- The Prime Wave
- Posts
- Moderna's Never Ending Bottom
This is the weekly version of The Prime Wave. The weekly is free for all subscribers, daily updates of the Swingex Index are reserved for paid subscribers only.
THE BIG IDEA
Q: What is another way of describing a stock that is down by 90%?
A: It is a stock that went down 80% and then lost half its value.
A little more than five years ago, most of us had never heard of Moderna or knew anything about RNA technology. That all changed quickly, didn’t it? By the middle of 2021, millions of people around the world were eagerly waiting to get a dose or three of Moderna’s vaccine against COVID-19. Around the same time, shares of MRNA reached a high of $484.
Today, MRNA is going for $26, down 94% from that all-time high.
Along the way, many have called for a bottom for the shares. Here are some:
October 2022 - Did Moderna Stock Mark a Bottom?
January 2024 - Oppenheimer analyst explains why he upgraded Moderna's stock
February 2025 - Moderna: A Generational Opportunity for Investors in 2025
For buy-and-hold investors, it hasn’t worked out well, to put it mildly. Buying into that “generational opportunity” from four months ago would have you down 26% already.
The thing is, even a long-term bad investment like MRNA can provide numerous bear market rallies of 20%, 50%, even 100%. Those first two articles cited above were not wrong, if your time horizon is a few weeks or a few months. Below is the same chart of MRNA, but as a “zig-zag” chart. We have cleared out the annoying details and just show movements of 20% or more.
See those small wiggles on the right hand side of the chart? After a big drop, it doesn’t take much to gain (or lose!) 20% or more. If - hypothetically - MRNA would drop to $20 from here it would barely show up on a long-term chart, but it could put a real dent in your portfolio.
SEEN ON THE INTERNETS
Frank Cappelleri, CMT did a detailed analysis of NVDA as part of a larger article on the StockCharts website. He included a series of four charts of the stock, though we are skeptical of the relevance of the pre-AI era of the company.
The chart that looks the most interesting for swing trading is copied below. Here, Cappelleri noted the bullish flag pattern from which the stock seems to have just exited. The 161 represents a price target based on a classical technical analysis method.
The idea is that with a bull flag you take the height of the flagpole and add that amount to the point where the stock leaves the flag pattern. Those are the two dotted lines on his chart.
It seems like a simplistic, if not outright crazy, way of predicting prices, doesn’t it? And yet, you would be surprised at how often this technique correctly identifies tops or pauses in prices.
OTOH, when a bull flag doesn’t do what it is supposed to do that is also useful information. But that is a story for another day.
NUMBERS ONLY
1 | After 15 straight weeks with more bears than bulls, the AAII sentiment survey managed just 1 week with a majority of bulls. The latest survey has the bears back in charge, 41.9% to 32.9%. |
51.0% | The market cannot decide which way to go. Just over half (51%) of S&P 500 stocks are above their 200-day average. That leaves 49% below their long-term average. |
- 8.6% | The “TACO trade” is a thing now, but shares of YUM (owner of Taco Bell) are down 8.6% since the tariff announcement on April 2. |
SWINGEX INDEX
Swingy says: The market is looking iffy for the coming weeks. Better to sit and relax with a cold beverage and wait for better conditions. | As of market close on 30 May 2025 -1 |  |
See some historical examples of the Swingex Index in action here.
REWIND
Along with the daily value of the Swingex Index, we sometimes highlight stocks that could do well over the next 3 days to 3 weeks. This is a look back to 2-3 weeks ago to see how they have played out.
Before market open on May 13th we mentioned two stocks.
$PYPL ( ▲ 0.64% ) - The chart of PayPal printed a bearish “shooting star” the day before. There was a high risk that the stock would give back a chunk of its post-tariff-trauma gains. It opened at $72.41 and is now at $70.28. A small drop but not what we thought it might have been.
$HON ( ▲ 1.09% ) - Conversely, on the same day Honeywell broke above its base from Feb-March and looked primed to go higher. The shares have gone from $218.64 that morning to a current $226.67.