The U.S. market is in a Rally Attempt. Despite the heavy sell-off this week, the Nasdaq has held above its recent low (17,238) for three sessions and is open for a follow through day as soon as Monday. A follow through day is a move of +1.7% or more on volume higher than the prior session. The Rally Attempt on the Nasdaq resets if the low (17,238) is undercut. The S&P 500 set a new low (5,504) on Thursday and is only on its first day off that low and will be open for a follow through, if the low is held, as early as Wednesday.
Author: Raj Gupta
Raj Gupta is Director, Research Analyst.
After joining the firm in 2002 as a research analyst, Raj was appointed senior equity analyst in 2006, and lead senior equity analyst in 2014—largely because of his ability to select outperforming stocks. He acts as an expert in the O’Neil Methodology and contributes to the direction of product and service line development. He recommends securities for addition to or removal from the U.S. Focus List, or USFL, and the associated alerts to clients. During his tenure, he was part of the leadership that developed the Global Focus List, which marked the firm’s successful expansion into international equity recommendations. He is also a lead on the IPO Rewind report and contributes to weekly summaries on the performance of the U.S. market. Much of his expertise is delivered as highly customized service to clients.
RAj earned his Bachelor’s degree in Economics from the University of California, Santa Barbara. He began working at the firm directly out of college, driven by his passion for investing and stocks. An avid soccer player, he built and managed an adult league in the Los Angeles area, in which he still plays. He also enjoys international travel; he and his wife commit to at least one major adventure a year.
O’Neil Health Care Weekly
XLV traded relatively flat last week, holding support along its 200-DMA ($147.61). The next key level of resistance is the November
high of $150.95 (+1%). Its RS line continues to rise as the broader market corrects, warranting an equal-weight sector positioning.
Market View
The U.S. market remains in a Downtrend. The S&P 500 declined ~3.1% for the week despite staging an upside reversal and closing positive on Friday. It breached it’s 200-DMA (5,733) for the first time since November 2023, before closing just above it. The Nasdaq fell 3.5% and closed the week below the 200-DMA (18,400) for the first time since October 2023. A follow-through day (FTD) for each index now becomes first possible on Wednesday, March 12, assuming no further lows are made
O’Neil Health Care Weekly
XLV rallied 171bps last week, regaining 200-DMA ($147.51) support and now set to test resistance at its November high of $150.95.
Despite still trading 7% off its September peak, its RS line made a higher high last week, warranting a shift to an equal-weight sector
positioning.
Market View
The U.S. market was downgraded to a Downtrend. The S&P 500 and Nasdaq declined 1% and 3.5%, respectively, and breached their 100-DMAs (5,954, 19,239). The next level of support on the S&P 500 is the low of the current consolidation (5,773) followed by the rising 200-DMA (5,720). The Nasdaq is currently testing 200-DMA (18,358) support.
Over the trailing five sessions, Capital Equipment (+2.3%) and Health Care (+1%) outperformed while Consumer Staples, Retail, and Basic Material were relatively flat. All other sectors declined as Technology and Consumer Cyclical fell 3% each, followed by Financial and Energy pulling back
O’Neil Health Care Weekly
XLV gained 1.1% last week, still consolidating below 200-DMA ($147.38) resistance followed by $148.78 and $151. Support remains
the flattening 50-DMA ($142.61). Despite rising last week, its RS line has yet to make a higher high, still warranting an underweight
sector positioning. We will be looking for the index to break and hold above its 200-DMA and for the RS line to make a higher high,
before becoming more constructive on the broader sector.
Market View
The U.S. market was moved to an Uptrend Under Pressure. This week, the S&P 500 declined 1.7% and is 2% off highs while the Nasdaq was down 2.5% and is 3% off highs. The S&P 500 broke below its 21-DMA, but is still slightly above the 50-DMA (6,010). The Nasdaq breached both 21- and 50-DMAs, leaving next support at the 100-DMA (19,192). The distribution day count stands at six apiece after each index picked up one on Friday.
O’Neil Health Care Weekly
XLV fell 1.1% last week, unable to hold above its 200-DMA ($147.29) and December highs at ~$148-$149. This level remains key
near-term resistance with support at the flattening 50-DMA ($142.54). Overall, XLV is now consolidating an oversold rally from
December lows resulting in the RS line falling sharply over the last two weeks, and again warranting an underweight sector
positioning.
Market View
The U.S. market remains in an Uptrend Under Pressure. Despite bouncing 1-2% higher for the week, indices remain in a sideways range just below all -time highs (6,128, 20,204). Should indices close at a new all-time high, the market status will shift back to a Confirmed Uptrend. Until then, support is at the 50 DMA (6,008, 19,667) with four and five distribution days on the S&P 500 and Nasdaq respectively.
O’Neil Health Care Weekly
XLV traded relatively flat last week, falling 30bps after rallying for six straight weeks. The index now faces strong resistance at its 200-
DMA ($147.13) with support at the rising 21-DMA ($143.34). Though its RS line has risen from lows, it has yet to make a higher high,
still warranting an equal-to underweight sector positioning.
