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 March 23, 2018March 23, 2018 by Raj Gupta

Market Overview

The U.S. market has been downgraded to Downtrend. The February 14 follow-through day has failed. The S&P 500 and Nasdaq closed below their respective 100-DMAs this week with an elevated number of distribution days. The next level of support is the 200-DMA on both indexes. A majority of leading ideas have pulled back off extended highs and many have now broken below their respective 50-DMAs. We recommend lightening up in both extended ideas and ideas that have broken below short-term levels of support. Going forward, we will be looking for the market to stabilize and establish a new low. At that point, we will be looking for a new follow-though day before we recommend buying.

Stocks on our U.S. Focus List: Current Sentiment
Our USFL of 71 ideas (three removals) lost 5% on average this week, outperforming the S&P 500 (-5.9%) and the Nasdaq (-6.5%).

By Sector

Technology rolled over this week, breaking its 50-DMA and then its 100-DMA in back-to-back sessions. Multiple USFL ideas are now under pressure. Ideas breaking their 50-DMA include ATVI, GOOGL, MRVL, MPWR, NVDA, PSTG, CRM, and WB. Technology ideas holding up the best include SSNC, TYL, RNG, and RHT. Financial has also come under heavy selling pressure this week. All five Banks (MS, WAL, SIVB, TCBI, ZION) on our list broke their respective 50-DMAs. Conversely, Retail and Energy held up the best this week. Within Retail, FND, FIVE, LULU, OLLI, and WING have RS lines at or near new highs. Within Energy, FANG and NEP have rising RS lines.

Hong Kong Pharma

Posted on March 20, 2018March 21, 2018 by Raj Gupta

Hong Kong-listed Pharmaceutical Focus List stocks continue to be under heavy accumulation. Three of our five ideas remain actionable: Livzon Pharma (LVZN.HK; 1513:HK) broke out from a six-week cup, 3SBio (SBIL.HK; 1530:HK) broke out from a 10-week cup, and Shanghai Fosun Pharma (SFPG.HK; 2196:HK) broke out from a nine-week cup-with-handle. We caution that all three ideas will be reporting over the next two weeks. The other two ideas, WuxiBiologics (WXBO.HK; 2269:HK) and CSPC Pharma (CPHA.HK; 1093:HK), are now extended after reporting very strong 2017 results. We recommend waiting for constructive pullbacks to the 50-DMA before adding to those two ideas.

Market View

Posted on March 16, 2018March 16, 2018 by Raj Gupta

The U.S. market remains in a Confirmed Uptrend. The S&P 500 remains above its 50-DMA, while the Nasdaq is still trad-ing just 2% off all-time highs. Leading ideas across Technology continue to act well, though the majority is now well extend-ed from ideal pivot points. We are looking for leadership to broaden over the next week as Technology consolidates these gains.

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

By Sector

Technology continues to outperform, led by Software, Internet Content, and Semiconductors. Most USFL ideas are extended and will need to consolidate over the next several weeks, including RNG , GRUB , ADBE , CRM , RHT , NOW, and PAYC . Health Care ideas across the USFL remain strong, with five of our eight names ( ILMN , EW , VRTX , IDXX , ABMD ) hitting new all-time highs this week. Financial ideas are also acting well, led by Payment Processors SQ, PYPL , GPN , and WP. Banks ( MS , SIVB ) are also holding up well and Brokers ( SCHW ) remain under accumulation. Conversely, Energy ideas remain weak. NEP and CDEV are still trading well off highs, while FANG remains a leader within the sector, but still 7% off highs.

New Ideas or Deletions

We added Calavo Growers ( CVGW ) and removed Blue Buffalo Pet Prods ( BUFF ) , Essent Group ( ESNT ) , and Noble Midstream Prtns ( NBLX ) from the U.S. Focus List this week.

Illumina

Posted on March 12, 2018February 1, 2019 by Raj Gupta

O’Neil Methodology

• The stock is breaking out of a seven-week consolidation and is actionable. We recommend adding to shares here as its A/D Rating of B remains strong despite lower volume over the last few sessions. Should the stock pull back, we will be looking for the top of the base (~$249) to hold. Support below that is the rising 21-DMA (~$235).
• The stock’s RS line hit a new YTD high last week before the stock broke out. RS Rating of 88. A/D Rating of B. U/D Volume 1.2.
• EPS Rank of 94. High Composite Rating of 95. Top SMR Rating of A.

