O’Neil Health Care Weekly

Sector Thoughts

XLV traded relatively flat last week, holding near-term support along its rising 21-DMA ($141.28). The next level of resistance is ~$148, followed by $150.32. With the index now back above key moving averages, and the RS line now lifting from lows, we recommend an equal-weight sector positioning.

O’Neil Market View

U.S. Market

 

The U.S. market remains in an Uptrend Under Pressure. The S&P 500 and Nasdaq are consolidating along their 21-DMA (6,650, 22,566 ) in a choppy fashion but remain above support at their respective 50-DMA (6,564, 22,110). The distribution day count stands at two and six, respectively, with one distribution day  set to expire on the Nasdaq next week.

O’Neil Health Care Weekly

XLV declined 1.9% last week, pulling back after strong gains the week prior. Look for support at the rising 21-DMA ($140.50). The next
level of resistance is ~$148 followed by $150.32. With the index now back above key moving averages, and the RS line now lifting
from lows, we recommend an equal-weight sector positioning.

O’Neil Market View

U.S. Market

 

The U.S. market was shifted to and Uptrend Under Pressure from Confirmed Uptrend. The S&P 500 and the Nasdaq fell 2.4% and 2.5% for the week after dropping ~3% on Friday. Both indices breached their 21-DMA for the first time since the beginning of September. It was the largest down day for the indices in six months. Support is now the rising 50-DMA (6,530, 21,948), which is ~1% below. The distribution day count stands at one and five, respectively.

 

O’Neil Health Care Weekly

XLV jumped 6.9% last week, clearing back above all key moving averages including the 200-DMA ($138.51). As the index
consolidates this move, look for the now rising 21-DMA ($138.52) to act as near-term support. The next level of resistance is ~$148
followed by $150.32. With the index now back above all moving averages, and the RS line now lifting from lows, we shift our
recommendation to equal-weight. This move was largely driven by multi-year lagging Pharma and Tools, most of which now need
time to settle and consolidate gains.

O’Neil Market View

U.S. Market

 

The U.S. market remains in a Confirmed Uptrend. The S&P 500 and Nasdaq rose ~1% and remains near all-time highs. The first level of support is at the rising 10-DMA (6,675/22,624), followed by the 21-DMA (6,624/22,379). The distribution day count stands at one and four, respectively, with one day expiring on the Nasdaq on Monday after the close.

O’Neil Health Care Weekly

XLV declined 1.3% last week, breaking back below its 50-DMA ($135.34) Thursday. Near-term resistance is along the declining 21-
DMA ($136.57), with the next level of support at ~$130. The RS line is back to all-time lows, still warranting an underweight sector
positioning.

O’Neil Market View

The U.S. market remains in a Confirmed Uptrend. The S&P 500 declined 0.3%, while the Nasdaq closed 0.6% lower for the week. Indices closed right around their 10-DMA (6,635/22,478) after holding another test of support near the 21-DMA (6,575/22,159) The distribution day count is at two and four, respectively.

 

Market View

The U.S. market remains in a Confirmed Uptrend. The S&P 500 and Nasdaq touched another new all-time high and continues to trend above all moving averages. The first level of support is the 10- and 21-DMA (6,532/21,931). Distribution day count stands at three on each index with one day expiring on each index next week.