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 October 5, 2018February 1, 2019 by Raj Gupta

The U.S. market is in an Uptrend Under Pressure. The Nasdaq broke its 50-DMA on Thursday, a level that had
been holding as support for the last several months. Distribution increased and leading ideas pulled sharply
back off highs with several breaking down technically and subsequently being removed from the U.S. Focus List.
With the 100-DMA also undercut on Friday, the next level of support on the Nasdaq is now the July 30 low at
~7,600, before the 200-DMA. This poor technical action across the major averages and leading ideas alike

warrants a cautious approach until market conditions stabilize and price action tightens up. Therefore, our rec-
ommendation is to reduce risk by trimming ideas that have broken below moving average and/or price support,

while also locking in gains in ideas that have become well extended from prior pivot points.
Stocks on our U.S. Focus List: Current Sentiment
Our USFL of 71 ideas lost 4.5% on average this week, underperforming the S&P 500 ( -1% ) and the Nasdaq ( –
3.2% ).
Actionable Focus List ideas: Abiomed ( ABMD ), Activision Blizzard ( ATVI ), Adobe Systems ( ADBE ), Autodesk
( ADSK ), Centennial Resource Dvlp ( CDEV ), Continental Resources ( CLR ), Diamondback Energy ( FANG ), Fidelity
Natl Info Svcs ( FIS ), Intuit ( INTU ), Nvidia ( NVDA ), Vertex Pharmaceuticals ( VRTX ), Xilinx ( XLNX ), Yelp ( YELP ),
Zoetis ( ZTS )
Sector
Health Care and Technology ideas within the U.S. Focus List pulled back sharply this week. Breakouts failed in
EW and ALGN, while ABMD pulled back after testing all-time highs earlier in the week. ILMN and IDXX gapped
down below their respective 50-DMA. VRTX, UNH, and ZTS continue to hold up well. Within Technology, ideas
that had become extended over the past month pulled back the most. PAYC, AMD, TEAM, and VEEV are now
trading more than 10% off their highs, while BL, PANW, ALRM, WDAY, SMTC, NOW, SPLK, and QTNA among
others have broken below their respective 50-DMA. INTU, ADSK, and CRM continue to act well, trading above
their respective 50-DMA with relative strength lines trading near new highs. Bucking the trend were Consumer
Staple ideas MKC and CHEF. Both reached new highs despite the weak tape.
New Ideas or Deletions
We removed

(

), Monolithic Power Systems ( MPWR ), Arista Networks ( ANET ), and Lumentum ( LITE )
from the U.S. Focus List this week.

Market View

Posted on September 28, 2018February 1, 2019 by Raj Gupta

The U.S. market is in a Confirmed Uptrend. The S&P 500 and Nasdaq continue to hold above short-term sup-
port levels. The Nasdaq has an elevated distribution day count at seven, however, three days expire within four

sessions beginning next Thursday. To remain positive, we would like to see the Nasdaq hold above its 50-DMA
and avoid further distribution as expiration approaches. Underlying action among growth ideas has been strong

this past week. Multiple ideas have begun to emerge from consolidation and move back into new highs. Sixty-
four of the 75 (85%) U.S. Focus List ideas are trading above their respective 50-DMA, 49 (65%) are trading with-
in 5% of a new high, and 21 (28%) hit new all-time highs this week. We continue to recommend buying high

quality ideas as they find support at key moving averages or as they emerge from sound bases.
Stocks on our U.S. Focus List: Current Sentiment
Our USFL of 75 ideas gained 1.8% on average this week, outperforming the S&P 500 (-0.5%) and the Nasdaq
( +0.7% ).

