Illumina, Inc. (NASDAQ: ILMN)

Illumina, Inc. provides sequencing and array-based solutions for genetic analysis. The company’s sequencing by synthesis technology provides researchers with various applications and the ability to sequence mammalian genomes. It also offers arrays for a range of deoxyribonucleic acid and RNA analysis applications, including single nucleotide polymorphism genotyping, copy number variations analysis, gene expression analysis, and methylation analysis, as well as allow for the detection of known genetic markers on a single array.

Take a look at the 18-month chart of Illumina (NASDAQ: ILMN) with the added notations:

18-month chart of Illumina (NASDAQ: ILMN)

Over the course of the past fourteen months, ILMN had tested the $130 level (red) as support on multiple occasions. Even though the stock had dipped below that mark in May, ILMN had always managed to hold the $130 level. However, last week, the $130 support broke, and now the stock should be taking another leg down.

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The Tale of the Tape: ILMN broke a key level of support at $130. A trader could enter a short position on any rallies up to or near $130 with a stop placed above the level. If the stock were to break back above the $130 level, a long position might be entered instead.

Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.

No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key!

Good luck!

Christian Tharp, CMT

Follow me on Twitter: @cmtstockcoach