Illumina (ILMN) May Be Ready to Turn Higher

03/01/2010 10:49 am EST


I've been watching ILMN for a few weeks after it had a huge move late in 2009 and into early this year. ILMN was able to rally from the mid $20s to the $40s in less than a month. Interestingly, the rally halted immediately as it almost filled a bearish gap from late October. While it was disappointing that ILMN couldn't follow through with a break to new highs, the action after that rally has been healthy.

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ILMN has been consolidating in a fairly tight five-point range since then and appears to be holding the 200-day moving average as support. ILMN may be on the way to retest the $40 level as buyers have been consistently stepping in at the bottom of this range. While that would be a decent trade from these levels, it would get really interesting if ILMN cleared the $41 level. If that occurred, it would not be a surprise if it squeezed some shorts and rallied to new all-time highs. Currently, that all-time high is just above $47. A close below $35 would be a sign of weakness and a likely time to reconsider.

By Joey Fundora, trader and blogger, Downtowntrader Blog

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