The Dow Jones charged higher in Monday trade after Pfizer announced a potential coronavirus vaccine. The news saw risk appetite rage alongside some of the more distressed sectors of the economy. Cruise lines, airlines, energy, and entertainment were big winners alongside financials and healthcare.

MONDAY’S BIGGEST WINNERS WERE THOSE HURT MOST DURING PANDEMIC

Conversely, stocks that had long benefited from the transition to a work-from-home lifestyle were left out to dry. Zoom, Peloton, and Docusign were just some of the losers and a rather tepid response from the big tech stocks saw the ratio of the Nasdaq 100 to Dow Jones fall significantly. All in all, the development of a possible vaccine has seen a rapid increase in the pace of the rotation from work-from-home stocks to those that were most vulnerable during the pandemic.

MONDAY’S BIGGEST LOSERS WERE THOSE THAT BENEFITED DURING PANDEMIC

That being said, the pandemic still rages with daily cases soaring to new heights. Further still, the purported vaccine has yet to pass FDA approval and is 90% effective. Coupled with possible public reluctance to taking such a vaccine, it can be argued the pandemic is far from over so the rotation witnessed today could be a little bit overdone in my opinion. With that in mind, there may be sectoral plays to be made in the weeks ahead.

DOW JONES PRICE CHART: DAILY TIME FRAME (FEBRUARY 2020 – NOVEMBER 2020)

Either way, the surge higher on Monday saw the Dow Jones tag a new all-time high - albeit briefly. Following the retracement during the session, the Industrial Average closed just narrowly above the September high which should offer some degree of support in the days ahead. If broken, subsequent support might be found at the October high near 28,970.

In terms of resistance, immediate levels are rather sparse apart from the prior all-time high around 29,570. Therefore, the newfound catalyst of a possible covid vaccine alongside stimulus hopes, lowered odds of corporate tax increases, and a potential infrastructure program, the medium-term outlook for US equities - the Dow Jones in particular - is quite encouraging at this stage.