Technical Trouble Haunts This Medtech Name

The shares of Illumina, Inc. (NASDAQ:ILMN) got a kick from this week's broad-market rally, surging 9.5% on Tuesday to mark its biggest one-day jump since January. The stock looks to be erasing some of these gains during today's trading, last seen down 2.5% at $212.91, and things could get even worse for the medtech concern, as this week's positive price action put the security back near a historically bearish trendline.

The trendline in question, ILMN's 120-day moving average, has only been toppled twice on a daily closing basis since September 2021. Looking back three years, there have been five other instances when the stock came within one standard deviation of this trendline, according to data from Schaeffer's Senior Quantitative Analyst Rocky White. One month later, the shares were negative 60% of the time -- including the two most recent -- averaging a 2.5% drop. A similar move from its current perch could put the security back near the $207 mark.

ilmn oct 6
ilmn oct 6

Analysts, meanwhile, are split on the equity. Of the 11 in coverage, five say "strong buy," and six say "hold" or worse. On the other hand, short interest is starting to rise, up 24.8% in the last two reporting periods, though the 4.37 million shares sold short make up a just 2.8% of the stock's available float.

Options traders have been incredibly bullish, though. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), ILMN sports a 50-day put/call volume ratio of 3.88, which stands higher than 80% of readings from the past year. In other words, options players are pricing in relatively low volatility expectations at the moment.