Actionable Focus List ideas: Abiomed ( ABMD ), Activision Blizzard ( ATVI ), Adobe Systems ( ADBE ), Align Technolo-
gy ( ALGN ), Autodesk ( ADSK ), Canada Goose ( GOOS ), CarGurus ( CARG ), Centennial Resource Dvlp ( CDEV ),

Continental Resources ( CLR ), Diamondback Energy ( FANG ), Envestnet ( ENV ), Fidelity Natl Info Svcs ( FIS ),
Fleetcor Technologies ( FLT ), Home Depot ( HD ), Intuit ( INTU ), Nextera Energy ( NEP ), Nomad Foods ( NOMD ),
Nvidia ( NVDA ), Old Dominion Freight Line ( ODFL ), Palo Alto Networks ( PANW ), Planet Fitness ( PLNT ), PRA
Health Sciences ( PRAH ), Realpage ( RP ), Splunk ( SPLK ), Vertex Pharmaceuticals ( VRTX ), Xilinx ( XLNX ), Yelp ( YELP ),
Zoetis ( ZTS )
Sector
Health Care ideas within the U.S. Focus List led this week. All nine ideas are trading within 3% of an all-time
high, with five reaching a new high this week. EW broke out earlier in the week and is now extended from an
ideal pivot, while VRTX is just slightly extended after breaking out this week. ABMD remains actionable and is

now testing new highs. Energy ideas fared well for a second straight week. CLR, CDEV, and FANG are all ap-
proaching new highs with all three still actionable. Technology ideas also did well this week. NVDA turned ac-
tionable after finding support at its 50-DMA, RP moved back into new highs after finding support at its 21-DMA,

and ATVI broke out of a cup pattern. Multiple other ideas, including TEAM, VEEV, MTCH, ALRM, AMD,
and PAYC, remain extended, but are holding near-term levels of support.

Nanosonics

Posted on September 28, 2018February 1, 2019 by Raj Gupta

Key Points:

The stock regained its 50-DMA on heavy volume after an Australian investment firm announced the acquisition of 15M shares. We recommend building positions as the stock forms the right side of a new base.

Technical ratings: Sharp rise in the stock‘s RS line this week, RS Rating 85, A/D Rating A+.

Fundamental ratings: EPS Rank 62 (expected to improve given consensus EPS growth of 50% in FY 2019 and 167% in FY 2020), Composite Rating 92, SMR Rating C.

Abiomed

Posted on September 25, 2018February 1, 2019 by Raj Gupta

Key points from the report:

The stock is building the right side of a new base in very heavy volume. We recommend building a position now, ahead of the pivot point of $450.93.

Technical ratings: Sharp rise in the stock’s RS line this week, RS Rating 97, A/D Rating C+.

Fundamental ratings: Highest EPS Rank of 99, top SMR Rating of A, best Composite Rating of 99.

Edwards Lifesciences

Posted on September 24, 2018February 1, 2019 by Raj Gupta

Key points from the report:

The stock is actionable after breaking out of a cup pattern. Support is the top of the base at ~$157. The stock becomes extended above $164.

Technical ratings: RS line is at multi-year highs. RS Rating 84. A/D Rating A-.

Fundamental ratings: EPS Rank 88. Top SMR Rating A. Composite Rating 98.

Market View

Posted on September 21, 2018February 1, 2019 by Raj Gupta

The U.S. market is in a Confirmed Uptrend. The S&P 500 moved back into all-time highs this week, while the

Nasdaq held support at its 50-DMA. The majority of leading ideas also continue to hold individual levels of sup-
port or make new highs, though we have begun to see sector rotation over the past week. Energy, Basic Materi-
al, Consumer Cyclical, and Capital Equipment have come under accumulation, while previously leading sectors,

Technology and Retail, have paused, consolidating sharp gains over the last month. Our recommendation is to
continue holding core positions in high relative strength ideas, while also proactively locking in gains in ideas
that have rallied 20-25% or more above later stage pivot points. We maintain our positive view on the general

market, which will change should we begin to see technical deterioration in leading ideas coupled with addi-
tional distribution in the major averages.

Stocks on our U.S. Focus List: Current Sentiment
Our USFL of 74 ideas lost 1.4% on average this week, underperforming the S&P 500 (+0.8%) and the Nasdaq
(-0.3%).

