None greater than CSL shares (ASX: CSL) to highlight the importance of momentum in financial markets, with the share price now 85% off the lows in just 7 weeks. Momentum is a vital watch point in financial markets, and when it swings, or reverses, the moves can be equally violent in the opposite direction.
CSL’s share price added another 5.49% in the last session to push the RSI into heavily overbought territory at 83.66, the most overbought A$1b+ market cap name on the ASX. This marks a huge shift from when the stock was the most oversold with an RSI of 9.62 back in May. A remarkable three months in the market.
The violent swing represents a textbook case of momentum whiplash, where extreme pessimism gives way to equally extreme optimism in compressed timeframes. Markets have effectively repriced CSL from a value trap to value buy in less than two months, with the stock now back within A$5 of the YTD break even line.
Driving The Recent Volatility In CSL Shares
The catalyst for CSL’s capitulation low came on 11 May, when the company released an “Interim CEO 90 Day Review and Financial Update” that appeared catastrophic on the surface. The announcement included a guidance cut for FY26, with revenue now expected around A$15.2 billion and net profit after tax and amortisation around A$3.1 billion on a constant currency basis, both figures below prior expectations. More dramatically, CSL flagged additional pre-tax charges and impairments running into the billions of dollars, linked primarily to its troubled Vifor acquisition and other assets.
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The guidance downgrade represented the latest in a multi-year string of disappointments that had eroded management credibility since 2024. Yet rather than triggering further selling, the announcement marked an inflection point. Markets interpreted the bad news as a credible reset, with the interim CEO effectively clearing the decks for a fresh start. The perception shifted from “another downgrade is coming” to “the worst is now priced in.”
Subsequent news flow, while mixed, reinforced the turnaround narrative. On 26 June, CSL Vifor announced that the European Medicines Agency’s Committee for Medicinal Products for Human Use had recommended revoking the EU marketing authorisation for TAVNEOS (avacopan) following a review of phase 3 data. Ordinarily such regulatory setbacks would pressure shares, but the stock absorbed the negative headline without breaking its uptrend, a technical signal that emboldened momentum traders.
More positive was the 27 July announcement of successful top-line Phase 3b results for ANDEMBRY (garadacimab-gxii) in pediatric hereditary angioedema, with plans to submit regulatory filings for expanded pediatric indications in the first half of FY27. The pipeline success reminded markets of CSL’s depth beyond plasma and vaccines, supporting the quality-compounder thesis.
The latest FY26 results provided the final piece of the rebound jigsaw, with the 22% gain since the start of this week coming as the company framed the year as a reset. With a return to growth now guided for FY27, buyers have continued to step in, stretching the technicals beyond ordinary levels of comfort.
CSL’s journey from most oversold to most overbought in seven weeks demonstrates how violently momentum can swing when fundamentals, sentiment, and positioning align. Yet a word of caution, that the exact same forces that powered the 85% surge can reverse just as quickly if markets so decide.
