To say that Moderna (NASDAQ 🙂 was the top-performing stock of COVID-19 vaccines of the past year would be a laughable understatement. Shares of AstraZeneca (NASDAQ 🙂 were up 0.25% over the period; Pfizer (NYSE 🙂 added 3.1% value. But Moderna blew them all past and rose 687%.
Yesterday we noted that Pfizer's technical chart suggests there could be a sell-off. Today we are offering both bullish and bearish setups for Moderna as the biotech stock has reached a tipping point based on its technical factors.
But perhaps the most important fundamental question is why Moderna stocks have outperformed the competition so overwhelmingly?
The efficacy figures tell the story. Moderna & # 39; s vaccine showed 95% effectiveness in the prevention of coronavirus and was 100% effective when used to combat severe cases of the virus
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Based on those results, 30 countries approved the use of the Moderna vaccine. The Cambridge, Massachusetts-based company has already made $ 2.89 billion and is expected to receive another $ 11.7 billion this year from this vaccine alone. But that's just the beginning.
The biotech is now conducting clinical trials to extend the use of its vaccine to young children and adolescents. It also tests an adult booster shot, which can extend the efficacy of the immunization. If successful, it can also lead to additional, guaranteed annual income.
The stock has been trading in an upward channel since May, but broke through the channel top in November, hitting a record high of $ 178.50 on December 1
Moderna then corrected, losing 42.5% during the month, to December 31. The drop drove the price below the channel top on December 28. Then the stock managed to pierce the channel top a second time, on January 12, climbing again to January 15. Yesterday, the stock fell, but found support at the top of the previous channel.
The obvious question, of course, is what happens next? While we don't know, we can at least navigate probabilities.
On the face of it, this pattern seems to support the view that the new, steeper upward channel is intact and offers a buying opportunity, with the expectation that the price will bounce off the bottom of the new (green) channel to rebound it. to test. highest point ever as it continues to move along the ascending channel.
However, the congested range in which the price has risen by 21% just this month is of concern. It could be a developing rising flag bearish after the preceding 40 +% plunge in exactly one month. The diminishing volume amid the price advance increases the likelihood of that scenario.
But the location of the flag is also significant. It developed at the intersection of the former channel apex, the base of the potential new channel bottom at the 50 DMA and meets the downward trend line from the record high in December. All of this means that the price has reached a focal point and is set to an explosive move.
While the lagging MACD is still in a bullish cross since this month's rebound, the sensitive RSI is retesting its uptrend line after dropping below and recovering. In other words, the momentum is also on the edge of a knife, just as the price is in the eye of the storm.
A downward flag breakout would show a continuous drop from its all-time high on December 1, to retest the original channel bottom at $ 80. If the price breaks the down trend line (dotted red), and preferably through the flag top, would increase the chances of the record being retested.
Trading Strategies
Conservative Short: Wait for the second trough to establish a downtrend followed by a return.
Conservative Long: Awaiting breakout above the downtrend line followed by a dip showing support.
Moderately Short: Wait for a downward penetration of 3% (preferably, including a weekend), down 3 days, followed by a return movement.
Moderate Long: waiting for a breakout above the downtrend line.
Aggressive short: waits for a 2% downward breakthrough followed by a return, showing resistance.
Aggressive Long: Buy now, provided you understand and accept risk and prepare with a cohesive trading plan.
Here's just one example:
Trade Sample – Aggressive Long
Admission: $ 124
Stop Loss: $ 119
Risk: $ 5
Goal: $ 174
Reward: $ 50
Risk: Reward Ratio: 1:10
