The U.S. market remains in an Uptrend Under Pressure. The S&P 500 and Nasdaq gapped lower to support on Monday before rallying back toward 50-DMA resistance to close the week. Both will now enter their sixth week of consolidation with no real trend yet to develop. Support remains ~4,200 and ~14,200, respectively. The distribution day count stands at six and seven, respectively, with one day set to expire on the S&P 500 and two on the Nasdaq next week.
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 continued to decline last week falling 3.5%. The ETF is now sitting on the top of its prior base at ~$126, which is now
the next level of support before the rising 200-DMA ($122.90).
The sector came under pressure following MRK’s COVID-19 therapeutic news as the majority of leading ideas are
benefiting from vaccine production. Thus far, ideas are simply forming new bases in and around their respective 50-DMA,
with few breaking down in concerning fashion.
Market View
The U.S. market remains in an Uptrend Under Pressure. The S&P 500 and Nasdaq gapped down back below their respective 50-DMA Tuesday and are now trading around their respective 100-DMA after staging upside reversals Friday. Both will now enter their fifth week of consolidation with support at ~4,200 and 14,200, respectively, and resistance at a flattening 50-DMA (S&P 500: 4,443; Nasdaq: 14,909). The distribution day count increased sharply to five and seven, respectively, with no expiration next week.
O’Neil Health Care Weekly
XLV gapped down below its 50-DMA last Monday, before rallying back to that level by week’s end. The 50-DMA ($133.20)
is now acting as near-term resistance as XLV enters its fourth week of building a new base.
The majority of big cap ideas within the sector have pulled into levels of logical support mostly in and around 50-DMAs.
Remain patient, focus on ideas rallying back to new highs as they will likely lead if the broader market is able to settle and
push higher in the coming days/weeks.
Market View
The U.S. market is in an Uptrend Under Pressure. The S&P 500 and Nasdaq broke below their respective 50-
DMA (S&P 500: 4,440; Nasdaq: 14,900) Monday before retracing the entirety of the move to close the week.
We will now be looking for both indices to settle above this moving average or push further higher in the coming
days before shifting the market status back to Confirmed Uptrend. The distribution day count remains low at two
and three, respectively, with no expiration next week.
O’Neil Health Care Weekly
XLV traded relatively flat for the week, pulling back just slightly below its 50-DMA. Overall action is orderly, however, if
weakness persists, we believe the next level of support is ~$129, which may coincide with a rising 100-DMA ($128.49
(-3.3%)).
Market View
The U.S. market remains in a Confirmed Uptrend. The S&P 500 and Nasdaq continued to pull back this week,
with the S&P 500 closing just below its 50-DMA (S&P 500: 4,436; Nasdaq: 14,875). Despite the pullback, indi-
ces remain just 2% off highs. The next level of support below the 50-DMA on the S&P 500 is ~4,367, while the
Nasdaq has good support at ~14,900. The distribution day count stands at three and four, respectively, with
one day expiring on each next week.
IPO Rewind
Attached is the latest IPO Rewind report. This report identifies a select group of IPOs or spin-offs that have priced in the last two years, giving them time to digest any initial volatility. Our selected ideas display positive fundamental trends with strong top- and bottom-line consensus estimates, and IPO Rewind provides an efficient way to review these ideas that we believe warrant attention
O’Neil Health Care Weekly
XLV pulled back sharply to close the week, breaking below its 21-DMA. We will now be looking for support at the 50-DMA,
a level that held during its last test in June.
Weakness was largely due to mega cap Biotech (AMGN, BIIB, LLY, NVS, SNY) and Managed Care (ANTM, CI, CNC,
HUM, UNH), though other big cap companies across multiple industry groups also declined Friday including FMS, ISRG
and ZBH.
Market View
The U.S. market remains in a Confirmed Uptrend. The S&P 500 and Nasdaq pulled back for three straight ses-
sions, with each staging a downside reversal to close the week. The S&P 500 is now sitting just above its 50-
DMA (4,424), a level that has acted as consistent, but now obvious support over the entirety of the year. The
Nasdaq is now trading just above its 21-DMA (15,081), with the next level of support at 14,896, which may co-
incide with a rising 50-DMA (14,826). The distribution day count stands at two and three, respectively, with no
expiration next week.
