Bet on This Medical Device Stock to Break Out

TMO stock has jumped 83% of the time after previous signals

by Patrick Martin

Published on Dec 18, 2018 at 12:16 PM
Updated on Dec 18, 2018 at 12:28 PM

The shares of medical analytics issue Thermo Fisher Scientific Inc. (NYSE:TMO) have taken a breather since touching a record high of $253.90 in early December. However, the equity could be ready to launch its next leg higher, with TMO shares flashing a historical buy signal.

Specifically, Thermo Fisher stock is now within one standard deviation of its 160-day moving average. When encountering this trendline in the past few years, TMO shares boast an average one-month gain of 7.9% and have been positive 83% of the time, per data from Schaeffer's Senior Quantitative Analyst Rocky White.

At last check, TMO was up 1.2% to trade at $231.59. A move of similar magnitude would have the stock trading near $250 once again. Since pulling back from that Dec. 3 high, the shares have churned below the $245 level. Overall, the security boasts a 22% lead year-to-date. 

Daily Stock Chart TMO

While Thermo Fisher options volume tends to run light on an absolute basis, speculators have been tremendously fond of bearish bets lately. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 10-day put/call volume ratio of 3.62 is in the 92nd percentile of its annual range. This suggests options buyers have picked up TMO puts over calls at an accelerated clip in the past two weeks. Echoing this, total call open interest stands at 20,731 contracts, a new annual high. 

Those wanting to buy options to bet on TMO's short-term trajectory will have to pay up, though. The security's 30-day at-the-money implied volatility (IV) checks in at 26.7%, in the 95th annual percentile, meaning near-term bets are pricing in higher-than-normal volatility expectations.

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