PreMarket Prep Stock Of The Day: Moderna

Benzinga's PreMarket Prep airs every morning from 8-9 a.m. ET. During that fast-paced, highly informative hour, traders and investors tune in to get the major news of the day, the catalysts behind those moves and the corresponding price action for the upcoming session.

On any given day, the show will cover at least 20 stocks determined by co-hosts Joel Elconin and Dennis Dick along with producer Spencer Israel.

A few different pharmaceutical companies' share prices have rapidly appreciated as the result of developing a vaccine for COVID-19. One issue that may benefit the most is Moderna Inc. MRNA.

Building A Major Base: From December 2019 through March 2020, Moderna made all of its monthly lows between $17.58 and $19.31, with the highest low coming in March. With the events of the pandemic beginning to unfold and the need for a vaccine becoming more evident, savvy investors began buying Moderna.

What was a slow and steady rally accelerated in the span of five days when the issue rallied from $32.90 to $51.69. That rally was instigated by the announcement that the Federal government had awarded the company $454 million to accelerate the development of a vaccine for COVID-19.

The Rest Is History: With ever positive development from the trials, the issue gathered more and more upside momentum all the way up to the announcement of a completed vaccine. In a volatile fashion, the issue surged higher and higher. In fact, its ultimate all-time high wasn't made until Feb. 26 at $189.60. Interestingly, its all-time closing high was made on May 3 at $186.02.

Well Defined Area Of Resistance: Shorter-term investors sometimes get too enamored with shorter-term charts and miss a clear signal that the market is giving them. For example, the issue peaked in a well-defined area every month but March in 2021. In January it peaked at $185.98, in February at $189.26, in April at $186.80, and as previously mentioned in May at $189.

In essence, it's obvious large shareholders have targeted this area as an exit point in their stake. It should be noted the monthly lows in the above months were in a range from $103.36 to this month’s low of $143.56. For shareholders with a large stake, the huge fluctuations in profit and loss may be getting hard to stomach.

Tuesday’s Catalyst Broadcasted Live: Just after 8 a.m. EST, the company announced the TeenCOVE study of its COVID-19 vaccine showed no cases of COVID-19 after two doses of the vaccine. As expected the issue lurched higher in premarket trading and spiked from the $165 area to $170.36.

Dennis Dick, who has no position in the issue, was clear what he would do if he owned the issue: "What is the next catalyst for the issue? You have a stock that has rallied over 1,000%, what else is going to move the issue higher? If I owned it, I would sell it."

The author of this article noted the entire $170 area as formidable resistance.

Price Action During The Regular Session: The issue retreated in the premarket and opened the regular session at $166.56 and spike lower to $165.10, it tested the $170 area on a few different occasions.

As of 1:30 p.m, it was able to reach $171.74, but has fallen back into the middle $168 handle.