Thermo Fisher Scientific (TMO), based in a Boston suburb perhaps better known for its pockets of old and ivy-covered universities, has been in the financial press for its attempted acquisition of Affymetrix (AFFX).
Putting the bids and counters aside, we thought a look at the chart of TMO would be helpful.
In the past 12 months, TMO has been confined to a range of roughtly $120 to $140, with four attempts to break out over the $140 ceiling (see the chart above).
Prices for TMO and the 50-day and 200-day moving averages criss-crossed each other several times in the past year.
The On-Balance-Volume (OBV) line declined from August until early February, as sellers of TMO were more aggressive, in that volume was heavier on days when TMO closed lower. Since early February, the OBV line has been strengthening.
A longer-term view of TMO is quite positive. In this three-year line chart of TMO, above, we can see that prices are above a rising 40-week moving average line.
The OBV line on a weekly timeframe is basically neutral, and the Moving Average Convergence Divergence (MACD) oscillator is in a bullish configuration, with a crossover above the zero line.
This chart of TMO, above, is what is known as a point and figure chart. The origin of this charting technique dates back to the 1880s -- a time when the markets moved slower and data mining, day trading and alogs didn't exist. This kind of chart only looks at price reversals of a particular size.
Here we are looking at price changes of $2 or more on TMO, ignoring smaller "jiggles." A trade on TMO to $144 will be considered a breakout on the upside and give us a longer-term price target for TMO around $181.
A trade to $116 would be needed to justify a break down lower. With prices above the rising 40-week average line (chart 2 above), we would anticipate a breakout to the upside. A decline below $130 would turn us neutral on TMO.