Why I Am Long Pfizer and Not Eli Lilly

Pfizer and Eli Lilly are two major pharmaceutical companies, but from a technical and risk/reward perspective, I currently prefer Pfizer stock.

The main reason is simple: I would rather look for the potential beginning of a new trend than buy the later stages of an already extended trend.

Eli Lilly: An Extremely Extended Long-Term Trend

The long-term trend in Eli Lilly stock is very old.

The major trend essentially started around 2009, and since then the stock has spent a very long period trending higher.

That isn’t necessarily bearish. Eli Lilly could still make new all-time highs and continue higher.

The problem is what can happen after an extended trend.

Looking back at historical market structures, long trends are often followed by long periods of sideways price action. Instead of continuing to trend strongly higher, the market can enter a multi-year trading range.

That means buying late in an extended trend can create a very different risk/reward profile.

Even if Eli Lilly continues to make new highs, a large portion of the major move has already happened.

The question I ask myself is:

Why buy late in an extremely extended trend when another stock may offer an opportunity much closer to the beginning of a potential new trend?

Pfizer: A Potential Turnaround Story

This is where Pfizer becomes interesting to me.

Pfizer is much more of a turnaround story after a major correction.

On the monthly timeframe, I see an important sequence of:

• A major higher high
• A higher low
• Another higher high
• The potential formation of a new higher low

If that structure develops as expected, Pfizer could potentially be entering a new phase of its long-term trend.

There are obviously many possible paths from here.

The stock could move toward the previous high, consolidate, and then continue higher. It could also take longer to develop.

But the important part for me is the location of the trade.

I’m not buying at the highs of an extremely extended trend.

I’m buying around a potential higher-low area.

Why I Bought Pfizer

The setup I was looking for was a test of the lower part of the range followed by a higher-low rejection.

That’s what I saw.

I entered around $25.50 and also shared the trade with my Patreon members.

I took a separate short-term swing position as well, but that’s a different trade.

For the longer-term position, I’m looking at this as a potential swing toward the previous highs and potentially much higher over time.

My longer-term target is the possibility of Pfizer reaching triple digits, although that would require the new trend to develop successfully.

Risk/Reward Is the Main Reason

This isn’t about saying that Pfizer is guaranteed to outperform Eli Lilly.

Eli Lilly could continue making new highs.

The difference is where I want to take my risk.

With Eli Lilly, you’re buying into a very mature and extended long-term trend.

With Pfizer, you’re potentially buying near the beginning of a new trend after a major correction.

That’s a completely different setup from a risk/reward perspective.

The Main Lesson

The main idea behind this trade is something I use across markets:

I want to buy the potential start of a new trend rather than the end of an existing one.

An extended trend can continue for longer than expected, but eventually the market needs to digest the move.

That digestion can take the form of a large trading range lasting years.

I don’t necessarily want to be the person buying right before that happens.

Instead, I’m looking for situations where the previous trend has already corrected significantly and the technical structure starts showing signs of a potential new trend.

That’s why I’m currently long Pfizer and not looking to go long Eli Lilly.

Educational content only. Trading involves substantial risk. The setup grade and outcome described here are specific to my plan, sizing, and risk tolerance. Do your own work.