One of the problems is that this move is coming on top of an already huge move due to the celebration of gridlock in Washington last week. Many stocks were overbought and in need of a rest but the news Monday morning made the technical picture even more challenging.
Many traders are feeling frustrated Monday as the biggest winners are mostly the stocks that have been lagging lately. Concerns about the rising number of Covid cases have helped the "stay at home" names but that has suddenly reversed and caught many market players by surprise.
While this news from Pfizer is significant, it is still going to take several months before a vaccine is widely distributed. Some states are already proceeding with restrictions and that is going to continue until the number of cases is no longer trending upward and hospitalizations are falling.
The vaccine news caused some initial overreactions in both directions and now there are some reversals taking place. Retailers, airlines and other "open the economy" plays spiked and reversed. There are very few now that are at day highs. The "stay at home" stocks did just the opposite and now many of them are well off their early lows.
What is important to know here is that while the vaccine news is important and will produce some significant rotation, it won't be a smooth and steady transition. There are some substantial shifts in the economy that will persist well after a widely available vaccine. Moves in both directions will offer opportunities in the next few days and weeks.
This is a very extended market that is now even more extended and many stocks are already struggling to keep running higher. The potential for some resets is quite high.
The Nasdaq 100 (QQQ) is already back in negative territory while the DJIA is up over 4%. That is quite a mix and the difficulty of navigating it should be obvious.