O’Neil Health Care Weekly

XLV fell 54bps last week, finding resistance at its rolling 200-DMA ($139.31). Near-term support is at the rising 21-DMA ($135.41)
followed by the 50-DMA ($134.28). Its RS line has come off lows, but remains in a longer-term downtrend, still warranting an
underweight sector positioning. We will be looking for XLV to regain its 200-DMA before recommending a shift to equal weight.

O’Neil Health Care Weekly

XLV gained 1.5% last week, closing just below resistance at the rolling 200-DMA ($139.60). Support is at the rising 21-DMA ($134.53).
Its RS line has rallied from lows, but remains in a longer-term downtrend, still warranting an underweight sector positioning. We will
be looking for XLV to regain its 200-DMA before recommending a shift to equal weight.

O’Neil Market View

U.S. Market

 

The U.S. market is in a Confirmed Uptrend. Indices are at or near all-time highs after accelerating higher on Friday despite pulling back earlier in the week. The S&P 500 and Nasdaq regained their 10-and-21-DMAs (6,415/21,249) and continue to chop around in a sideways range for the last three weeks. The distribution day count stands at six and three, respectively.

O’Neil Health Care Weekly

XLV gained 4.7% last week, regaining its 50- and 100-DMA ($135.07). The next major level of resistance is the rolling 200-DMA
($139.87). Its RS line has rallied from lows, but remains in a longer-term downtrend, still warranting an underweight sector
positioning. We will be looking for XLV to regain its 200-DMA before recommending a shift to equal weight.

Market View

The U.S. market remains in a Confirmed Uptrend. The S&P 500 and Nasdaq gained 0.9% and 0.8%, respectively, for the week. Each index made a fresh all-time high earlier in the week. The first level of support is at the rising 10-DMA (6,391/21,397), followed by the 21-DMA (6,359/21,194). The distribution day count stands at six and two, respectively, with one added Friday on the S&P 500, and one set to expire on the S&P 500 after Monday’s close.

O’Neil Health Care Weekly

XLV fell 74bps last week after falling ~4% the week prior, and is now testing year-to-date low support at $127.35. It remains below all
key moving averages with an RS line near all-time lows, still warranting an underweight sector positioning.

O’Neil Market View

U.S. Market

 

The U.S. market remains in an Uptrend Under Pressure. The Nasdaq closed just below all-time highs (21,457), which would have been the trigger to shift the market back into Confirmed Uptrend. For the week, the S&P 500 and Nasdaq rose 2.4% and 3.9%, respectively. The S&P 500 still has minor resistance at prior highs (6,339). Support is at their 10-DMA (6,340/21,101), followed by their 21-DMA (6,307/20,924). The distribution day count stands at four and one, respectively, after one distribution day expired on each index on Friday’s close.

O’Neil Market View

U.S. Market

 

The U.S. market has shifted to an Uptrend Under Pressure. Indices staged a sharp downside reversal near all-time highs, declining over 2% and closing below the 21-DMA (6,284/20,764) for the first time since the April 22 follow-through day. The next level of support on the S&P 500 and Nasdaq is at the rising 50 DMA (6,130/20,290), which is poised to coincide with the top of the prior base consolidation. The distribution day count stands at four and two, respectively.

O’Neil Health Care Weekly

XLV rallied 3.5% last week, closing back above its 50-DMA ($133.78), but still below resistance at its falling 100-DMA ($137.26) and
200-DMA ($141.34). Though its RS line did rally slightly from multi-year lows last week, it remains in a downtrend and still warrants
an underweight sector positioning.