Market View

Posted on March 9, 2018March 15, 2018 by Raj Gupta

Market Overview

The U.S. market has been upgraded to a Confirmed Uptrend. The Nasdaq broke into all-time highs while the S&P 500 gapped up through its 50-DMA after a better-than-expected jobs reports. Technology, driven by Soft-ware, Semiconductor, and Internet Content, remains the leading sector, however we have noticed improvement across multiple sectors including Financial and Cyclicals. Although markets remain volatile, we advise buying stocks from leading sectors/industry groups as they emerge from constructive consolidations or pull back into areas of support.

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

Our USFL of 76 ideas (two additions) gained 3.5% on average this week, outperforming the S&P 500 (3.3%) but trailing the Nasdaq (4.0%).

By Sector

The USFL significantly outperformed the general market this week, with contribution across all sectors. Technol-ogy ideas increased 4.5% on average due to strength from software (ATVI, TEAM, MB), semiconductors (ON, MKSI, CY), and Internet-Content (GRUB, WB). Health Care ideas increased 5% on average, led by IDXX and ABMD. VRTX was up 3% and remains actionable. Financial ideas increased 4% on average, led by payment processors (SQ, PAGS, PYPL) and regional banks (SIVB, WAL). Other standout ideas this week include Healthequity (+7%) and Wingstop (+6%).

Hong Kong Pharma

Posted on March 8, 2018March 9, 2018 by Raj Gupta

Our Hong Kong-listed Pharmaceutical Focus List stocks have come under recent accumulation, and now four of our five ideas are actionable again. CSPC Pharma broke out from a seven-week consolidation, while 3SBio, Livzon Pharma, and Shanghai Fosun Pharma are all now building the right side of new bases. The fifth idea, Wuxi Biologics, jumped ~20% this week after issuing a 2017 profit alert and is now extended from an ideal pivot. We do caution that all five ideas will be reporting earnings within the next three weeks.

Earnings estimates for the MSCI Emerging Market Health Care Index have reached their highest level since 2010.
Consensus calls for strong double-digit growth in all five of our ideas over the next year. Current year consensus median
EPS and revenue growth for our five Focus List ideas stand at 29% and 31%, y/y, respectively. Next year’s consensus median
EPS and revenue growth stand at 27% and 28%, y/y, respectively.

Market View

Posted on March 2, 2018March 2, 2018 by Raj Gupta

Market Overview

The U.S. market is in an Uptrend Under Pressure. The U.S. market was downgraded this week after a clustering of distribution days and a breach below key support levels. All sectors except Technology are trading below their 50-DMAs as volatility remains elevated. Look for the Nasdaq and S&P 500 to hold support at the 50-DMA and 100-DMA, respectively, to remain optimistic. We advise reducing exposure to stocks that have broken below key support levels.

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

Our USFL of 74 ideas (one addition, one removal) were flat on average this week, outperforming the S&P 500 (-2.0%) and the Nasdaq (-1.1%).

By Sector

Despite high volatility, we continue to see outperformance across pockets of the USFL. Software ideas rose 1.7% on average, led by strong earnings from Salesforce.com ( CRM ), Splunk ( SPLK ), and Realpage ( RP ). Atlassian ( TEAM ) is emerging from a cup-with-handle consolidation and remains actionable. Capital Equipment ideas were under accumulation, led by Heico ( HEI ) and Healthequity ( HQY ). Conversely, Health Care ideas continue to consolidate, led by Align Technology ( ALGN ) and PRA Health Sciences ( PRAH ). Our lone Transportation idea, Fedex ( FDX ), pulled back to support at its 100-DMA.

Market View

Posted on February 23, 2018February 23, 2018 by Raj Gupta

Market Overview

The U.S. market remains in a Confirmed Uptrend. The S&P 500 and Nasdaq continue to hold above the Febru-ary 14th follow-through day (FTD) with one distribution day each. A handful of leading ideas have been able to push into higher highs (PLNT, MB, TAL, OLLI, NOW, PSTG, RHT, GRUB, RNG, etc.), though most ideas continue to build the right side of new bases. Following our discipline, we continue to recommend a slow approach, gradually committing capital to actionable ideas as the Confirmed Uptrend remains intact.

