While stock futures were higher on Sunday night, they really erupted once Pfizer announced positive news regarding its Covid-19 vaccine.
The company said that its vaccine was 90% effective in late-stage trials and as a result it will seek emergency use authorization from the Food and Drug Administration.
This is the news that investors have been waiting for. A company with a leading vaccine and a high-efficiency rate will be needed for the economy to eventually return to normal.
While there are still hurdles - like getting all of the data points on Pfizer’s vaccine and implementing a vaccine to a large population - there is hope and promise. That’s particularly true with Moderna’s (MRNA) - Get Report vaccine also looking good.
In any regard, the move has Pfizer stock flying higher. Let’s look at how to trade it.
Pfizer reported earnings in late October, tipping lower on the news. The move temporarily sent shares below the 200-day moving average, although the stock did find its footing near that mark.
On Nov. 2, Pfizer stock reclaimed the 200-day moving average. Later in the week - amid the market’s strong rally - Pfizer reclaimed the 20-day and 50-day moving averages as well.
Shares held the 50-day moving average into the weekend, before Monday’s monstrous gap-up rally.
From here, bulls are trying to figure out how to trade Pfizer. Now a leading candidate in the vaccine race, it’s a worthy name to own on the long side. Its current 3.8% dividend yield makes it an easy income producer too.
But for bulls to really stick with Pfizer, shares must hold up over the $38 to $39 resistance area. This has been a big-time resistance zone for the stock, so if it can maintain above it, bulls will remain in control.
We’ve already seen a healthy fade from Monday’s high around $42, where $39 acted as support and provided a bounce. That's promising.
If Pfizer can remain above $39 and reclaim $40, look to see if it can retest Monday’s high and the 123.6% extension at $42.27.
Above that puts the all-time high in play from December 2018 at $43.05, followed by a possible move to the 161.8% extension near $47. Above that and $50-plus is possible.