The U.S. market is back in a Confirmed Uptrend. The S&P 500 and Nasdaq rebounded strongly from moving
average support this week, pushing all the way back to new all-time highs. Near-term support is again the rising
10- and 21-DMA (S&P 3,804; Nasdaq: 13,358). Both indices avoided distribution, keeping the count at six and
three, respectively, with one day expiring on the S&P 500 and two on the Nasdaq next week.
Author: Raj Gupta
Dr Lal Pathlabs
Key points from this report:
- Buy Dr Lal Pathlabs. The stock is breaking out of a stage-one flat base in heavy volume.
- Better-than-expected Q3 FY21 results. Revenue and net income beat consensus by 12% and 30%, respectively, driven by a strong recovery in its core business and double-digit volume growth. The core business has fully recovered, increasing 8% y/y in the quarter.
- Geographical expansion. The company announced the opening of two new reference labs in the West and South regions of India. These labs will be more technologically advanced and less capex heavy.
- Better positioning among peers. Dr Lal Pathlabs is the largest branded diagnostic chain in India in terms of samples processed. In the first nine months of FY21, the company processed 34.6M (-5% y/y) samples, compared with Metropolis’s 12.6M and 9.2M for SRL Diagnostic in H1 FY21.
- Next catalyst. The company will announce Q4 FY21 results in April. For FY21, consensus expects revenue and EPS growth of 16% and 24%, y/y, respectively. For FY22, consensus expects revenue and EPS growth of 15% and 20% y/y, respectively.
O’Neil Health Care Weekly
Health Care (XLV) pulled back to its 50-DMA last week. Despite the pullback, the sector has shown good
relative performance versus the S&P 500 over the last several weeks with the RS line beginning to turn higher.
Market View
The U.S. market is in an Uptrend Under Pressure. The S&P 500 and Nasdaq broke below their respective 21-
DMA this week in heavy volume. The next level of support is the rising 50-DMA (S&P 500: 3,716; Nasdaq:
12,721), which the S&P 500 is currently testing. The distribution day count now stands at six and three, respec-
tively, with no further expiration next week.
O’Neil Health Care Weekly
Market View
The U.S. market remains in a Confirmed Uptrend. The S&P 500 and Nasdaq moved back into all-time highs this
week and are again trading near the upper end of their respective channels. Near-term support remains the ris-
ing 21-DMA (S&P 500: 3,776; Nasdaq: 13,045). The distribution day count stands at five and three, respec-
tively, with one day set to expire on each next week.
O’Neil Health Care Weekly
Health Care (XLV) is trading 1% off highs and above its 10- and 21-DMA despite the pullback in the broader
market last week. The ETF is outperforming the S&P 500 over the last three weeks
Market View
The U.S. market remains in a Confirmed Uptrend. The S&P 500 and Nasdaq pulled back off all-time highs this
week, consolidating sharp gains over the last several weeks. Both indices held above their respective 21-DMA
(S&P 500: 3,747; Nasdaq: 12,860), however, the S&P 500 picked up back-to-back distribution days to close the
week. The distribution day count now stands at five and three, respectively, with one day expiring on the S&P
500 next week.
O’Neil Health Care Weekly
Market View
The U.S. market remains in a Confirmed Uptrend. The S&P 500 and Nasdaq made new all-time highs for a sec-
ond straight week, continuing to hold trend above their respective 21-DMA (S&P 500: 3,718; Nasdaq: 12,732).
The distribution day count stands at four each, with one day expiring on each index next week.