When 23 elderly Norwegians died recently, after receiving the Pfizer (NYSE 🙂 COVID-19 vaccine, the Chinese newspaper The Global Times said the fatalities received little attention because English-language media concealed unsympathetic news about a vaccine produced in the West with an emphasis on negative news about the Chinese Sinovac (NASDAQ 🙂 vaccine. Nevertheless, Norway said on Monday it would continue to use the vaccine developed by Pfizer in collaboration with Germany's BioNTech (NASDAQ :), describing the fatalities as individuals who were "old, vulnerable and with serious illness."
Still, after the deaths were announced, Pfizer issued a statement saying it was temporarily delaying its deliveries to Europe because it wanted to increase production. We cannot say whether this latest development is also related to internal quality control issues within the company, or whether logistics alone is the cause.
However, Wayne County, Michigan, where Detroit is located, has just announced that it is moving to the Moderna (NASDAQ 🙂 vaccine, citing a shortage of supply of the Pfizer vaccine. Will Pfizer lose business to Moderna because of the production slowdown? We couldn't tell.
But the balance between supply and demand on PFE's technical chart tends to sell out.
The stock completed a bullish flag after a dramatic 15% drop from its December 9 high of $ 43 to its December 22 high of $ 36. The flag is likely to rise on a combination of short squeeze and dip buyers, even if it remains tight as the demand for engorges continues to sell.
However, the downward breakthrough suggests that supply has outpaced demand, and sellers are now seeking buyers at even lower prices. This is a set-up for creating a domino reaction, where the price is expected to repeat the previous move.
Just two weeks ago {{art-200549720 || we gave an optimistic view of the New York City-based vaccine maker. But a lot has changed since then, both fundamentally – as described above – and technically.
To be clear, we don't know if there really is a problem with the Pfizer vaccine, nor can we predict whether the company will lose significant business to Moderna despite the switchover in Wayne County. All we know for sure is that the price pattern has technically weakened.
Still, that doesn't mean that with a bit of good news, the small downward breakout will not reverse and continue along the upward trend line visible on the chart, satisfying the longer term upward picture we gave two weeks ago. . Moreover, the technical picture is not entirely clear at the moment. For example, we would like to see a peak volume on the downside breakout, as proof that the consensus has shifted towards a downtrend. In both cases, wait for a signal to confirm or limit your exposure.
Indeed, summing up the various map indicators and why we are no longer completely optimistic:
The 50 and 200 DMAs frame the flag, showing its technical significance.
The 200 DMA and flag bottom are appearing on the very upward trajectory since the March bottom, presumably so bears can prepare to conquer this bullish stronghold.
The highest volume peaks appeared on red days.
Trading Strategies
Conservative traders should wait for two falling highs and lows before going short.
Moderate traders would wait for a bounce back to retest the pattern shortly after the price fell below its November 17 low of $ 35.
Aggressive traders could go short at will, provided they understand and accept the higher risk with less confirmation, for the potentially higher reward of early entry and have a coherent trading plan to which they commit.
Just an example:
Trade Sample
Entry: $ 37
Stop Loss: $ 38
Risk: $ 1
Target: $ 34
Reward: $ 3
Risk: Reward Ratio: 1: 3
Author's Note: This is an example only. It does not take the place of reading and understanding the full analysis in the post itself which is primarily a breakdown of the possibilities and how to navigate them to increase your chances of winning in trading in general, not necessarily on this particular one transaction. Trading is essentially happiness management.
