XLV has lost more than 3% in alpha versus the S&P 500 over the last two weeks. Weakness last week can be largely attributed to Abbott’s gap lower on Monday and how newly anticipated COVID-19 testing weakness will negatively impact peers over the remaining year.
Though Hospitals continue to be the leading group within Health Care, we did see notable strength in select Biotech and Medical Technology ideas to close last week. The majority of ideas remain stuck within consolidation, so the overall recommendation is to be patient. With that said, keep a close eye on our highlighted early technical setups as they could lead to breakouts should the broader market push out of current rangebound trade.
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
The U.S. market remains in an Uptrend Under Pressure. The S&P 500 and Nasdaq traded at the low end of a relatively tight range this week before pushing back to the upper end of that range Friday. We will shift the market back to Confirmed Uptrend should the S&P 500 clear back above all-time high resistance at 4,238 next week. Near-term support remains the 21- and 50-DMA, respectively. The distribution day count stands at seven and four, respectively, with one day expiring on each next week.
Jinxin Fertility
Key points from this report:
- Buy Jinxin: The stock broke out from a 14-week cup-with-handle base on heavy volume as China changes its existing two-child policy.
- What’s new: On May 31, China changed its child policy, allowing all married couples to have up to three children from the existing limit of two children.
- Leading position in attractive China market: Jinxin is one of three licensed, non-state-owned ARS providers in China that conduct more than 5,000 IVF cycles annually. The ARS market in China is expected to have a CAGR of 15% in 2018–2023, reaching RMB 49.6B. The success rate of Jinxin’s medical facilities is 55%, which outpaces the national average of 45%.
- Business expansion: In 2020, Jinxin expanded its network to Wuhan and Southeast Asian markets by acquiring Wuhan Jinxin Hospital and Jinrui Medical Center in Laos.
- Next catalyst: The company is expected to announce H1 results in August. With the recovery in IVF services, management guided for revenue growth of 20% for 2021.
O’Neil Health Care Weekly
XLV’s RS line (vs S&P 500) declined last week as the majority of large-cap Health Care ideas consolidated
gains. The ETF is still holding near-term support along its 21-DMA.
Market View
The U.S. market remains in an Uptrend Under Pressure. The S&P 500 and Nasdaq have regained their 21-
DMA (4,168) and 50-DMA (13,612), respectively, and continue to consolidate in a constructive fashion above
support. The distribution day count stands at eight and four, respectively, with one day expiring on each index
next week.
O’Neil Health Care Weekly
XLV’s RS line ( vs S&P 500 ) moved back up last week as majority of the large-cap Health Care ideas are at or
approaching new highs. Health Care remained the best performing sector over the last five days.
Large-cap pharmaceutical and biotech ideas are either forming the right sides of their respective bases or breaking out
into new highs. However, medical devices and diversified ideas including ABT and TMO are pulling back, with their RS
line remaining near lows.
Market View
The U.S. market remains in an Uptrend Under Pressure. The S&P 500 is testing resistance at its 21-DMA (4,167)
after a sharp pullback to and subsequent bounce off support at its rising 50-DMA. The Nasdaq is testing re-
sistance at its 50-DMA (13,579) after a rally across oversold growth constituents. The distribution day count re-
mains elevated at nine and five, respectively. However, two days will expire on the S&P 500 and one on the
Nasdaq next week.
O’Neil Health Care Weekly
XLV’s RS line (vs S&P 500) moved back up last week as majority of the large-cap Health Care ideas continued
to rise. Multiple ideas cleared above their key moving averages and are now forming the right sides of their
respective bases. Earnings session has almost come to an end. On an average, S&P 500 Health Care ideas beat consensus
revenue and EPS by 3% and 13%, respectively in Q1.
Market View
The U.S. market remains in an Uptrend Under Pressure. The S&P 500 bounced off its 50-DMA after a sharp
selloff earlier this week. The Nasdaq, which is already below its key moving averages, is bouncing into re-
sistance at the converging 50- (13,540) and 100-DMA. The distribution day count stands at seven and four re-
spectively, with one day expiring on the S&P 500 next week.
O’Neil Health Care Weekly
XLV’s RS line (vs S&P 500) moved back up last week after multiple large-cap Health Care ideas reported beatand-raise quarters and cleared back above key moving averages.
More than 100 Health Care ideas over $1B in market cap reported last week.
