Thanks to COVID-19 vaccines, expected to help countries manage the pandemic and reopen closed economies, global inventories have repeatedly hit new record highs in recent months. Then why is the share of the actual vaccine producers falling?
Pfizer (NYSE :), the first pharama to roll out their general-purpose immunization, is down 9.5% in the past four days. Shouldn't the shares of the New York City-based company go through the roof?
The stock's downward movement appears to be another variation of the old market word "buy-the-rumor, sell-the-news". As investors bought the stock for its potential, the stock has rallied more than 50% from its March low to its December high to move ahead of vaccine approval and affiliate sales.
But from the week of November 9, some investors decided to commit the profits and the sale began. A month later, starting on the week of December 7, a second wave formed a long shooting star followed by the mother of all Bearish Engulfing patterns, with an even longer red candle during the week starting at 14 December.
That is the period when sellers unwinded their positions, drove the price down as they met all current demand and then started looking for additional, more critical buyers, at lower prices. Ironically, some investors who sold when the stock was in the 1940's have bought back very well at mid to high $ 30.
It is not identity or the number of people buying or selling that moves the market, but the amount of capital that changes hands. Now, however, the distribution of that capital on the scale of supply and demand is at a tipping point. And we identify an upward bias going forward.
Price has developed a year-long symmetrical triangle shaped according to the forces of supply and demand. It is symmetrical because both sides pressed against the price.
Although the pattern has been on a decline since its December 2018 peak, it & # 39; coincidentally & # 39; developed where it meets the progress since the March 2009 low, indicating greater interest in that trend.
While the 50-week MA has already supported the price for a third week, the 100-week MA strengthens the apex of the triangle, underscoring its importance as a bearish stronghold – and the powerful upward movement that can be caused by its outbreak.
Also, the stock has already delivered back-to-back upside breakouts, one of which included the downtrend line. Bears may have pushed the price down again, but the bottom of the pattern held up. In fact, it has bounced off the bottom all the way this week, showing its technical significance.
The Relative Strength Index (RSI), which measures price momentum, has bottomed out, whose upward breakout above 63 would signal a reversal of momentum upward.
The Money Flow Index (MFI), which measures the momentum of both price and volume changes, supports the rising price, both in the short term, by also trending within the rising channel between the March low and the present . as in the long run, within a bullish channel since 2016.
Finally, price position offers a rich risk-reward ratio as it is at the very bottom of the pattern. The price target is $ 12 from the point of breakout to an estimated target of $ 50.
However, if the price falls below $ 34.60, we would be concerned that the tide has shifted, with a low below the March 23 bottom pushing it into a full downtrend.
Trading Strategies
Conservative traders should wait for the price to hit a new high, above $ 43.08, to see the long-term uptrend dominate since the bottom of 2008 to recover on the downward trend in the medium term since the 2018 high.
Moderate traders may be satisfied with a lock above the down trend line, if not the symmetrical triangle.
Aggressive traders can now take a long position.
Trade Sample
Admission: $ 37
Stop Loss: $ 36
Risk: $ 1
Target: $ 43
Reward: $ 6
Risk: Reward Ratio: 1: 6
