Key points:
The stock broke out of a cup-with-handle base on July 24 post print. It is constructively trading higher with support at its 21-DMA.
Fundamental ratings: EPS Rank 93, top Composite Rating 99, top SMR Rating A.
Technical ratings: RS line near all-time high, RS Rating 96, A/D Rating A
U.S. Market
The U.S. market is in an Uptrend Under Pressure. The S&P 500 and Nasdaq continue to whipsaw below 50-
DMA resistance. Though the Nasdaq did stage a day-six follow-through on Tuesday, gains were immediately
wiped out Wednesday with instant distribution. Further, few quality ideas have been set up technically to buy with
the majority chopping around within consolidation. Our primary expectation is that the August 5 lows (S&P 500:
2,822; Nasdaq: 7,662) are undercut and we eventually test the 200-DMA. This would result in the market status
being moved back to a Downtrend. We would change our current cautious outlook should indices rally strongly,
close, and importantly hold above their respective 50-DMA. Should that occur, we would move the market status
back to a Confirmed Uptrend.
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The U.S. market is in a Rally Attempt. The S&P 500 and Nasdaq have now held above Monday’s low for four
sessions. We are now looking for a follow-through day before shifting the market back into a Confirmed Up-
trend or, conversely, an undercut of Monday’s lows (S&P 500: 2,822; Nasdaq: 7,662) before shifting the market
back into a Downtrend. A follow-through day should feel like an explosive rally, with indices preferably up 1.7%
or more, on heavier volume than the day before. We would recommend a gradual increase in risk should a fol-
low-through day occur next week. Positively, both indices closed off their lows Friday after finding support at their
respective 100-DMA.
Following Monday’s selloff, multiple sectors, including Technology, rallied back strongly to narrowly recapture
their respective 50-DMA. Most, however, continue to chop around that level similar to the major averages. The
majority of leading ideas are doing the same—consolidating around their respective 50-DMA—though a select
few remain very strong, bucking general market weakness and continuing into new highs following better-than-
expected results. ~45% of S&P 500 and Nasdaq 100 stocks are trading above their respective 50-DMA.
Key points:
The U.S. market is in an Uptrend Under Pressure. The S&P 500 and the Nasdaq pulled back sharply this week
after hitting resistance at all-time highs. The distribution day count is elevated with seven and five on the S&P
500 and Nasdaq, respectively. Indices are testing support at the 50-DMA as the Nasdaq and S&P 500 are sit-
ting on this key moving average.
Ten of 11 O’Neil sectors declined this week with four sectors falling more than 4%. Consumer Cyclical (-4.2%)
pierced through its 50-DMA and led the move lower as multiple apparel/leisure groups were under heavy distri-
bution. Six other sectors are testing support at their 50-DMA. Overall, 32% of S&P 500 stocks are trading below
their 50-DMA.
We maintain a cautious view of the general market until we see the S&P 500 and Nasdaq consolidate at support
and resume strength. The break below the 21-DMA and testing of support at the 50-DMA warrants a cautious
approach. Avoid new buys and reduce risk in ideas that have gapped down below 50-DMA support as these
ideas will likely lag until a new catalyst presents itself. Until then, stay patient and wait for market conditions to
improve.
The U.S. market remains in a Confirmed Uptrend. The S&P 500 and Nasdaq are trending into higher highs with
support off their respective 10- and 21-DMA. Distribution stands at six days on the S&P 500 and four on the
Nasdaq, with one day set to expire on both indices next Tuesday. To remain positive, we would like to see near-
term support levels continue to hold and distribution begin to subside.
Leadership is broadening. The majority of leading ideas and industry groups are holding logical levels of sup-
port or hitting higher highs, while previously lagging industry groups have rallied sharply off lows. Technology,
Transportation, and Consumer Cyclical rallied more than 2% each this week, while three other sectors including
Financial rallied more than 1%. Utility and Energy are the only two sectors lagging, both trading right around
their respective 50-DMA. 74 of 197 (37%) O’Neil Industry Groups are trading within 5% of a 52-week high with
160 groups (81%) trading above the 50-DMA. 46 industry groups rallied by more than 3% this week.
The overall backdrop remains positive, despite the elevated distribution day count on the S&P 500. Continue to
add to leading ideas as they rally off moving average support or emerge from secondary entry points. Lock in
partial gains in ideas that have become too far extended from later stage bases and logical levels of support.
Continue to avoid lagging ideas trading below their respective 50- and/or 200-DMA.
The U.S. market remains in a Confirmed Uptrend. The S&P 500 and Nasdaq continue to hold near all-time
highs, consolidating the last two weeks of gains over the last several sessions. Distribution did rise to five days on
the S&P 500 (three in the last four sessions) and four on the Nasdaq, though one day is set to expire on the
Nasdaq at the end of next week. There will also be further expiration on both indices the week after next. Near-
term support remains the rising 21-DMA (S&P 500: 2,968; Nasdaq: 8,104).
Ten of 11 O’Neil sectors remain clearly above the 50-DMA, while Energy is trading right around that level after
falling ~3% this week. Breadth remains strong with ~80% of S&P 500 stocks above the 50-DMA and ~45%
trading within 5% of a 52-week high. Leading ideas continue to act well, with the majority holding trend despite
this week’s pullback.
The U.S. market remains in a Confirmed Uptrend. The S&P 500 and Nasdaq are trending constructively higher
with just two and three distribution days, respectively. Near-term support remains the 10- and 21-DMA on both
indices.
Multiple sectors and industry groups are participating in this rally. All 11 O’Neil sectors remain above their re-
spective 50-DMA, led this week by Retail, Energy, Transportation, and Technology which all rose at least 1%
each. 84% of S&P 500 stocks are trading above the 50-DMA and 45% are trading within 5% of a new 52-week
high.
Current upward progress has been better than historical successful follow-through days. After five weeks since
the June 7 follow-through day, the S&P 500 has rallied 4.9% and the Nasdaq 6.5%. In the 18 instances since
1970 where the first follow-through day after a downtrend led to new highs, the median one-month gain was
3.1% and the median two-month gain was 5%.
