Illumina Inc (ILMN)

Company. Illumina "develops tools for the large-scale analysis of genetic variation and function, the results of which will pave the way for personalized medicine, a key goal of genomics and proteomics. Our technology platform also extends to other applications such as high-throughput screening of pharmaceutical compounds and chemical detection." (company website)

Buy. I bought ILMN just before Thanksgiving in a test of the holiday strategy of investing. The theory is that markets always take a breather the day before a major holiday, and one way to make money is to buy stocks on that day and hold through the end of the year. Obviously this depends on the stock you buy; an ETF (exchange traded fund, a fund that trades like a stock on Amex) that emulates a major index would probably be a better way to apply the theory than an individual stock. But when you're feeling pretty cocky, as I was at that time, sitting on nice YTD gains, you don't always think of being prudent.

Sure enough, in the week after Thanksgiving, ILMN reached new heights, only to return to where I started with it. Fortunately, it didn't sink below that level.

What I chose to ignore (I'd like to think) was the four trading days in early December highlighted in white. Yellow and red flags were waving furiously. On 3-Dec, ILMN opened up $1 from the previous close and then lost most of the gain. The following day ILMN opened slightly up and then moved only lower. ILMN was up on 5-Dec on respectable volume, but gave it all back the next day on even heavier volume. This is not the pattern of a stock that is going to move higher!

Sell. Today opened up, but ILMN began to slide back down, getting below the body of yesterday's candle. In an abundance of caution, I decided to sell. I've made a tidy profit, and ILMN is a high-risk stock in a high-risk industry. Note the extremely low volumes in the weeks before I bought; at that point,average volume was less than 80K shares. Also, the company has lost money for the past four years. Earnings are due out next week.

Yes, this is truly a time to remember the old bird in the hand logic.