PreMarket Prep Stock Of The Day: Pfizer

Benzinga's PreMarket Prep airs every morning from 8-9 a.m. ET. During that fast-paced, highly informative hour, traders and investors tune in to get the major news of the day, the catalysts behind those moves and the corresponding price action for the upcoming session.

On any given day, the show will cover at least 20 stocks determined by co-hosts Joel Elconin and Dennis Dick along with producer Spencer Israel.

With the Delta variant of COVID-19 becoming more widespread, it has piqued the interest of investors in companies that have already produced vaccines. The biggest of those companies is Pfizer Inc. PFE.

Slow Mover: While Moderna Inc. MRNA and Novavax NVAX have had massive price appreciation over the past 16 months, Pfizer has not. The reason being its COVID-19 vaccine isn't a huge part of the company's profits from drugs in the pipeline that have gone to market.

It's also a low-priced, heavily traded value stock that isn't subject to violent swings as institutions holding the issue need to move huge blocks of stocks that can't be absorbed instantly.

Trading Range: The session prior to Pfizer announcing its successful trials for the COVID-19 vaccine, the issue closed at $34.61. In a very un-Pfizer-like price action, it sprinted to $39.80 on Nov. 9, 2020, and retreated to end the session at $37.16.

In February and March, investors had the opportunity to go long the issue at a discount to the pre-vaccine closing price when it bottomed at the $33.50 area in both months.

Since April it has been in a well-defined trading range from $35.76 to $41.09. Since May the bottom of the range moved up to the $38 area and last week it had a tight range from $39.53 to $40.35.

Ramping Up For Breakout: Despite the weakness in the broad market on Friday and Monday, the issue closed above last Thursday’s close ($40.09) as it ended Monday’s session at $40.15. In the process, it put in a double top at $40.35, which was just under June’s high of $40.72.

With a huge rally in the broad market as a tailwind, Pfizer opened flat and took out the wall of sellers at both of the aforementioned resistance levels. In fact, the momentum has taken the issue to $41.71 and has backed off to the $41 area as of 3:30 p.m. EST.

Besides the Delta variant scare and the broad-based rally, there is no specific news to account for the huge price appreciation.

Moving Forward: The question now remains is whether or not Pfizer can maintain this momentum and go on test its December high ($43.08), which was a two-year high, and beyond. It should be noted Pfizer quickly retreated from that high and didn't bottom until February at $33.36.

A good indication of what may happen will be the closing price from Tuesday’s session along with the current high. There's little doubt of huge institutional sell orders at $42, $42,50 and $43, with scattered size along the way, which means it won't be easy.


Posted In: Covid-19Delta variantTechnicalsTrading Ideas