Thermo Fisher Scientific (TMO) has fallen from highs above $640. It closed at $466.70, with price action pointing lower.
The focus is an ascending trendline that began at the 2020 lows. This trendline is currently near $420.
The move from $466.70 to about $420 implies roughly 45 to 50 points of further downside. The area around $466 is described as offering little visible technical support.
The approach outlined is to wait for price to reach the trendline before considering a swing trade long. It also states that an intraday touch is not enough, and that a confirmed daily close at or near the level with stabilisation is the validation.
A daily close back above $500 is presented as a reason to reassess the timing. The trendline level near $420 remains the key zone in this view.
We are seeing Thermo Fisher struggle to hold the $540 level after its first-quarter 2026 earnings report showed slowing revenue in its bioprocessing segment. This weakness is supported by recent industry data indicating a 5% contraction in life sciences capital expenditures, putting pressure on the stock. This brings a critical long-term support level back into focus for the coming weeks.
Looking back, we remember the sharp sell-off in 2025 that brought TMO down to its major ascending trendline, which originated from the 2020 lows. That trendline, then near $430, provided a powerful floor for a multi-month rally. Now, that same structural support line has risen and sits near the $450 mark.
Given the potential for another 80-90 points of downside before that support is tested, a straightforward bearish position makes sense for the next few weeks. We see value in buying the June 2026 put options with strikes around $500 or $480. This provides direct exposure to the expected decline towards the key trendline.
For those looking to generate income from this view, consider selling bearish call credit spreads. A spread using the May or June 2026 expirations with strikes above resistance, such as $560/$570, could be effective. This strategy profits if TMO stays below $560, aligning with the view that there is no immediate catalyst for a significant upside move.
The primary trade, however, requires patience and is not a short position. As TMO approaches that ascending trendline near $450, we should prepare to shift our bias. A high-probability trade would be to sell bullish put credit spreads, such as the July 2026 $450/$440, to collect premium on the expectation of strong support materializing at that level.
We will need to reassess this downward trajectory if the stock can reclaim the post-earnings high near $565 on strong volume. Such a move would suggest buyers have absorbed the negative news and could delay a test of the trendline. Until then, the path of least resistance appears to be lower toward that historic support.