Actionable Focus List ideas: Activision Blizzard ( ATVI ), Adobe Systems ( ADBE ), Align Technology ( ALGN ), Auto-
desk ( ADSK ), Calavo Growers ( CVGW ), Centennial Resource Dvlp ( CDEV ), Edwards Lifesciences ( EW ), Envestnet

( ENV ), Fidelity Natl Info Svcs ( FIS ), Home Depot ( HD ), Intuit ( INTU ), Nextera Energy ( NEP ), Nomad Foods
( NOMD ), Nvidia ( NVDA ), Old Dominion Freight Line ( ODFL ), Palo Alto Networks ( PANW ), Paypal ( PYP L), PRA
Health Sciences ( PRAH ), Q2 Holding ( QTWO ), Realpage ( RP ), Splunk ( SPLK ), Vertex Pharmaceuticals ( VRTX ),
Zoetis ( ZTS )
USFL ideas weekly earnings line-up:
Thursday: Open: MKC

Sector
Energy ideas within the U.S. Focus List led this week. FANG regained its 50-DMA, while CLR found support at its
200-DMA. NEP continues to trend along its 50-DMA, while CDEV remains technically intact despite pulling back
from its pivot point on Thursday. Payment processors also continue to act well. MA and V continue to make new
highs, while FLT, PYPL, WP, and GPN remain at or near new highs. Conversely, Technology ideas have pulled
back off extended levels. WDAY, GRUB, SPLK, NOW, RNG, QTWO, ADBE, NVDA, and TYL have pulled back to

their respective 50-DMA, while MPWR and GOOGL have broken below that same level of sup-
port. ADSK and ATVI still look strong technically and remain actionable. Retail ideas are also consolidating sharp gains over the past month. WING, LULU, OLLI, and FIVE remain extended, while HD is still trading within
a pivot. AMZN is trading ~7% off highs and testing support at its 50-DMA.

Market View

Posted on September 14, 2018February 1, 2019 by Raj Gupta

The U.S. market is in a Confirmed Uptrend. The S&P 500 held support at its 21-DMA this week while distribution
fell to just two days due to expiration. The Nasdaq held its 50-DMA and currently has five distribution days. Both
indices will lose an additional distribution day next week. Leadership continues to act well, with new ideas also

breaking out from consolidation over the past week. Despite positive price volume action in both the major av-
erages and individual ideas, we recommend reducing risk in stocks that have rallied 20-25% above later stage

pivot points. We will change our current positive view on the market should we begin to see technical deteriora-
tion in leading ideas coupled with additional distribution in the major averages

Stocks on our U.S. Focus List: Current Sentiment
Our USFL of 77 ideas gained 2.1% on average this week, outperforming the S&P 500 (1.2%) and the Nasdaq
(1.4%).
Actionable Focus List ideas: Activision Blizzard ( ATVI ), Align Technology ( ALGN ), Autodesk ( ADSK ), Calavo
Growers ( CVGW ), Centennial Resource Dvlp ( CDEV ), Chefs’ Warehouse ( CHEF ), Envestnet ( ENV ), Fidelity Natl
Info Svcs ( FIS ), Home Depot ( HD ), Intuit ( INTU ), Nextera Energy ( NEP ), Nvidia ( NVDA ), Old Dominion Freight
Line ( ODFL ), Palo Alto Networks ( PANW ), Paypal ( PYPL ), PRA Health Sciences ( PRAH ), Q2 Holding ( QTWO ),
Realpage ( RP ), Servicenow ( NOW ), Splunk ( SPLK ), SVB Financial ( SIVB ), Vertex Pharmaceuticals ( VRTX ), Zoetis
( ZTS )

Sector
Technology ideas within the U.S. Focus List led this week. Nineteen of 30 ideas hit a new high, including ATVI,

