Thermo Fisher Stock Surges 9.42% as Two-Day Rally Hits 14.87% Despite Overbought Technical Signals

Thermo Fisher (TMO) has surged 9.42% in the most recent session, extending its two-day rally to a 14.87% gain. This sharp upward move suggests strong near-term momentum, but a closer examination of technical indicators reveals nuanced dynamics. The stock’s recent high of $534.90 and closing price of $530.73 indicate a potential resistance cluster forming around the $530–$535 range, with prior peaks at $491 and $492 likely serving as key support levels on a pullback. Candlestick patterns, such as the absence of bearish reversal signals (e.g., shooting stars or engulfing patterns), suggest the bullish trend remains intact for now, though traders should monitor for signs of exhaustion.

Moving Average Theory

The 50-day, 100-day, and 200-day moving averages all appear to be in an uptrend, with the 50-day MA (calculated from recent data) likely above the 100- and 200-day MAs. The price’s current position above all three averages reinforces a long-term bullish bias. However, the 200-day MA, which acts as a critical trend filter, has not yet confirmed a definitive breakout. A sustained close above the 200-day MA could solidify the uptrend, while a retest of the 50-day MA may trigger a consolidation phase.

MACD & KDJ Indicators

The MACD histogram shows a positive divergence, with the line expanding as the rally gains momentum, indicating strong bullish momentum. However, the RSI crossing above 70 into overbought territory (currently at 70+) raises caution. The KDJ indicator’s death cross in overbought conditions—a bearish signal—suggests potential short-term volatility. This divergence between MACD and KDJ highlights a mixed outlook: while momentum remains robust, the overbought readings may precede a correction.

Bollinger Bands

Volatility has spiked, with the price near the upper Bollinger Band. The bands have widened recently, reflecting heightened trading activity and uncertainty. A retest of the lower band (around $460–$465) could offer a buying opportunity if the trend holds, but a break below the band would signal a potential reversal.

Volume-Price Relationship

Trading volume has surged on the recent rally, validating the price strength. The volume on the two-day 14.87% gain is notably higher than preceding sessions, suggesting strong conviction among buyers. However, if volume begins to wane while the price continues to rise, it may indicate weakening momentum. For now, the volume profile supports the sustainability of the upward move.

Relative Strength Index (RSI)

The RSI is in overbought territory, but given the stock’s recent breakout, this is not necessarily a sell signal. In strong uptrends, RSI can remain above 70 for extended periods. Traders should watch for a bearish divergence (lower highs in RSI despite higher price highs) as a potential warning of a reversal.

Fibonacci Retracement

Key Fibonacci levels from the recent swing low ($460) to the high ($534.90) include 38.2% at $500 and 50% at $497. A retest of these levels could offer support, with a successful hold above $497 reinforcing the bullish case. A breakdown below $485 (38.2% of the prior leg) would raise concerns about the trend’s integrity.

Backtest Hypothesis

The proposed strategy of buying TMO when both RSI and KDJ are overbought from 2022 to 2025 has historically underperformed the benchmark, returning -13.40% versus the S&P 500’s 42.24%. This -55.64% excess return and -6.39% CAGR, coupled with a Sharpe Ratio of -0.22, underscores the strategy’s poor risk-adjusted performance. The recent technical signals (RSI overbought, KDJ death cross) align with the backtest conditions but contradict TMO’s strong fundamentals, including raised financial guidance and robust cash flow. The mixed signals from MACD and moving averages further complicate the strategy’s reliability. Investors should avoid overreliance on these indicators and consider a more holistic approach that incorporates fundamental and broader technical factors.