The broader market launched higher last week. But is now a good time to buy Virgin Galactic Holdings (NYSE:SPCE)? Let’s see what’s happening off and on the price chart of SPCE stock to determine if it’s an appropriate time for investors to suit up and climb aboard. Let me explain.
In today’s market environment, it seemingly doesn’t get any more risky than Richard Branson’s space transport pioneer Virgin Galactic. As bellwethers like the S&P 500 and NASDAQ Composite crashed on either side of 35% over the past month on the growing COVID-19 pandemic, shares of SPCE plummeted a staggering 79%. But it wasn’t always that way for the space tourism upstart.
Up until the coronavirus took full hold of U.S. markets, it had been a short but amazing ride for SPCE stock and its investors. Shares rocketed from an all-time low of $6.90 in late November to an all-time high of $42.49 by mid-February. The swift gain amounted to a more than five-fold return. Crazy, right? Maybe not.
Backing the rally in shares, enthusiasm over the outfit’s first-mover advantage in the race to space for civilians turned much more real after Virgin Galactic announced its first passenger launch by late 2020. Moreover, along with a solid financial position, seats fetching $250,000 a pop, and more than $80 million in advanced sales for this new breed of astronaut, SPCE stock teased Wall Street with the color of money and a business model built for growth.
SPCE Stock Weekly Chart
Source: Charts by TradingView
To be clear, SPCE stock is not a blue-chip investment for the portfolio like you’d find with Apple (NASDAQ:AAPL) or Home Depot (NYSE:HD). Still and especially for younger millennial investors with time on their side, Virgin Galactic’s positioning in this nascent industry could eventually lead to big-time returns for those buying shares today. And I’m not alone in thinking this as InvestorPlace’s Louis Navellier wholeheartedly agrees with the company’s prospects.
Technically, the decline in Virgin Galactic shares looks very promising. This past week SPCE stock confirmed a weekly doji decision candlestick, indicating its steep correction could be complete. As our illustrated weekly chart shows, the price action is also squarely overlapping Virgin’s two prior launches.
That’s attractive. From a contrarian point of view, the undercutting and subsequent reversal of this key level is bullish as it could act as a ‘reset’ in SPCE stock.
The correction’s sharp drop through the prior breakout points undoubtedly puts most past SPCE investors underwater. It’s also not a stretch to think most of those Virgin Galactic holders also threw in the towel during the move lower. If we’re right, this sequence means there’s far less overhead supply and lighter resistance for a pending rally. And given the weekly chart pattern bottom and stochastics just entering oversold territory, I don’t mind thinking, “Houston, we have lift-off” is a reasonable outcome.
Investment accounts under Christopher Tyler’s management do not currently own positions in securities mentioned in this article. The information offered is based upon Christopher Tyler’s observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. For additional market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits.