Pharma stocks bolstered by news of vaccine purchases
As countries round the world look to secure supplies of future Covid-19 vaccines, we look at some recent big winners. IG's chief market analyst Chris Beauchamp applies technical analysis to the stocks.
Sanofi
Sanofi has had a great run since early 2018, and while like many stocks it saw significant volatility in 2020 the overall trend is still intact. Indeed, while it has weakened of late it continues to post higher highs and higher lows, with recent weakness finding support around €87.80. A fresh push higher brings €95 into view, while we can expect further support at the 200-day SMA (€85.30) in the event of a bigger pullback.
GlaxoSmithKline
While other pharma firms have done well, GSK is seeing upside momentum drain away. While it surged from its March lows, we have seen the bounce turn sour since then, as the price continues to drop back. While for a time this was fairly limited, the past week has seen a more dramatic fall that has taken the price below the £15.70 zone of support. Rebounds towards £16.30 will likely be selling opportunities, unless the price can reclaim £1650.
Pfizer
Since late June Pfizer has enjoyed its second surge of 2020, rallying from $32 to reach $39 and hitting trendline resistance from its late 2018 peak. This may mark the end of the progression of lower highs since that summit, although with both stochastics and MACD looking overextended some weakness may be possible in the short-term.
However, even if there is a substantial pullback, it may find support at the rising trendline from the March lows, leaving Pfizer one to watch for the next few weeks.
BioNTech
A relatively new stock, BioNTech has nonetheless enjoyed a healthy surge. After going parabolic for a time in March the stock has returned to a more normal uptrend, with higher lows in April and June. While it is edging lower for now, the overall push higher continues, and a few more days weakness may provide a compelling opportunity for fresh longs from a risk-reward perspective.
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