The life science stocks have been red-hot lately, and while some of that strength has stemmed from market rotations, Jim Cramer said on Thursday night's Mad Money program, most of the move is coming from solid execution. Cramer recommended Thermo Fisher Scientific Inc. (TMO) as a name that can be bought right now.
Thermo Fisher is a great long-term investment, Cramer said. The shares are up 28% for the year and unlike other healthcare stocks, this company is not likely to become a political football. Let's review the charts and indicators too.
In the daily bar chart of TMO, below, we can see that prices have trended higher the past 12 months. A dip or test of the rising 200-day moving average line in October was a buying opportunity but the December break of the line may have stopped you out. Prices went on to rally to an April high followed by an equilateral triangle formation. TMO broke out on the upside from that triangle pattern earlier this month. TMO is back above the rising 50-day moving average line after crossing it several times while the triangle formed.
The daily On-Balance-Volume (OBV) line made a new high this month to confirm the price gains. The 12-day price momentum study in the lower panel is showing equal highs from March while prices made higher highs -- one category of bearish divergence. This divergence may not mean that a correction is coming.
In the weekly bar chart of TMO, below, we can see that prices have doubled in the past three years. The uptrend is clear to see even for fundamental investors. Prices are above the rising 40-week moving average line.
The weekly OBV line has been bullish since last June. The 12-week price momentum study has been slowing since March -- something to keep it mind for now.
In this Point and Figure chart of TMO, below, we can see the recent upside breakout at $285.32 and the potential price target of $302.
Bottom-line strategy: Traders could look to buy TMO on a dip back to the $280 area. Risk to $265 and our first upside price target is the $300-$305 area.