Which chart do you like the best? $NVAX or $MRNA? (May 18, 2020)
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I want to look at a couple of Coronavirus stocks. Here’s the one ( NASDAQ: MRNA ) that got all of the attention because they had good Phase 1 trials and a vaccine and they are going to start Phase 2. The stock was up in monster-like fashion this morning before the open; it was well above $90.00.
But the stock, once it gapped up, what happened? The stock basically traded sideways. You had the obligatory gap and crap, which always tends to happen on a stock that goes up 30 percent, I thought at one point it was up even more. A stock that’s up 30, you know it’s going to shakeout a bunch of people and then that’s when the fun starts once a stock finds some support here. But then the rest of the day that stock wasn’t much fun at all.
You are buying the stock you are holding it. You are hoping that the stock runs higher but it really doesn’t. And so I am telling you, the way you avoid this kind of stuff is, once a stock gaps and then it falls over, just draw a line right there, right where it opened, set an alert and then forget about the stock. You don’t care about it until it breaks to a new high.
That takes me to Novavax ( NASDAQ: NVAX ) and this is why: If you look at the daily chart you will see a similar situation here; where the stock really gapped up here, strong, 60 percent in a day. Some members had a great trade on this by the way. I was fortunate enough to have some stock that I had actually bought on Friday, not a big position at all. However, that small position turned into a really big one because the price went up so much; when you are getting the right entries sometimes you get really, really lucky.
The stock runs up here and then it just kind of drifted sideways but it never really pulled back. You look at how Moderna ( NASDAQ: MRNA ) has pulled back, it’s kind of weak. Whereas, Novavax ( NASDAQ: NVAX ) has stayed strong. It closed down here on one day and then here, last Friday, what happens? The stock closes at a new high; that’s a big deal.
Think about this, we’re going into a weekend and since the prior Friday the stock is up 130 percent, in a week and it is closing near the high of the day. It is THE highest closing of the week that is institutional commitment. That’s real money coming into this stock. So when is the next entry? Boom, when the stock breaks above this prior high. Now, you are absolutely chasing the stock at this point, no question about it. But when you look at the weekly chart you’ve been chasing the stock since $20.00 or so.
And so the way this stock is trading now here is how I would make this high-momentum, high-velocity trade: I would use $50.00 as my line in the sand. So if you are buying the stock right here you want to keep your stop a little bit below 50.00. Now, the low of the day here was 48.30 so let’s just use that.
So you’ve got your stop here just a little bit below 48.30. As long as the stock stays above this line you’re good. If the stock falls below that line you’re not good, you have got to get out of the stock. But with your stop right where it is now, it’s a pretty loose one; it’s over 12 percent so you need to have a small position. But if this stock continues to work that small position is going to become a real big position.
So between the two stocks, Novavax ( NASDAQ: NVAX ) and Moderna ( NASDAQ: MRNA ), I will take Novavax ( NASDAQ: NVAX ) any day. This thing ( NASDAQ: MRNA ) was all headlines this morning but this ( NASDAQ: NVAX ) was all price action all day long, up 25 percent today.
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