The U.S. market is in a Confirmed Uptrend. The Nasdaq staged a day five follow-through on Thursday, gaining 2.7% in
higher day/day volume. The index regained both its 10-DMA (11,687) and 21-DMA (11,925) which will now act as nearterm downside support. The rolling 50-DMA (12,920) is now the next level of logical resistance. The S&P 500 rallied in
lower volume, but also regained its 10-DMA (4,024) and 21-DMA (4,066), with the 50-DMA (4,277) now also the next level
of resistance.
Author: Raj Gupta
O’Neil Health Care Weekly
XLV gained 92 bps last week, significantly outperforming the broader market. The index has held longer term support near
$124, but still faces resistance at multiple moving averages including the 21-DMA ($130.47).
Market View
The U.S. market is in a Downtrend. The S&P 500 and Nasdaq staged a follow-through day (FTD) Tuesday, before
quickly failing on Friday by undercutting year-to-date lows. This is now the third failed FTD this year. Since 1971, there
have been 33 S&P 500 corrections (9% off highs and below 200-DMA) of which seven turned into bear markets. These
seven bear markets had a median of six failed FTDs. Support is now ~3,700 on the S&P 500 and ~10,500 on the
Nasdaq. Near-term resistance remains the declining 10-DMA (S&P 500: 3,985, Nasdaq: 11,670).
O’Neil Health Care Weekly
XLV fell 91bps last week, declining towards year-to-date lows before rallying to close the week. The index now faces
direct resistance at its 10-DMA ($128.93) before its rolling 21-DMA ($131.17). Support remains ~$124.
Market View
The U.S. market is in a Downtrend. The S&P 500 and Nasdaq declined 2.4% and 2.8%, respectively, each falling for a
sixth straight week. Despite another steep weekly decline, both indices are now two days off recent lows (S&P 500:
3,858; Nasdaq: 11,108) and set to again face resistance at the sharply falling 10-DMA (S&P 500: 4,063; Nasdaq: 11,965)
and 21-DMA (S&P 500: 4,167; Nasdaq: 12,430).
O’Neil Health Care Weekly
XLV reversed from 200-DMA ($133) resistance, closing down for a fourth straight week. Despite another pullback, the
ETF’s RS line is making highs, outperforming the broader market. There is still support between ~$127.50 to $129, before year-to-date lows of $124.06.
Market View
The U.S. market is in a Rally Attempt. The S&P 500 reversed from 21-DMA resistance giving up early week gains to close down for a fifth straight week. Despite the reversal, the index is still holding above the May 2 intraday low (4,062), which keeps the attempted rally on this index intact. The Nasdaq also reversed sharply from its 21-DMA, however, did undercut prior lows, killing the rally attempt on that index. Though a follow-through day (FTD) on the S&P 500 can still result in a market upgrade as early as Monday, the earliest the Nasdaq can stage a FTD is now Thursday. Both indices face resistance at the sharply rolling 10-DMA (S&P 500: 4,214; Nasdaq: 12,620) and 21-DMA (S&P 500: 4,285; Nasdaq: 12,944).
O’Neil Health Care Weekly
XLV fell 2.5% last week, failing to hold support at its 200-DMA. The breakout into new highs from last month has failed.
The next range of support is between ~$127.50 and $129, before year-to-date lows at $124.06. The ETF now faces
upside resistance at all key moving averages including its 50-DMA ($134.24).
Market View
The U.S. market is in a Downtrend. The S&P 500 and Nasdaq closed at year-to-date lows this week, resulting in the
second failed follow-through day of the year. The next level of support on the S&P 500 is ~4,114 before ~4,000, while
support on the Nasdaq is ~12,000.
O’Neil Health Care Weekly
XLV fell 3.5% last week and back to its 200-DMA ($133). After initially responding favorably to JNJ and ABT earnings, the sector reversed following ISRG and HCA prints Friday. There remains a high amount of uncertainty within the sector
regarding margin pressure due to elevated costs from inflation, labor costs and supply chain constraints.