ADBE, AMD, BL, CRM, GRUB, MTCH, PAYC, RP, and TEAM. Though AMD, PAYC, and TEAM are now well ex-
tended from moving average support, ATVI and RP just turned actionable after breaking out this week. Energy

ideas also rallied, led by new addition CDEV which is breaking out from a 17-week cup. CLR and FANG are still

looking to regain their respective 50-DMA as they build new bases. Though Banks remain under pressure, Pay-
ment Processors within Financial continue to show positive technical action. GPN, MA, PYPL, SQ, V, and WP are

all trading at or near new highs. Conversely, though Retail remains a long-term leading sector, multiple ideas
on the U.S. Focus List have begun to consolidate after big gains over the last several weeks. FIVE, LULU, OLLI,
and WING are consolidating at highs, while HOME continues to decline and is now trading below its 200-DMA.

Asahi Intecc

Posted on September 13, 2018February 1, 2019 by Raj Gupta

Key points from the report:

The stock broke out of an eight-month consolidation into all-time highs on 2.7x average daily volume, turning actionable.

Support is the 200-DMA at ~¥4040. The stock becomes extended above ¥4782.

Technical ratings: RS line is at a new high, RS Rating 92, A/D Rating A.

Fundamental ratings: EPS Rank 74, SMR Rating B, Composite Rating 96.

Market View

Posted on September 7, 2018February 1, 2019 by Raj Gupta

Market Overview

The U.S. market is in a Confirmed Uptrend. The S&P 500 and Nasdaq pulled back off highs during the first
week of September and continue to digest strong gains from August. Increasing distribution has caused the
Nasdaq to break slightly below its 21-DMA, while the S&P 500 is testing this moving average. The rising 50-
DMA is the next level of support for both indices. The majority of growth ideas have pull back off highs and/or are consolidating above key support levels. Despite the rise in distribution, leadership remains intact. We maintain a bullish outlook as long as indices and leading stocks exhibit constructive price action and hold above key support levels.

Stocks on our U.S. Focus List: Current Sentiment

Our USFL of 77 ideas lost 1.4% on average this week, underperforming the S&P 500 (-1.1%) and outperforming
the Nasdaq (-2.6%).

By Sector

Retail ideas were up 3% on average this week, led by FIVE, which gapped up +13% on earnings. OLLI also re-
ported better-than-expected earnings and continues to trend higher. WING remains a leader in the restaurant group, while HD is actionable from a flat base consolidation. Within Staples, MKC is quietly trending higher as CVGW is emerging from cup-with-high handle after positive earnings results. A majority of Technology ideas pulled back or are consolidating, however PSTG and BL broke out into new highs and are extended. QTWO isbreaking out from flat base consolidation and remains actionable. Health Care lagged significantly, down 1.5% on average, however most ideas, including IDXX and ALGN, have either pulled back into support or continue to consolidate.

Market View

Posted on August 31, 2018February 1, 2019 by Raj Gupta

Market Overview

The U.S. market is in a Confirmed Uptrend. The S&P 500 and Nasdaq are consolidating near all-time highs after accelerating the last two weeks. Distribution remains low with three days on the Nasdaq and two on the S&P500. Leadership remains intact, with strong price action across multiple groups, including payment processors, med-tech, and software. We maintain a positive outlook on the market.

Stocks on our U.S. Focus List: Current Sentiment

Our USFL of 77 ideas gained 1.8% on average this week, outperforming the S&P 500 (+0.9%) and slightly lag-
ging the Nasdaq (+2.1%).

By Sector

Ideas across Capital Equipment, Health Care, Financial, and Retail were up more than 2% on average. HEI, within the Capital Equipment sector, gapped up 12% into new highs after better-than-expected earnings results. Payment processors remain one the best industry groups in the Financial sector, led by SQ, MA, and V. LULU gapped up on earnings, while OLLI broke out into new highs ahead of earning results on Wednesday. Health Care ideas, VRTX and ALGN, are actionable after moving into a pivot area on constructive price action. Transportation ideas remain weak, as ZTO pulled back below its 100-DMA.