Dow Jones, Russell 2000, Nasdaq 100 Price Forecast:
- The week opened with a bang on positive news of a breakthrough in the hunt for a Covid vaccine.
- The Dow jumped up to a fresh all-time-high, and the Russell 2000 isn’t far behind as buyers continue to drive in small caps.
- Curiously, the Nasdaq 100 has been on its heels so far this week, testing a huge zone of potential support. The Nasdaq was the high-flyer from the March lows, jumping by as much as 88%. Why would the tech-heavy index be lagging now that there’s positive news on the horizon?
- The analysis in this article heavily utilizes price action and chart patterns. To learn more about price action, check out our DailyFX Education section, where it’s taught amongst a host of other candlestick patterns and formations.
It’s been a brutal stretch in the headlines this year, and perhaps even more so over the past month as the US Presidential Election dominated the airwaves. But yesterday produced something of a positive note as news circulated that Pfizer’s vaccine candidate is currently showing a 90% efficacy rate.
The timing of the announcement, however, is somewhat curious, as the study being quoted isn’t even finished yet. And given the timeline of Covid infections, the early stage of those results is somewhat questionable and very much out of the norm for a drug trial: When the study concludes, we very well may be looking at a lower efficacy rate; but as long as that rate is above 50%, it’s widely thought that the drug would end up being approved.
Perhaps the more exciting part of those results wasn’t necessarily the drug itself as much as how the drug works: Pfizer’s vaccine is based on messenger RNA, which is quite a bit different than how many other vaccines work by inoculating with a form of the live virus. What’s exciting about mRNA is both the fact that this could be replicated for other maladies down the road, and there are other drug companies using similar technology in their own vaccines; such as we heard Dr. Fauci remark on yesterday in regards to the Moderna vaccine.
So, taking a step back to look at the big picture: There is hope that light may be at the end of the tunnel somewhere. But, its merely hope at this point, with a probability as to whether these drugs will actually ‘work,’ and we won’t have more info on that until later in the month after Pfizer has been able to accumulate more results in their current trial.
Perhaps even more curious was the market response to this news with one of the clear take-aways being higher rates in the US. The 10-year note is currently trading at its highest level since March, as the virus was getting priced-in to markets. The Dow Jones Industrial Average opened the week with a bang, finally pushing up to a fresh all-time-high. Up until yesterday, the Dow had been the laggard with the Nasdaq pushing up to a fresh high in June and the S&P following a couple of months later.
That move in…
Go to the news source: Equities Bifurcate on Covid News