Trading in Eli Lilly and Company (NYSE:LLY)is quiet on Wednesday. This follows yesterday's drop of almost 6%. The move was driven by a downgrade. But the selloff may be over. A reversal could even occur. The shares are oversold and at support. These can be bullish dynamics, which is why Eli Lilly is our Stock of the Day.

As you can see on the chart, in April 2025 when Eli Lilly reached the $890 level, it hit resistance. A reversal and move lower followed. When this happened, many of the traders and investors who sold were glad they did.

But in October, the stock rallied. The resistance broke. Many investors who were happy when they sold changed their minds. They decided that selling was a mistake.

Many of these disgruntled sellers vowed to buy their shares back if they could eventually get them at the same price they were sold for. As a result of this, now that the stock has dropped back to this level, they will be placing buy orders.

If there is a large enough concentration of these orders, it could create support at the prior resistance level. This could put a floor under the price.

Eli Lilly is also oversold. This means it has been pushed below its typical or usual trading range. This could draw buyers into the market, and they could force the price higher.

The red line on the chart is two standard deviations below the 20-day moving average. According to statistics and probability theory, 95% of trading should occur within two standard deviations of the mean.

If a stock is below this threshold, like Lilly is, it is considered oversold.

The combination of reaching a support level while simultaneously being oversold means there is a good chance a stock reverses. Eli Lilly may be about to enter a new uptrend.