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 February 2, 2018February 7, 2018 by Raj Gupta

Market Overview
The U.S. market has been downgraded to Uptrend Under Pressure. This week, the S&P 500 and Nasdaq broke below their respective 21-DMAs as distribution increased. The majority of leading ideas have pulled back off ex-tended highs and a handful have 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 look-ing for the market to stabilize and bounce from key moving average and/or price support before we recom-mend buying. The next level of support is the rising 50-DMA, which is 2-3% below current levels.
Stocks on our U.S. Focus List: Current Sentiment
Our USFL of 75 ideas (five removals) lost 3.8% on average this week, in-line with the S&P 500 (-3.8%), but un-derperforming the Nasdaq (-3.5%).

By Sector
Over the last five sessions, all sectors have declined at least 2%. Retail, Financial, and Consumer ideas have held up the best, while Energy ideas have come under pressure. Retail outperformance has come largely from AMZN, while Consumer Cyclical has been aided by NFLX. EL, MNST, and BUFF are holding up well within Con-sumer Staple. Within Financial, Banks and Brokers continue to act well. ZION, WAL, SIVB, MS, and SCHW con-tinue to show constructive technical action. Conversely, Energy ideas COG and CDEV broke short-term individu-al support levels.

IPO Rewind

Posted on January 31, 2018March 27, 2019 by Raj Gupta

Market View

Posted on January 26, 2018February 7, 2018 by Raj Gupta

Market Overview
The U.S. market remains in a Confirmed Uptrend. The S&P 500 and Nasdaq continue to trade at all-time highs with a low number of distribution days. The majority of leading ideas are acting well, with many now extended from ideal pivot points. We maintain our positive view until we see a pickup in distribution that leads to deterio-rating technical action in leading ideas and the major averages alike.

Stocks on our U.S. Focus List: Current Sentiment
Our USFL of 80 ideas (one addition) gained 2.1% on average this week, slightly underperforming the S&P 500 (2.2%) and the Nasdaq (2.3%).

By Sector
Over the last five sessions, Health Care, Retail, and Consumer Cyclical are leading, while Transportation has slowed. Within Health Care, ALGN and VRTX are trading at pivot points, but both report earnings next week. Retail-Internet ideas, BABA and AMZN, are leading the Retail sector higher, while blowout earnings from NFLX resulted in strong gains for the Consumer Cyclical sector. Technology is mixed. OLED, COHR, and AVGO are currently under pressure with all three testing individual support levels, while other ideas including NVDA, NOW, and WB continue to make new highs. GRUB and RHT are two other USFL ideas breaking out from new bases.

Global Health Care Sector

Posted on January 24, 2018January 24, 2018 by Raj Gupta

Health Care Sector Improving
The Biotech industry group came under heavy distribution in October, causing the Health Care sector to sharply underperform in Q4. The sector declined 0.8% in Q4, while the S&P 500 and Nasdaq rallied 6.1% and 6.3%, respectively. The Health Care sector is now improving on a relative basis through the first three weeks of Q1, mostly aided by accumulation in long-term lagging industry groups (Wholesale and Generic Drugs and Medical Services); but also continued outperformance within the sector from Managed Care, Research Equipment, and Medical Devices; and most recently, a big breakout in Biotech. The iShares Nasdaq Biotech ETF broke above October highs on heavy volume.
Q4 Preview: Though the Health Care sector is improving on a relative basis to start the year, we recommend a selective approach for a few reasons. First, the improvement in the sector has largely been driven by biotech/drug companies jumping off the bottom. From an O’Neil perspective most of these moves are likely unsustainable and will need to settle over the next few months. Second, the sector remains a long-term (six-month) lagging sector with only two groups ranked in the top 50 of 197 total O’Neil industry groups. Lastly, Q4 consensus EPS is well below the S&P 500. Median S&P 500 Health Care EPS estimates (+6%) are 300bps below the S&P 500 (+9%) with in line revenue growth of 6%. Also, 2018 consensus EPS (+10%) is 100bps below the S&P 500 (+11%). The Health Care sector and the S&P 500 also both trade at 18x 2018. We do, however, expect another season of positive earnings surprises for U.S.-based companies within the Health Care sector, as we believe Wall Street’s 2018 earnings estimates have not been accurately revised to take into account the new lower tax rates, given the complexities of companies’ tax structures. We already saw this
with UnitedHealth. The Company sharply raised 2018 adjusted EPS 16% above its prior guidance and 9% above consensus, resulting in another breakout in the stock.