Stocks on our U.S. Focus List: Current Sentiment
Our USFL of 74 ideas (four additions) gained 2% on average this week, outperforming the S&P 500 (0.5%) and the Nasdaq (1.4%).

By Sector

Since the February 14th FTD, Technology and Utility are leading, rising nearly 3% each. Most of the Utility move was made Friday after the sector jumped more than 2%. Within Technology, MB broke out on earnings this week, turning actionable. ON and CY also both regained their respective 50-DMAs. Conversely, Energy, Con-sumer Staple, and Retail are lagging since the FTD, all flat to down 1%. Within Energy, NEP, NBLX, and CDEV continue to lag, while FANG remains a leader, regaining its 50-DMA. Within Retail, WING pulled back to its 50-DMA post-earnings, while HD reversed lower off its 50-DMA and is now forming a new base.

Market View

Posted on February 16, 2018February 17, 2018 by Raj Gupta

Market Overview
The U.S. market was upgraded to a Confirmed Uptrend on Wednesday. The market staged a Day 4 follow-through and continued higher to close the week. We now view the 50-DMA as short-term support on both the S&P 500 and Nasdaq. Multiple risk-on ideas are again making new highs, while new ideas are emerging from consolidation. We continue to recommend gradually buying high-quality growth ideas with sound technical pat-terns now that the market is back in a Confirmed Uptrend. Signs of a failing follow-through day include a clus-tering of distribution shortly following the move, coupled with failed breakouts in individual ideas.
Stocks on our U.S. Focus List: Current Sentiment
Our USFL of 70 ideas (three additions) gained 6.2% on average this week, outperforming the S&P 500 (4.3%) and the Nasdaq (5.3%).

By Sector
Technology recovered the quickest over the last five sessions, jumping ~6%. Software is leading the sector, with multiple groups trading back at new highs. RNG, PAYC, RHT, QTWO, ADBE, TYL, NOW, CRM, and RP all moved back into new highs. Health Care is also improving on a short-term relative basis. ABMD jumped into all-time highs on positive news, ALGN regained its 50-DMA, and new additions IDXX and EW are both breaking out of multi-month consolidations.

Market View

Posted on February 9, 2018February 9, 2018 by Raj Gupta

Market Overview
The U.S. market was downgraded to Downtrend on Monday. The S&P 500 and Nasdaq broke below their re-spective 50- and 100-DMAs on heavy volume this week. The 200-DMA is now acting as support for both indi-ces. We will move the market into a Rally Attempt should the S&P 500 and Nasdaq hold above Friday’s lows for a minimum of two days. From there, we will be looking for a follow-through day (as early as Wednesday) before moving the market back into a Confirmed Uptrend. We continue to recommend a patient approach, waiting for the follow-through day and for more ideal technical set-ups in individual ideas before buying.
Stocks on our U.S. Focus List: Current Sentiment
Our USFL of 67 ideas (eight removals) lost 5.4% on average this week, underperforming the S&P 500 (-5.2%) and the Nasdaq (-5.1%).

By Sector
All 11 O’Neil sectors are below their respective 50-DMAs, with four trading below their 200-DMAs. Over the last five sessions, all sectors expect Utility are down more than 5%. On a relative basis, Utility, Consumer Staple, and Consumer Cyclical are improving on a short-term relative basis, while Energy and Transportation are weaken-ing.

Market Overview

By Sector

By Sector

New Ideas or Deletions

O’Neil Methodology

Market Overview

By Sector

Market Overview

Stocks on our U.S. Focus List: Current Sentiment Our USFL of 74 ideas (four additions) gained 2% on average this week, outperforming the S&P 500 (0.5%) and the Nasdaq (1.4%).

By Sector

Stocks on our U.S. Focus List: Current Sentiment
Our USFL of 74 ideas (four additions) gained 2% on average this week, outperforming the S&P 500 (0.5%) and the Nasdaq (1.4%).