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.

O’Neil Health Care Weekly

XLV remains within 2% of all-time highs holding above its 21-DMA after pulling back slightly last week. The relative
strength line versus the S&P 500 has pulled in following strong gains in the broader market. Leading ideas mostly remain extended, though a handful are providing add points on pullbacks to the 21-DMA, while others are beginning to setup. We would remain overweight on Health Care.

Market View

The U.S. market remains in a Confirmed Uptrend. The S&P 500 and Nasdaq are trading at or near all-time
highs with leadership expanding across multiple sectors and market caps. Support is at the rising 10- and- 21-
DMA ( S&P 500: 4,469, Nasdaq: 14,809). The distribution day count stands at three and two, respectively, with
two expiring on the S&P 500 next week.

O’Neil Health Care Weekly

Over the last five sessions, Commercial Services (CRVL), Products (ALC), and Diversified Healthcare (ABT)
led, while Generic Drugs (ABSI), Biotech (FATE), and Long-term Care (OSH) lagged. Hospitals, Diversified
Healthcare, Pharmaceuticals, and Systems/Equipment remain top-ranked industry groups. Biotech, Generic
Drugs, Long-term Care, and Outpatient Care are trading below 50- and 200-DMA.

Market View

The U.S. market remains in a Confirmed Uptrend. The S&P 500 and Nasdaq pulled back to their respective 50-
DMA before finding support and closing within the upper half of their weekly range. Support below the 50-DMA
is ~4,233 on the S&P 500 and ~14,200 on the Nasdaq. Despite adding a distribution day on Tuesday, the
overall count declined to three and two, respectively, with no expiration next week.

O’Neil Health Care Weekly

Over the last five sessions, Generic Drugs ( OGN ), Diversified Healthcare ( GSK ), and Pharmaceuticals ( PFE ) led, while
Hospitals ( LFST ), Services  ( NVTA ), and Long-term Care ( OSH ) lagged. Hospitals, Diversified Healthcare,
Pharmaceuticals, and Systems/Equipment remain top-ranked industry groups. Biotech, Long-term Care, Services, and
Outpatient Care are trading below 50- and 200-DMA.

IPO Rewind

Winners (annualized gain of 30% or greater)
• Less than half the median market cap at IPO and clearly better Day 1 performance.
• Revenue growth of ~40% three consecutive years (1 year prior to IPO, year of IPO, and year after IPO).
• Most still losing money as they IPO, but more make progress toward profits.

Losers (annualized loss of 20% or greater)
• Clearly larger IPOs, not as good Day 1 performance.
• Good revenue growth year before IPO and year of IPO (although sharply lagging winners), but big dropoff in revenue growth year after IPO.
• Similar % losing money, but difference with that no progress in the group made over three years.