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.

Market View

Posted on by Raj Gupta

The U.S. market remains in a Confirmed Uptrend. The S&P 500 and Nasdaq continued to push higher post last week’s follow-through, remaining above 50-DMA support with no distribution. Both indices now face resistance at February highs (S&P 500: 4,595; Nasdaq: 14,509) with the Nasdaq also still below its 200-DMA (14,723).

Leading sectors led this week with Energy and Basic Material jumping another 4-7%, while Financial, Health Care, and Retail lagged, trading flat to down 1%. Technology gained another 2% and now faces resistance at its 200-DMA. All in all, breadth continues to improve with all sectors outside Consumer trading above the 50-DMA. The best performing industry groups this week included Steel, Agriculture, Oil & Gas, Metal Ores, Miners, Aerospace/Defense, Autos, Ships, Insurance, and Semiconductors. The worst performing groups included Mobile Homes, Leisure, Building Products, Home Builders, Furniture, Auto Parts, Apparel, and Medical Equipment. 60% of S&P 500 stocks are trading above their 50-DMA and 51% are trading above their 200-DMA, compared with 54% and 49%, respectively, a week ago. 59% of Nasdaq 100 stocks are trading above their respective 50-DMA, compared with 50% one week ago.

We recommend increasing risk in high quality high relative strength ideas as they build the right side of bases or emerge
from consolidation. Indices have held moving average support during intraday pullbacks, avoiding instant distribution, and
eventually progressing above multiple moving averages. Breadth has improved sharply over two weeks with the number
of actionable ideas steadily increasing. This action warrants a further increase in risk. We will now be looking for indices
to break and hold above February highs and for key moving averages to continue to hold during pullbacks to remain
constructive.

Market View

Posted on by Raj Gupta

The U.S. market is now in a Confirmed Uptrend. The S&P 500 staged a day 15 follow-through Wednesday, and the
Nasdaq staged a day 4 follow-through Friday. The S&P 500 rallied above 10- 21- and 50-DMA resistance which will all
now act as near-term support going forward. The next level of resistance is the 200-DMA (4,470). The Nasdaq closed
narrowly above its 50-DMA Friday after rallying over 8% on the week. Should a pullback occur, look for the index to hold
support at the now rising 21-DMA (13,421).

Consumer Cyclical, Technology, Retail and Health Care led, jumping 7-10%, while Utility and Energy lagged closing flat to
down ~3% on the week. Seven of 11 O’Neil sectors are now trading above their respective 50-DMA, including Retail,
Transportation, Capital Equipment and Health Care which regained that level this week. Technology and Financial are
trading 1-2% below their 50-DMA. The best performing industry groups this week included Semiconductors, Computer
Networking, Leisure, Discount Retail, Pharma, Managed Care, Trucks, and Construction. The worst performing groups
included Generic Drugs, Drug Stores, Banks, Reits, Media, Aggregates, and Food. 54% of S&P 500 stocks are now
trading above their 50-DMA and 49% are trading above their 200-DMA, compared with just 26% and 36%, respectively, a
week ago. 50% of Nasdaq 100 stocks are trading above their respective 50-DMA, compared with only 18% one week ago.

We recommend a gradual approach to increasing risk, buying non-extended high quality high relative strength ideas
trading above their respective 50-DMA. Increase risk should indices hold near-term moving average support on pullbacks
and eventually progress above logical levels of resistance. Avoid or reduce risk in lagging ideas with poor volume trends
that have been unable to keep up with the market advance.

O’Neil Health Care Weekly

Posted on by Raj Gupta

XLV pulled back 2.7% after finding resistance directly at its rolling 50-DMA ($131.84). Despite the pullback, its RS line
continues to hold, remaining near recent highs. Look for the index to remain in a range and hold support above $124.

Market View

Posted on by Raj Gupta

The U.S. market remains in a Rally Attempt. The S&P 500 and Nasdaq were unable to rally above 10-DMA resistance (S&P 500: 4,275; Nasdaq: 13,207), reversing from that level again Friday. Despite poor technical action, both indices remain above the February 24 low, keeping the attempted rally alive. Monday will mark Day 13 of the Rally Attempt with a follow-through day still needed to upgrade the market status. An undercut of these lows will shift the market status back to Downtrend.

O’Neil Health Care Weekly

Posted on by Raj Gupta

XLV rallied for a second straight week and now faces resistance at its declining 50-DMA ($132.91). Its RS line continues to rise as bigger cap constituents across Managed Care and Pharma remain under accumulation.  We will be looking for the index to regain and hold above the 50-DMA this week. Should it reverse, look for support at the rising 10- 21- or 200-DMA, all of which are just below current prices.

Market View

Posted on by Raj Gupta

The U.S. market remains in a Rally Attempt. The S&P 500 and Nasdaq bounced into resistance at their declining 21-
DMA (S&P 500: 4,394; Nasdaq: 13,756) before pulling back for the week. Price action continues to be volatile however the
Rally Attempt status remains once indices hold above February 24th lows (S&P 500: 4,288; Nasdaq: 13,473). While in a
Rally Attempt, the market status moves to a Confirmed Uptrend

O’Neil Health Care Weekly

Posted on by Raj Gupta

Pacira Biosciences (PCRX) — $2.9B market cap — Buy Pacira Biosciences as the stock is breaking out of a 52-week
stage-one cup-with-handle base in heavy volume. Exparel (88% of revenue) is the only approved non-opioid long acting
pre and post surgery pain medication with a TAM of 32M patients annually. The company is poised for strong double-digit
growth over the next few years driven by a rebound in elective surgeries, geographic expansion, and portfolio
diversification.

Market View

Posted on by Raj Gupta

The U.S. market is in a Downtrend. The S&P 500 and Nasdaq undercut January lows before reversing sharply higher
to close a volatile shortened week. Both are now two days off recent lows and still below near-term resistance at their
respective 21-DMA (S&P 500: 4,423; Nasdaq: 13,881) before both the 50 – and 200-DMA. The market status will shift to
Rally Attempt Monday should recent lows hold at which point a second follow-through day will need to occur before
moving back to Confirmed Uptrend

O’Neil Health Care Weekly

Posted on by Raj Gupta

XLV fell another 2% last week, moving further below its 200-DMA and now set to test support at ~$124.50. This level held
in October and again in January. Near-term moving averages are rolling over and may act as resistance before the 200-
DMA ($130.80). The 21-DMA is currently trading at $131.10.