New yearly highs: vaccine hopes drive cheers from Pfizer bulls

November 12, 2020 11:00

The trading week started with a bang: Pfizer and BioNTech announced that they found an experimental vaccine that is over 90% effective In preventing Covid-19. As a result, global stock markets and risk assets soared higher – but, surprisingly, stocks from pharmaceutical giant Pfizer have been "subdued" – what does this mean?

Vaccines hopes push #PFE to new yearly highs – further gains to come?

Ok, "subdued" performance is probably a little too negative, at second glance.

Pfizer closed more than 7.5% higher on Monday, but since the stock was up more than 13% at one point in the trading day, we still saw it giving back around 50% of its initial gains.

That comes as a surprise since Pfizer and BioNtech said that they can produce 1.3 billion doses by the end of 2021 with about 50 million in 2020.

The skepticism among market participants probably arose shortly after news on the Pfizer trial made rounds. Of the 43,358 participants in the study, 94 of them contracted Covid-19. Of those 94, some had received the vaccine and some had received a placebo.

Questions remain about whether moves in risk assets, and also Pfizer stock, are sustainable.

Certainly, Pfizer CEO Bourla said on Monday that demand for the vaccine will be "higher than anything we can produce". If high hopes materialize and push the stock up to $50 per share as some analysts predict, any disappointment or delay in further trials could result in sharp drops in the Pfizer stock price.

How can you trade #PFE in this environment?

The bullish open on Monday with a gap up at new yearly highs is the first clear bullish sign for the stock.

Technically, the break above the May and August highs around 39.00/50 USD is also clearly bullish and the re-test of this region on Monday in which it found support underlines that the stock may have found a potential long-trigger.

From here, a run up to 42.00 USD is an option with a break higher levelling the path up to the region of the 2019 yearly highs of around 44.00/50 USD.

A drop back into trading between 34.50 and 38.50/70 would clearly neutralize the picture, meaning that a potential stop for our long idea lies at around 38.50, leaving us with a risk-reward of around 1 to 4 if we re-test the 2019 yearly highs:

Source: Admiral Markets MT5 with MT5SE Add-on #PFE CFD Daily chart (from April 22, 2019, to November 10, 2020). Accessed: November 10, 2020, at 13:30 PM GMT. Please note: Past performance is not a reliable indicator of future results, or future performance.

In 2015, the value of #PFE increased by 3.63%, in 2016, it increased by 0.62%, in 2017, it increased by 11.51%, in 2018, it increased by 20.51%, in 2019, it dropped by 10.24%, meaning that in the past 4 years, the stock is up 26.03%.

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