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U.S. stocks broke strongly higher today as Moderna (RNA) disclosed results from an initial safety trial. Investors also got a report on the website that new findings from the vaccine candidate being developed at the University of Oxford could be published as early as tomorrow. (ITV is the largest commercial TV broadcaster in the United Kingdom.)

My read is that the news is very, very modestly positive. The big market rally on the news report (and the report of a coming news report) testifies to how much the market is hoping for an effective vaccine that can be distributed soon–because no one can see a way out of the current resurgence of the coronavirus in the United States short of a vaccine. No vaccine–and the only real alternative is a countrywide economic shutdown. And that sure isn’t priced into this market.

The Moderna trial, as reported in the New England Journal of Medicine,  showed that the vaccine candidate elicited antibodies in all the people tested in what was an initial safety trial. We still don’t know if the presence of antibodies indicates immunity or how long that immunity might last. But if the vaccine candidate didn’t lead to the create of antibodies that would likely be fatal to prospects that this candidate would result in an effective vaccine.

So antibody production is necessary but not sufficient.

The results came from a very limited trial of a first group of 45 patients who received the vaccine candidate mRNA-1273. It evaluated three doses  given in a two-shot regimen. In the trial, participants received two shots 28 days apart. After the first dose, all of participants generated antibodies that bound to the coronavirus, but most did not yet produce antibodies capable of neutralizing the virus. But all 42 people who got both scheduled doses of the vaccine generated antibodies capable of neutralizing the coronavirus. A final stage trial with 30,000 participants that compares the results of mRNA-1273 with a placebo is scheduled to begin on July 27.

One potential problem in this “safety” trial was that it did generate a relatively large number of adverse effects. More than half of participants who got the dose that will be administered in the July 27 trial suffered mild to moderate fatigue, chills, headache, and muscle pain. 40% of people in this group experienced a fever after the second dose of the vaccine. Three of 14 patients given the highest dose experienced severe side effects, but that dose will not be used in the July 27 trial. That’s not a disqualifying level of adverse effects but it is unusual for a vaccine to have that level of side effects.

In other words the “safety” trial raised some questions.

And the data reported were only from the first 45 patients in the trial group, all aged 18 to 55. Results from a second trial group that included older people, the demographic most at risk in the coronavirus pandemic,–haven’t yet been released.

On the Oxford University vaccine front all we know today is that the results were described on the website as “promising.” Here’s the top of the ITV report from Robert Preston: “I am hearing there will be positive news soon (perhaps tomorrow) on initial trials of the Oxford Covid-19 vaccine that is backed by AstraZeneca and supported by tens of millions of pounds of government money. The first data is due be published in the Lancet. Apparently the vaccine is generating the kind of antibody and T-cell (killer cell) response that the researchers would hope to see.”

This morning the group of stocks that I call “re-opening dependent”  because their share prices rise and fall with prospects for a successful relatively rapid re-opening of the U.S. economy were up strongly on the vaccine news. American Airlines (AAL), for example was ahead 9.16% as of 11:30 a.m. New York time. Six Flags (SIX) had gained 10.35%. Starbucks (SBUX) was ahead 3.72%. Cruise operator Carnival (CCL) had gained 10.49%. (By the close American Airlines was up 16.16%; Six Flags had gained 13.59%; Starbucks wasn’t ahead 3.96%; and Carnival had climbed 16.22%.) 

Money indeed looked to be flowing into these depressed shares from the technology sector where such recent winners as ASML (ASML) and Twilio (TWLO) sold down by 5.55% and 2.09%, respectively. (At the close ASML was dow 5.39% and Twilio was up 0.2%.)

I think  what we’re seeing today is likely to be a repeated pattern as “re-opening dependent” stocks sell off on days dominated by fears of the coronavirus surge in the United States and where they post strong gains on days with news reports on coronavirus progress.

Lots of good trading opportunities in that rotation–if you can get it right. (Buy Put Options on the vaccine good news days and sell them on the coronavirus surge days, for example.) But as far as a long term trend goes, I just don’t see enough information now to say when or if there will be a successful vaccine that will put the coronavirus back in a box.

Tomorrow should be a very interesting day since we might get more vaccine news from the Oxford University effort and we will certainly get the week’s report on initial claims from unemployment, which might reflect some of the re-closing steps of recent days (although timing suggests that we won’t get the full effect in this week’s numbers.)