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Here’s Where Moderna May Bottom After Earnings Rout

Moderna stock is getting pummeled after reporting earnings. The pain may not be over, so here's where I'd be looking to buy the dip.

Shares of Moderna  (MRNA) - Get Moderna, Inc. Report are dipped 19% on Thursday earnings missed expectations and it cut its projections for COVID vaccine sales.

After reporting before the open, the stock came under immediate pressure, but the selling has only gotten worse since the open.

We saw a post-earnings pop in Pfizer  (PFE) - Get Pfizer Inc. Report stock earlier month, but that stock has faded over the last few sessions. Johnson & Johnson  (JNJ) - Get Johnson & Johnson (JNJ) Report stock hasn’t exactly been a standout either.

Are the COVID vaccine stocks going to remain out of favor?

As one Real Money contributor said, buying Moderna stock now is akin to catching a falling knife. And he's right.

So where might this stock bottom? Let’s look at the chart.

Trading Moderna Stock

Daily chart of Moderna stock.

Daily chart of Moderna stock.

I hate looking for more downside in a stock that’s now down 45% from its all-time high made in August.

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With the stock’s post-earnings dip, Moderna opened just above the October low near $293.50.

Unlike Roku  (ROKU) - Get Roku, Inc. Class A Report — which ironically has an October low of $293.90 — Moderna did not give bulls a quick reversal trade to work with. Instead, it plunged below the October low and has been falling all day long.

Now I’m looking at the $255 to $261.50 zone. Why there?

There are actually several reasons. First, there’s an unfilled gap down at $261.22. Second, the 200-day moving average comes into play near this zone.

Lastly, it’s where we find the 161.8% downside extension from the “D” leg to the “C” leg in what’s now setting up as a five-wave “ABCDE” correction.

If that’s too much jargon, just know that if Moderna gets down into this area, there are several reasons why traders will consider a long position. 

If they are wrong and the stock keeps falling, bulls can bail with minimal losses.

The flip side is that Moderna stock bottoms before getting to this zone and rebounds higher. In that scenario, we’ll need to keep our eye on this one, to see if we can either get a reversal going or if the stock can reclaim last month’s low.