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Trading Moderna as It Hits All-Time Highs on S&P 500 Inclusion

Moderna shares are exploding to all-time highs Friday on word the stock will be included in the S&P 500. Here's how to trade it now.

Moderna  (MRNA) - Get Report has been running hot lately and the stock reached all-time highs on Friday.

The stock gained about 8% on the day, adding to this week’s gains of 20%. Shares were roasting higher in premarket trading and that momentum has continued despite a bumpy day in the stock market.

Moderna was rallying after being added to the S&P 500. Assuming it closes higher on the day, it will be the stock’s sixth gain in the last seven sessions.

Unfortunately, the climbing number of COVID-19 cases in the U.S. and abroad are likely acting as catalysts for Moderna, as well as Pfizer  (PFE) - Get Report.

It also likely helps that Johnson & Johnson’s  (JNJ) - Get Report COVID-19 vaccine may face an additional Food and Drug Administration warning. While not good for the world, it will likely help funnel more demand to Pfizer and Moderna.

In any regard, let’s look at the chart.

Trading Moderna

Daily chart of Moderna stock.

Daily chart of Moderna stock.

You don’t have to look at the chart for long to see a pattern with Moderna. Shares go on a big run, consolidate with a slight pullback, then rip higher to new highs.

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Or at least that’s been the pattern for most of this year, particularly after the breakout over $189.

Since then, Moderna has been riding its 10-day and 21-day moving averages higher - mainly the latter - and has been a strong trending play to the upside.

With Friday’s pop, however, I wouldn’t consider this the best buying opportunity.

Shares are struggling with the 261.8% extension of the June range, at $283.54. Being rejected by that level now, traders have to be a bit more nimble.

I am keeping an eye on the low of day, currently at $271.54. If that ends up being the low, look for a daily break of this mark - or whatever Friday’s low ends up being - which could put the gap-fill in play near $261.

A pullback could also put some of the short-term moving averages in play, like the 10-day.

On the upside, a push back through $283.50 puts Friday’s high in play, followed by a possible squeeze up toward $300.

After a powerful run, I am a bit concerned by the divergence on the Williams %R reading (blue circle), but I’m also not one to blindly short a strong move. For now, let’s keep an eye on Friday’s low as a tell.