The U.S. market is in a Confirmed Uptrend. The S&P 500 and Nasdaq continue to consolidate constructively above their 50-DMA (S&P 500: 4,338, Nasdaq: 13,401) support despite each index picking up a distribution day in the process. Indices jumped higher on Friday, as the Nasdaq has regained and is attempting to hold above its 100-DMA (13,618) while the S&P 500 is testing 100-DMA (4,403) resistance.
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 rose 3.47% last week, narrowly closing back above its 10- and 21-DMA ($127.35). The next level of major resistance is the rolling
50-DMA ($130), followed by the 200-DMA ($131). Though XLV rallied from YTD lows last week, its RS line made a lower low as few
constituents kept up with the broader market bounce. Overall, we continue to recommend an underweight sector positioning, until
the index regains key resistance, RS improves, and more ideas move up on their right sides.
Market View
The U.S. market was upgraded to a Confirmed Uptrend. The S&P 500 and Nasdaq each staged a follow-through day this week and remain under heavy accumulation. Each index has cleared multiple levels of resistance including its 50-DMA ( S&P 500: 4,348; Nasdaq: 13,425), which now is a level of short-term support. The next level of resistance is near the 100-DMA (S&P 500: 4,403; Nasdaq: 13,620).
O’Neil Health Care Weekly
XLV declined 3.8% last week, breaking to year-to-date lows. The next level of support below current levels is ~$120. Its RS line
remains rangebound, warranting an equal to underweight sector positioning. Along with XLV, the majority of Health Care industry
groups are trading at year-to-date or multi-year lows, including Equipment (XHE), Biotech (XBI), Pharma (PPH), Medical Devices
(IHI), Services (XHS), and Small Caps (PSCH).
Market View
The U.S. market remains in a Downtrend. The S&P 500 and Nasdaq declined 2.5% and 2.6%, respectively, for the week. Both breached early-October lows, which had held for the prior three weeks. The S&P 500 faces resistance at the 200-DMA and has support near ~4,050 level (-1%), or the lows of the April/May consolidation. The Nasdaq breached its 200-DMA for the first time since March and now has immediate support at ~12,270 level (-3%). The Nasdaq could generate a follow-through day as early as Wednesday if the 12,544 low from this week holds.
O’Neil Health Care Weekly
XLV declined 1.6% last week reversing from 200-DMA ($131.54) resistance. The next level of support is ~$126. Its RS line did rise last
week, but remains rangebound and unable to make a higher high still warranting an equal- to underweight sector positioning.
Managed Care (IHF), Medical Distribution (CAH, COR, MCK), and Pharma (PPH) continue to prop the sector up, while the majority of
other groups including Equipment (XHE), Biotech (XBI), Devices (IHI), and Small Caps (PSCH) are trading around year-to-date
lows.
Market View
The U.S. market remains in a Rally Attempt. Both S&P 500 and Nasdaq traded lower in four of five sessions this week, and closed down 2.4% and 3.2%, respectively. The indices are trading below 21- and 50-DMAs, which now may act as resistance to the upside. On the downside, the S&P 500 broke below major support at its rising 200-DMA (4,233), its first breach in seven months. The Nasdaq is testing support near its recent lows (12,963) with the 200-DMA (12,732) 2% further below. We will shift both indices to a Downtrend if they breach their recent lows (S&P 500: 4,216; Nasdaq: 12,963).
O’Neil Health Care Weekly
XLV gained 14bps last week, trading just below its first level of resistance at its 200-DMA followed by its 50-DMA (~1.5% above).
There is support around current levels as shorter-term moving averages have curled up in recent days. Its RS line has been
rangebound for the last few months, still unable to make a higher high, warranting an equal-weight sector positioning. Medical
Distribution, Managed Care (supported by beat and raise Q3 results of UNH), and Pharma are holding the sector up, while other
groups are trading around year-to-date lows. Medical Devices (IHI) took another huge hit last week on the back for more NVO/LLY, as
well as poor results from SILK.
Market View
The U.S. market remains in a Rally Attempt. The S&P 500 and Nasdaq faded off 50-DMA (4,404/13,591) resistance after bouncing into this level earlier in the week. Both indices remain open for a follow through day as long as the consolidation remains above the recent lows (S&P 500: 4,216; Nasdaq: 12,963).
O’Neil Health Care Weekly
LV rose 99 bps last week and regained its 10-DMA on above average volume last Friday. It is testing its first level of resistance at its 21-DMA followed by the 50-and 200-DMA (~1.5% above). The next level of support is around current levels followed by $126.05. Its RS line has come off lows, but has yet to make a higher high, warranting an under- to equal-weight sector positioning. Medical Distribution (COR, MCK), Managed Care (IHF), and Pharma (PPH) are holding the sector up, while other groups are still trading around year-to-date lows.
