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Moderna Shares Are 40% Off the Highs. Buy the Dip.

Moderna stock has fallen hard, dipping 40% from this month's high to the recent low. The charts show an opportunity for investors.

Moderna  (MRNA) - Get Moderna, Inc. Report recently has been hammered. The shares are up about 2.5% on the day after they fell as much as 4% at Tuesday’s low.

And that follows the 9.7% drubbing they took on Monday. Coming into Tuesday, Moderna shares had fallen in five of the prior six sessions and in eight of the prior 10.

If we zoom out a bit, the stock is down for three straight weeks. 

Ironically, so is Pfizer  (PFE) - Get Pfizer Inc. Report, the other leading Covid-19 vaccine maker.

But Pfizer is a bit less volatile than Moderna as it sports a peak-to-trough decline of about 15%. For Moderna, that figure stood at 40% as of this morning’s trading.

For me, I like to start looking at previously strong stocks when they are down about 40%. In my experience that tends to be a wash-out level and can at least get us looking at a stock after a hefty pullback.

Trading Moderna Stock

Daily chart of Moderna stock.

Daily chart of Moderna stock.

Moderna has been a volatile and tricky name to play, but most of the bias has been to the upside. In other words, the bulls have been able to simply buy, hold their breath and exhale profit.

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They did get a few warning signs over the course of December, though.

First was the massive fade from the Dec. 1 high, which ultimately set its all-time high up at $178.50. The shares had climbed 20% in the prior session and gained as much as 17% that day -- before closing 7.7% lower.

The ensuring rally petered out at $170, as the bulls didn’t have enough strength to retest the prior high. Then the 10-day moving average and $144 level gave way as support. Worse, both became resistance.

To me, that last bit — where support turned to resistance — was the turning point. It happened over four trading sessions, so it wasn’t an instance of the bulls being too slow to sell. It was an instance of being too stubborn.

In any case, we could be hitting a point where Moderna needs to relax on the downside.

The shares traded down into the 50-day moving average on Tuesday, where buyers promptly bid it up off the lows. Further, Moderna stock filled the last of its major gaps on the chart, at $109.29.

If Moderna closes below Tuesday's low, it puts $103 on the table. Below $103 and a retest of the July high near $95 is possible. 

Below that and the 100-day and 10-month moving averages may be in play, currently near $88 and $80, respectively.

Should current support hold, bulls will be looking for a move back to the 161.8% extension at $120.55, as well as this week’s high at $122.88. Above will put the 10-day moving average in play.