When momentum gets too hot, something's got to give. As of November 17, 2025, two healthcare stocks are flashing warning signals that might matter if you're the type of trader who pays attention to when things get a little too frothy.
The Relative Strength Index (RSI) is a momentum indicator that compares how strong a stock is on up days versus down days. It's a useful tool for getting a sense of short-term performance potential. Generally speaking, when the RSI climbs above 70, an asset is considered overbought—meaning it might be due for a breather after a big run.
Here are the two major overbought players in the healthcare sector right now, and both have some interesting stories behind their momentum.
Avadel Pharmaceuticals: When Unsolicited Offers Send Shares Skyward
Avadel Pharmaceuticals PLC (AVDL) received an unsolicited proposal from Lundbeck on November 14, valuing the company at up to $23 per share. The offer structure includes $21 in cash plus up to $2 in contingent value rights tied to milestones. That kind of news tends to move stocks, and move it did—shares have gained around 55% over the past month, reaching a 52-week high of $23.57.
RSI Value: 95.1
That's an extremely elevated reading, suggesting the stock's momentum may have gotten ahead of itself in the near term. For context, an RSI above 70 is considered overbought; Avadel is well into the stratosphere.
AVDL Price Action: Shares jumped 22.5% to close at $23.56 on Friday.
The stock also carries a momentum score of 96.26, though its value score sits at just 4.05, reflecting the premium investors are paying for the acquisition speculation.
Cidara Therapeutics: The $9.2 Billion Merck Deal
Cidara Therapeutics Inc (CDTX) got even bigger news on November 14 when Merck & Co. Inc. (MRK) agreed to acquire the company for $221.50 per share in cash—a deal valued at approximately $9.2 billion. Merck is betting big on CD388, a potentially first-in-class, long-acting antiviral designed to prevent influenza in high-risk individuals.
"We continue to execute our science-led business development strategy, augmenting our pipeline with CD388, a potentially first-in-class, long-acting antiviral designed to prevent influenza in individuals at higher risk of complications," said Robert M. Davis, chairman and chief executive officer at Merck.
The market loved it. Cidara's stock has soared around 114% over the past month, hitting a 52-week high of $218.85.
RSI Value: 93.7
Like Avadel, Cidara is deep in overbought territory, which could signal a potential pullback as momentum traders take profits.
CDTX Price Action: Shares rose 105.4% to close at $217.71 on Friday.
What This Means For Traders
Both stocks are riding high on acquisition news, and the RSI readings suggest they may have run too far, too fast. For momentum traders, these extreme readings often indicate that a short-term correction could be coming. Of course, with firm buyout offers on the table, the downside risk may be limited to the deal prices themselves—but that doesn't mean the ride will be smooth from here.
