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Can Virgin Galactic Soar Into Orbit or Is It Coming Back to Earth?

Virgin Galactic stock was trading really well before the open of trading Monday but is now falling hard. What's the trade?

Virgin Galactic  (SPCE) - Get Report has been all over the place lately as it geared up for its big launch over the weekend.

Shares were trading higher by more than 20% at one point in Monday’s premarket trading session, nearly tagging its all-time high of $62.80.

It came after Richard Branson rode a flight into space on Sunday.

However, bulls are feeling a bad case of “sell the news” after the open, along with the company’s plans for a secondary offering. Shares have fallen about 15% on the day.

Virgin Galactic filed to sell $500 million worth of stock after the successful launch. As a mostly revenue-less young company at the cusp of its bigger picture journey, one can hardly blame it for raising some cash near the stock’s highs and after such a positive event.

Surprisingly, the stock isn’t suffering a ton of technical damage despite such a painful fall. At least not yet. Let’s look at some key levels.

Trading Virgin Galactic

Daily chart of Virgin Galactic stock.

Daily chart of Virgin Galactic stock.

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The stock is currently setting up in a bull flag pattern, although it’s cracking below a number of key measures. Among them includes support near $43 - which is the low over the last two weeks - as well as the 21-day moving average.

However, there are still a few key levels to keep an eye on.

The first is $41.66. That was the gap-down level from February, which went unfilled until late June. Further, this level was acting as resistance until Virgin Galactic gapped over this mark and made multi-month highs.

Usually a gap-fill level does not get this much attention. Only now it’s also the gap-fill mark on the downside from June. Will it now act as support? That’s the hope among bulls.

However, if this level fails to support the stock, that will have investors looking for a test of channel support, as well as the 10-month moving average.

While volatile, the moves with Virgin Galactic stock do tend to be very technical. “If this, then that,” is very applicable in this case.

On the upside, I want to see a move back above the 21-day moving average and the $43 level. That will put the 10-day moving average back on the table, followed by channel resistance.

Over $52.50 and a retest of the highs near $57.50 could be in play.