The stock has been above a golden cross since December 2019 and traded to an all-time intraday high today.
This high has been $68.49, above this week’s pivot at $65.08.
The Cambridge, Mass., biopharmaceutical company has a fast-track nod from the U.S. Food and Drug Administration for its coronavirus vaccine trial. For the details on this trial read this report on TheStreet.com.
The stock opened Tuesday at $65.99, having more than tripled year to date and in bull-market territory nearly six times its 52-week low of $11.54, set on Aug. 7, 2019.
The stock set its all-time intraday high of $68.49 this morning.
When trading speculative biotech companies, investors should remember that when a stock meets a milestone, it pops higher. If the milestone disappoints, the stock falls back to its pre-milestone range.
For Moderna the staging ground is between its 52-week low of $11.54 and its Feb. 10 high of $23.95.
Without continued new highs, this stock can decline back to its monthly value level at $37.82.
The Daily Chart for Moderna
Courtesy of Refinitiv XENITH
Moderna has been above a golden cross since Dec. 26.
This buy signal occurred when the 50-day simple moving average rose above the 200-day simple moving average. A move of this sort indicates that higher prices lie ahead.
The stock became a speculative buy at the 200-day SMA when it was $18.03 on Jan. 7. This tracked the stock to this morning all-time high of $68.49.
The stock is well above its monthly value level at $37.82.
Today the stock has been trading back and forth around its weekly pivot at $65.08.
The Weekly Chart for Modera
Courtesy of Refinitiv XENITH
The weekly chart for Moderna is positive but overbought, with the stock above its five-week modified moving average of $46.95.
The stock has not been publicly traded long enough to have a 200-week simple moving average.
The 12x3x3 weekly slow stochastic reading is projected to rise to 84.57 this week from 81.74 on May 8.
Back at its August 2019 low this reading was below 10, making the stock too cheap to ignore.
Today the reading is nearing 90. If the stochastic rises above 90, the stock would be in an inflating parabolic bubble and bubbles always pop.
Trading Strategy: Buy Moderna on weakness to its monthly value level at $37.82. The weekly pivot at $65.08 should remain a magnet this week.
How to use my value levels and risky levels:
The closes on Dec. 31, 2019, were inputs to my proprietary analytics. Semiannual and annual levels remain on the charts. Each uses the past nine closes in these time horizons.
Second-quarter 2020 levels were set established based upon the March 31 closes. The monthly level for May was based on the close on April 30.
New weekly levels are calculated after the end of each week.
New quarterly levels occur at the end of each quarter. Semiannual levels are updated at mid-year. Annual levels are in play all year long.
My theory is that nine years of volatility between closes are enough to assume that all possible bullish or bearish events for the stock are factored in.
To capture share price volatility investors should buy on weakness to a value level and reduce holdings on strength to a risky level. A pivot is a value level or risky level that was violated within its time horizon. Pivots act as magnets that have a high probability of being tested again before its time horizon expires.
How to use 12x3x3 Weekly Slow Stochastic Readings:
My choice of using 12x3x3 weekly slow stochastic readings was based upon back-testing many methods of reading share-price momentum with the objective of finding the combination that resulted in the fewest false signals. I did this following the stock market crash of 1987, so I have been happy with the results for more than 30 years.
The stochastic reading covers the past 12 weeks of highs, lows and closes for the stock. There is a raw calculation of the differences between the highest high and lowest low versus the closes. These levels are modified to a fast reading and a slow reading and I found that the slow reading worked the best.
The stochastic reading scales between 00.00 and 100.00 with readings above 80.00 considered overbought and readings below 20.00 considered oversold.
A reading above 90.00 is considered an “inflating parabolic bubble” formation that is typically followed by a decline of 10% to 20% over the next three to five months.
A reading below 10.00 is considered as being “too cheap to ignore” which typically is followed by gains of 10% to 20% over the next three to five months.
Disclosure: The author has no positions in any stocks mentioned and no plans to initiate any positions within the next 72 hours.