Market Gap-Up Trends: Unlocking Momentum Opportunities in NVO, LLY, and SPOT

Momentum traders thrive on volatility, and nowhere is this more evident than in the recurring gap-up patterns of high-momentum stocks like Novo Nordisk (NVO), Eli Lilly (LLY), and Spotify (SPOT). These stocks have exhibited distinct behaviors around earnings reports, drug trials, and market sentiment shifts, creating actionable entry points for those who understand how to read the signals. Let's dissect the data and uncover strategic positioning opportunities.

NVO: A Tale of Earnings-Driven Gaps and Rebound Potential

Novo Nordisk has been a rollercoaster for traders, with its stock price swinging wildly in response to earnings and drug developments. In August 2025, NVO surged +7.4% the day after its earnings report, despite a year-to-date decline of -35.79%. This gap-up occurred amid a broader sell-off in the sector, suggesting a potential short-term rebound.

Historically, NVO has shown a pattern of post-earnings gaps, such as a +8.5% jump in January 2025 and a +17.2% surge in August 2023 following positive trial data. These moves often coincide with the stock testing key Fibonacci levels or 52-week lows. For example, NVO's current price of $53.75 is just 5% above its 52-week low of $45.05, making it a candidate for a gap-fill rally if it breaks above the $56.34 level (a recent intraday high).

Actionable Insight: Consider a bullish breakout strategy if NVO closes above $56.34 with strong volume. A stop-loss below $53.00 could protect against further declines.

LLY: Navigating Earnings Volatility and Support Levels

Eli Lilly's stock has been a mixed bag in 2025, with a -7.26% annual return despite strong fundamentals. A bearish gap in early August 2025—despite better-than-expected earnings—signals weakening momentum. However, LLY's 52-week high of $972.48 and current price of $711.68 suggest a potential gap-fill opportunity if the stock regains confidence.

Key support levels at $637.10 (Fibonacci extension) and $641 (50% retracement) are critical. If LLY holds these levels, a rebound toward the $738 gap could materialize. Conversely, a breakdown below $623.78 (52-week low) would signal further weakness.

Actionable Insight: Use a straddle strategy around the $711.68 level, buying calls if LLY breaks above $738 and puts if it falls below $637. This hedges against both gap-fill and breakdown scenarios.

SPOT: A Post-2022 Rebound and Momentum Reacceleration

Spotify's stock has surged in recent years, with a 49.05% annual return in 2025 and a 52-week high of $785.00. However, its 2022 collapse (-66.27%) created a $319.07 to $71.05 gap that remains unfilled. The stock's current price of $666.81 is 17.7% below its 52-week high, suggesting a potential pullback to test the $528.54 average price.

SPOT's momentum is driven by its dominance in the streaming sector and recurring revenue model. A break above $785.00 could trigger a retest of its 2025 high, while a drop below $528.54 would signal caution.

Actionable Insight: For aggressive traders, a long position at $666.81 with a target of $785.00 and a stop-loss at $528.54 could capitalize on the gap-fill potential.

Strategic Positioning for Momentum Traders

1. NVO: Focus on post-earnings gaps and Fibonacci retracements. A breakout above $56.34 could signal a short-term rally.
2. LLY: Monitor support levels at $637.10 and $641. A straddle strategy balances risk and reward.
3. SPOT: Look for a retest of the $528.54 average price as a potential entry point for a long-term hold.

Conclusion

Gap-up patterns in NVO, LLY, and SPOT reveal a mix of opportunities and risks. While NVO and SPOT show potential for rebounds, LLY's bearish gap demands caution. Momentum traders should prioritize volume confirmation and key technical levels to time their entries. As always, position sizing and stop-loss orders are critical to managing risk in these volatile plays.

By dissecting these recurring patterns, traders can turn market volatility into a strategic advantage—just don't forget to anchor your trades in the data.