday or Thursday better than Tuesday. There is no hurry buying the dip with ELN. Stocks dumping as a result of failed tests usually take a full month or two to recover, and only if no other disappointments are announced in the meantime.
Johnson & Johnson is so large and diverse that this speed bump will not likely stick in the memories of investors for long. Pfizer may take a breather from the rocket ride higher, but I expect bargain hunters to jump on board near $22.65 and lower, if it even makes it down that far.