There are always a lot of iffy investments pitched by Wall Street. But when it comes to novel coronavirus play Moderna (NASDAQ:MRNA), investors are buying what they’re selling. And off and on the MRNA stock chart, mostly good-looking trends still appear friendly and worth monitoring for a future purchase. Let me explain.
Clinical-stage biotech outfit Moderna isn’t alone in its mission to find a vaccine for the coronavirus. That’s not exactly a surprise, given the potential bounty for eradicating the destructive disease. Nor is it a revelation that some of the company’s competition have popped out of the woodwork. That, alongside alluring press releases and shares spiking similar to an EKG after being left for dead by investors.
Micro-cap iBio Inc. (NYSEAMERICAN:IBIO) is one entity which has some of those riskier and questionable characteristics. But Moderna’s vaccine hopes also faces challenges from more formidable and diversified biotechnology and pharmaceutical giants.
Gilead Sciences (NASDAQ:GILD) and Regeneron Pharmaceuticals (NASDAQ:REGN) are two companies making notable strides towards this well-watched goal.
Still, if investors are going to allocate a tiny bit of risk capital into the coronavirus pool, Moderna’s shares do stand out. The outfit’s mRNA vaccine was the first candidate to go to human trials. As well, the company has been offered as much as $483 million through a unit of the Department of Health and Human Services to progress its drug through clinical trials.
The fact is, MRNA stock has made it into the big leagues on the back of the Covid-19 outbreak. Shares are valued at more than $16.5 billion. In terms of market capitalization, this puts the outfit in the company of other large-cap stocks.
To be certain, size or capitalization aren’t foolproof by any means. You can look at cannabis play Tilray (NASDAQ:TLRY) on its rise to prominence as a multi-billion market leader as one glaring example of investors getting it 100% wrong. Yet despite this potential shortcoming, valuation is another factor which lends itself to Moderna’s credibility.
MRNA Stock Weekly Price Chart
Source: Charts by TradingView
Another attractive feature working in Moderna’s favor is its stock chart. Investors should be more confident knowing prior to the coronavirus outbreak, MRNA stock was already positioned as a mid-cap and trending higher since last summer. Wall Street was showing its interest in the company well before the coronavirus ever entered the picture. As the saying goes, ‘the trend is your friend.’ Right?
Currently the rally in Moderna has shares consolidating its gains off all-time highs. As of Tuesday morning, the stock is forming a second weekly chart inside the candlestick. The technical respite is good news overall. Over the course of a couple breakouts since February, Moderna has gained about 60%. It’s a lot, but the broader market’s own gains of around 35% since late March adds perspective and the idea Moderna could still be a friendly trend for investors.
For now I’d recommend investors simply monitor shares until a breakout or a supportive pullback entry is revealed. Waiting on one of those opportunities also makes sense in lieu of Moderna’s weekly stochastics. The indicator appears somewhat ‘iffy’ in overbought territory and on the cusp of a bearish crossover.
Make no mistake, it’s not all about Covid-19 or a trending price chart. There is that thing called earnings. This quarter’s announcement and potential catalyst is Thursday. Bottom-line, when and if investors decide it’s an appropriate time to allocate some risk capital in Moderna stock, I’d strongly advise filling that order with a limited risk options strategy.
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.
