It was a wild day on Wall Street as investors weighed the ongoing COVID-19 outbreak. Stocks opened the session on a high note before finishing “flat.”
The Dow rose only 0.2% while the S&P fell 0.1%. The Nasdaq Composite closed a hair below from where it opened.
What sent equities spinning today was remdesivir, an antiviral drug created by Gilead Sciences (NASDAQ: GILD) to fight Ebola. Last week, a University of Chicago Medicine study found that remdesivir may have effectively treated COVID-19 patients.
Today, the Financial Times reported that remdesivir “did not improve patients’ condition or reduce the coronavirus pathogen in their bloodstream,” via a clinical trial conducted in China. The World Health Organization (WHO) accidentally published the results of the trial today, providing ample fuel for critics looking to discredit the findings.
China (nor the WHO, for that matter) has not been a reliable source of COVID-19 information, leaving the legitimacy of remdesivir as a coronavirus treatment up in the air.
Gilead issued the following statement shortly after the report leaked:
“Because this study was terminated early due to low enrollment, it was underpowered to enable statistically meaningful conclusions. As such, the study results are inconclusive, though trends in the data suggest a potential benefit for remdesivir, particularly among patients treated early in disease.”
For investors, not much has changed. A “medical solution” must be found before the market (and U.S. economy) gets back to firing on all cylinders.
“Any sort of treatment is key for people to getting people back out into the world,” Kim Forrest, founder of Bokeh Capital, said.
“When the results were announced of the trial last week, you could see the market react and it was a sigh of relief that, if I get this, I may not die.”
Oil speculators are doing their part, too, as evidenced by a crude oil recovery that’s returned at least some stability to the economy. Oil’s still down dramatically on the year, but at least the closest WTI futures contract isn’t negative.
And if remdesivir turns out to be the “real deal” while oil surges, the market could continue climbing, too.
For short-term traders, that means it’s time to identify new opportunities to go long on stocks with serious rally potential.
Coty Inc. (NYSE: COTY), a cosmetics manufacturer that boasts over 77 brands, has done extremely well since bottoming out in mid-March. The stock has “zig-zagged” several times now, but still sits at a gain of almost 100% from its COVID-19 crash low.
Today, it “zigged” again, past the 10-day moving average and the stock’s minor bearish trend (represented with the yellow trendline).
Should COTY trade above today’s high by a significant amount, it might make sense to go long with a trade trigger of $6.20.
If the rally’s getting a re-boot this week, COTY is likely to soar. That’s great news for shareholders looking to recoup their losses, and even better for short-term traders taking advantage of a fantastic long opportunity.
