A sell side firm has named the life science firm Illumina (ILMN) a new top pick (overweight) with a $320 price target. Let's check out the charts of ILMN to see if the charts are in gear with the fundamental story.
In this daily bar chart of ILMN, below, we can see that prices made a long and bumpy decline the past 12 months to a low in July. Prices rebounded into August but show some short-term weakness. Prices have been crisscrossing the 50-day moving average line. The slope of the 200-day line is negative.
The On-Balance-Volume (OBV) line shows a decline into July and a retest of the July low in August. The Moving Average Convergence Divergence (MACD) oscillator is slightly above the zero line.
In this weekly Japanese candlestick chart of ILMN, below, we can see a hammer bottom reversal pattern in early July. This pattern marked the low in ILMN but it tells us nothing about a price target or how long a low may endure.
The slope of the 40-week moving average line is negative and the weekly OBV line has declined to a new low in early August. This OBV move may foreshadow new price lows in ILMN.
The MACD oscillator has crossed to the upside for a cover shorts buy signal.
In this daily Point and Figure chart of ILMN, below, we can see a bearish price target in the $157 area. A trade at $190 is needed to refresh the downtrend.
In this weekly Point and Figure chart of ILMN, below, we can see a potential upside price target in the $361 area.
Bottom line strategy: Aggressive traders could look to probe the long side of ILMN in the $200 area risking to $175 for now. The $275-$300 area is our price target for now.
