According to some investors Novavax (NASDAQ:NVAX) is a winner. But if we’re to trust the price chart, investors may want to study NVAX stock before buying in.
Source: vovidzha / Shutterstock.com
Let me explain.
While the benchmark S&P 500 climbed 1.60% led by Apple (NASDAQ:AAPL), Tesla (NASDAQ:TSLA) and a few other influential overachievers, shares of Covid-19 vaccine manufacturer NVAX jumped nearly 9% during yesterday’s session.
Aside from the market having its back, NVAX stock was the beneficiary of a survey conducted on behalf of much smaller Covid vaccine play Ocugen (NASDAQ:OCGN).
New Hope for NVAX Stock?
In a nutshell, the Harris Poll indicated that “73% of Americans would like to see additional COVID-19 vaccines be available that are developed from a more traditional method”
That is — theoretically — a positive result for Novavax, which is producing an “old school” style treatment called NVX-CoV2373.
Currently, the United States’ list of approved vaccines from Moderna (NASDAQ:MRNA), Pfizer (NYSE:PFE) and Johnson & Johnson (NYSE:JNJ) use new messenger RNA (mRNA) and DNA technologies which haven’t been in past vaccines.
Apparently, there’s a particular hesitancy to the trio of available treatments from parents with children under 18. A full 40% state they’d be more open to vaccinating against Covid-19 with a more traditional method. That hesitancy might have something to do with a bias toward successful vaccinations against polio, chickenpox or the mumps.
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Still, the survey was self-serving. It was commissioned by Ocugen, whose vaccine, developed by partner Bharat Biotech, uses a similar old school approach. More importantly, it’s not a secret that many of America’s anti-vaxxers claim the need for more research. But that begs the question: Which few among the Harris Poll are qualified to read a medical journal to back the indecision against mRNA?
So, should we trust mostly uniformed crowds and opinion polls on Covid-19? I’ll personally leave it to the healthcare professionals and regulatory approval process. It has worked so far.
Maybe that means NVAX’s vaccine will eventually get approved. I don’t know. With that uncertainty in mind, let’s take a closer look at the stock action in NVAX stock.
Novavax’s Weekly Price Chart
Source: Charts by TradingView
Regardless of your stand on the mRNA versus traditional vaccine debate, right now NVAX stock is warning of downside risk that should be taken seriously.
As the illustrated weekly view of shares reveals, Novavax has been busy consolidating around its Covid-related 76% retracement level the past few weeks. Moreover, the pattern has the earmarks of a bearish flag.
Following a failed larger double bottom corrective base and slightly more questionable triple formed on the 62% Fibonacci support, a breakdown of flag support through $79, give or take 50 cents, raises the chance for a much lower share price in NVAX.
How low? While a bearish signal remains several points to the south, some technicians will warn that a full-blown, 100% retracement in Novavax is in the cards given the inability of its Fibonacci level to fend off the bearish cycle.
I’m far from convinced that will happen.
On a positive note, the U.S. market isn’t the end all, be all for Novavax. Its vaccine is already in other countries. And with plenty of cash in the bank, there could always be life after Covid-19 with other treatments or therapies, right?
But how about $60 a share or $40 in NVAX stock if the bear flag is confirmed? Maybe. And today’s overall weak investor sentiment on Wall Street could help with that kind of reality.
I’m not a doctor or inclined to read medical journals. Still, I do know a thing or two about the markets. If you’re bullish on NVAX stock, realize the technical picture could get a good deal uglier.
At the end of the day, I won’t tell investors to pull the plug on Novavax today. But given NVAX’s larger price volatility, an actively managed, fully hedged collar strategy, whether the Covid play becomes a household name in the U.S. or not, is a professional suggestion I’m glad to offer.
On the date of publication, Chris Tyler did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Chris Tyler is a former floor-based, derivatives market maker on the American and Pacific exchanges. For additional market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits.
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