If you're hunting for momentum plays in healthcare, two stocks are waving red flags that suggest they might be running a bit too hot right now. As of December 16, 2025, both Avidity Biosciences Inc. (RNA) and Henry Schein Inc. (HSIC) are flashing overbought signals that momentum traders should probably pay attention to.
The Relative Strength Index, or RSI, is one of those handy momentum indicators that compares how a stock performs on up days versus down days. It's essentially a measure of buying pressure relative to selling pressure. When the RSI climbs above 70, the conventional wisdom says a stock is overbought and might be due for a breather. It doesn't guarantee a pullback, but it's a signal that the recent run-up could be getting ahead of itself.
Avidity Biosciences: Riding the Novartis Wave
Avidity Biosciences (RNA) is currently sporting an RSI of 76, well into overbought territory. The biotech company has had quite the run lately, with shares climbing roughly 141% over the past six months and recently hitting a 52-week high of $71.90.
The catalyst? A definitive merger agreement with Novartis announced in October. "We believe this maximizes value for our investors, accelerates the global reach of our innovative neuroscience pipeline, and advances even more possibilities for our innovative science," said Sarah Boyce, president and CEO of Avidity.
The company reported third-quarter results on November 10 that were a mixed bag. Avidity posted a loss of $1.27 per share, missing the consensus estimate calling for a loss of $1.11 per share. On the revenue side, though, the company crushed expectations, bringing in $12.475 million against estimates of just $1.932 million. That's the kind of revenue beat that gets attention.
Shares closed Monday at $71.86, up a modest 0.04%. The stock also carries a momentum score of 95.79, suggesting the upward trajectory has been powerful, even if it's now flashing caution signs.
Henry Schein: Analyst Upgrade Fuels Momentum
Henry Schein (HSIC) isn't quite as extended as Avidity, but with an RSI of 71.1, it's just crossed into overbought territory. The healthcare distribution company has gained about 6% over the past five days, with shares trading near their 52-week high of $82.49.
The recent catalyst here is analyst attention. On December 9, Barclays analyst Glen Santangelo initiated coverage on Henry Schein with an Overweight rating and set a price target of $86. That target implies modest upside from current levels, but the positive sentiment has clearly helped fuel the stock's short-term momentum.
Shares rose 1.1% on Monday to close at $77.39, continuing the recent climb.
What It Means for Traders
Overbought doesn't mean "sell immediately." Stocks can stay overbought for extended periods, especially when there's a strong fundamental story driving them. But for traders who use technical indicators as part of their decision-making process, these elevated RSI readings suggest caution might be warranted. The momentum has been strong, perhaps too strong in the short term, and a pause or pullback wouldn't be surprising from here.
