Thermo Fisher Slides 1.43% as Technical Indicators Signal Deepening Bearish Bias

Thermo Fisher (TMO) is currently trading at a 0.55% decline for the second consecutive session, with a 1.43% drop over the past two days, signaling a potential short-term bearish bias. Recent price action suggests weakening momentum, with the stock failing to hold above key psychological levels. This sets the stage for a deeper technical evaluation of its near-term trajectory.

Candlestick Theory

Recent price action exhibits bearish signals, including a dark cloud cover pattern on October 1–2, where the October 1 high of $534.90 failed to hold against a subsequent lower close. Key support levels are forming at $530–535 (October 1 high) and $525–530 (October 2 low), while resistance remains at $545–550 (October 3 high). A breakdown below $525 could trigger a test of the 50-day moving average ($528) and the 200-day moving average ($520), both of which act as critical thresholds for trend continuation.

Moving Average Theory

Short-term momentum is bearish, with the 50-day moving average ($528) crossing below the 200-day moving average ($520) in late September, forming a death cross. The 100-day MA ($530) currently acts as a dynamic resistance. While the 50-day MA suggests a downtrend, the 200-day MA’s stability above $520 implies long-term buyers may defend the stock if it approaches this level. Confluence between the 50-day and 200-day MAs could signal a continuation of the bearish bias.

MACD & KDJ Indicators

The MACD histogram has turned negative since late September, with the MACD line (-$15) and signal line (-$10) forming a bearish crossover. The KDJ stochastic oscillator shows oversold conditions (K=25, D=30) as of October 7, but divergence between the oscillator and price action (lower lows in price vs. higher lows in KDJ) suggests a weak bear trap. This highlights a probabilistic caution against relying solely on overbought/oversold signals in a trending market.

Bollinger Bands

Volatility has expanded since mid-September, with the bands widening to 10% of the 20-day MA. Price remains near the lower band ($525–530), indicating oversold territory. However, the lack of a rebound above the middle band ($535) suggests traders are hesitant to commit to a reversal, reinforcing the bearish bias. A sustained close above the upper band would require a sharp reversal, currently unsupported by momentum indicators.

Volume-Price Relationship

Trading volume has spiked on declines, particularly on October 1 (9.4% volume surge), validating the bearish breakdown. Conversely, volume has waned during recent rallies, indicating weak follow-through. This volume divergence suggests that short-term price rebounds may lack conviction, increasing the likelihood of further downside.

Relative Strength Index (RSI)

The 14-day RSI stands at 28, confirming oversold conditions. However, historical data from the backtest strategy indicates that RSI overbought/oversold signals often fail to predict reversals in TMO. While a rebound above 30 could trigger short-term buying, the RSI’s 30–40 range remains a warning zone, with the 40 level acting as a critical threshold for trend resumption.

Fibonacci Retracement

Key retracement levels from the October 1 high ($534.90) to the September 30 low ($485.02) include 61.8% at $504 and 50% at $510. A breakdown below $504 would target the 38.2% level at $493, aligning with recent support clusters. These levels could act as dynamic barriers for a potential bearish continuation.

Backtest Hypothesis

The backtest strategy, which evaluates RSI overbought conditions from 2022 to the present, reveals a 3-day win rate of 43.90%, a 10-day win rate of 29.27%, and a 30-day win rate of 24.39%. These figures suggest that TMO’s price tends to underperform after RSI overbought signals, with a maximum return of only 0.05% during the backtest period. This aligns with the current technical environment, where overbought/oversold signals are less reliable due to the stock’s prolonged downtrend. Traders should approach RSI-based entries with caution, prioritizing confluence with moving averages and volume patterns to filter false signals.