Illumina Inc. (ILMN) was rated outperform (buy) by a sell side firm here on Wednesday. I looked at shares of ILMN on Nov. 14 and wrote, "Traders could probe the long side of ILMN on a pullback or correction to the $220 area. Risk to $202." It looks like our recommendation could be stopped out with a loss very soon, so let's check out the charts and indicators of the provider of genetic analysis products again.
In this updated daily bar chart of ILMN, below, we can see that prices did pull back to the $220 area in late November to give us a better entry level, but prices have continued to decrease and are close to our $202 sell stop. Prices are back below the 50-day moving average line and still below the 200-day line. The On-Balance-Volume (OBV) line has continued to move in a downward path, telling us that sellers of ILMN have remained more aggressive than buyers. The Moving Average Convergence Divergence (MACD) oscillator is now crossing the zero line on the downside for a sell signal.
In this weekly Japanese candlestick chart of ILMN, below, we see a weak picture, unfortunately. Prices are in a longer-term decline and trade below the bearish 40-week moving average line. The candles are not encouraging. The weekly OBV line has turned lower from mid-October. The MACD oscillator is narrowing, which tells me that the trend strength is weakening.
In this daily Point and Figure chart of ILMN, below, we can see a downside price target in the $157 area.
In this weekly Point and Figure chart of ILMN, below, we can see the same downside price target as shown on the daily chart - $157.
Bottom line strategy: Maintain sell stop protection as per our original buy recommendation. If we are stopped out, we are stopped out. Not every trade is a winner.
