Here’s Why I’m Not Buying Moderna


Shares of Moderna (MRNA) shot higher at the open on Wednesday, but quickly pulled back. Why am I not a buyer of Modera? Let’s go to the charts to find out. 

COMP CHART
Moderna (MRNA) vs S&P 500 vs. Nasdaq. Chart via TradeStation

After pulling back sharply in August, Moderna has been on a tear. In this comparison chart, we see that as of Wednesday morning, Moderna has climbed by 33% since September 8th. 

Over that same period of time, the Nasdaq has gained just over 3%, and the S&P 500 has gained about 1%. But is that reason enough to buy the stock?

mrna

Since late August, Moderna has formed a technical pattern known as a cup and handle. The breakout point for the pattern was $70.50.

Now let’s get into the reasons why I don’t like this stock. First of all, the breakout from the cup and handle occurred on low volume. This reveals reluctance on the part of institutional buyers. 

5 min
Moderna 5 minute chart via TradeStation

Second, look at the intraday price action on the 5 minute chart. Moderna reached its high of the day within the first few minutes of trading, and it was all downhill afterward. 

There’s a saying in the markets – amateurs create the open, professionals create the close. If that’s true, then Wednesday’s pop in Moderna was created by small retail traders, while institutions sold into the rally. 

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Ed Ponsi is the managing director of Barchetta Capital Management, and is the author of three books for publisher Wiley Finance. A dynamic public speaker, Ed has made appearances around the world, in such diverse locations as Singapore, Dubai, London, and New York. For more information about Ed and his work, click here.

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