Market View

Posted on January 19, 2018October 17, 2019 by Raj Gupta

Market Overview

The U.S. market remains in a Confirmed Uptrend. The S&P 500 and Nasdaq did pick up a distribution day on Tuesday, however, the count still remains low at two and three days, respectively. Leadership also remains healthy with new breakouts across multiple sectors each week. We continue to recommend buying ideas as they begin to form the right side of their respective bases or as they emerge from consolidation.

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

Our USFL of 79 ideas (three additions) gained 1.6% on average this week, outperforming the S&P 500 (0.9%) and the Nasdaq (1%).

By Sector

Technology and Health Care ideas across the U.S. Focus List led for the second straight week. Within Technolo-gy, AMAT regained its 50-DMA and MCHP and CY both broke into new highs. ATVI, OLED, ON, NVDA, PAYC, and CRM continued into higher highs after breaking out last week. Within Health Care, UNH broke out after upping 2018 guidance, ALGN broke out of a cup base, ABMD pushed further into highs after breaking above $200, and PRAH broke above four weeks tight into new highs. Conversely, Energy and Basic Material ideas pulled back after big runs to start the year. FANG remains the leader and is still extended from an ideal pivot.

Market View

Posted on January 12, 2018October 17, 2019 by Raj Gupta

Market Overview

The U.S. market remains in a Confirmed Uptrend. The S&P 500 and Nasdaq continue to make new highs with a low number of distribution days. Leadership remains healthy with new breakouts across multiple sectors each week. We continue to recommend buying ideas as they begin to form the right side of their respective bases or as they emerge from consolidation. We would avoid chasing ideas that become too far extended as the major averages are now testing longer term upper channel lines and trading ~5% above their respective 50-DMAs.

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

Our USFL of 76 ideas (one net addition) gained 2.1% on average this week, outperforming the S&P 500 (1.6%) and the Nasdaq (1.7%).

By Sector

Technology, Health Care, and Financial ideas across the U.S. Focus List led this week. Technology ideas that broke out this week include ATVI, ADBE, RNG, RP, OLED, NVDA, and PAYC. All remain actionable. Within Health Care, ILMN and ABMD became quickly extended following preannounced earnings. VRTX remains actionable as it builds the right side of its base. Financial was led by Banks. SIVB, TCBI, and ZION are all now extended after the move this week, while WAL remains actionable off its 50-DMA.

Market View

Posted on January 5, 2018October 17, 2019 by Raj Gupta

Market Overview
The U.S. market remains in a Confirmed Uptrend. The S&P 500 and Nasdaq continue to make new highs with a low number of distribution days. Multiple sectors are participating in the rally, with the sharpest gains this week coming from Basic Material, Energy, and Technology. Leadership remains healthy with numerous breakouts each session. We maintain our positive view until we see a pickup in distribution that leads to deteriorating tech-nical action in leading ideas and the major averages alike.
Stocks on our U.S. Focus List—Current Sentiment
Our USFL of 75 ideas (one addition) gained 3.7% on average this week, outperforming the S&P 500 (2.6%) and the Nasdaq (3.4%).

By Sector
Technology ideas across the U.S. Focus List led this week. All but one have regained their respective 50-DMAs, led by TEAM, WB, NVDA, SPLK, and ON, which broke into all-time highs. Health Care ideas also came under accumulation. ILMN and VRTX both rallied ahead of a Health Care conference on Monday. VRTX remains actionable as it builds the right side of its current base. Most Financial ideas continue to consolidate December gains, however, the Payments group broke back into new highs led by PYPL, FLT, and VNTV.

Market View

Posted on December 29, 2017October 17, 2019 by Raj Gupta

Market Overview

The U.S. market remains in a Confirmed Uptrend to close out 2017. The S&P 500 and Nasdaq closed the year near all-time highs with little to no distribution. Eight of 11 O’Neil sectors closed the year less than 1% off all-time highs, not includ-ing Energy, which rallied nearly 5% over the last four weeks. Though most Technology ideas remain in consolidation, multi-ple leadership ideas across other sectors continue to act well heading into the New Year. The U.S. Focus List stands at 74 ideas, just off three-and-a-half year highs. We maintain our positive view until we see a pickup in distribution that leads to deteriorating technical action in leading ideas and the major averages alike.

Stocks on our U.S. Focus List: Current Sentiment Our USFL of 74 ideas (one addition) lost 0.1% on average this week, outperforming the S&P 500 (-0.3%) and the Nasdaq (-0.8%).

By Sector

Energy, Basic Material, and Retail ideas on the U.S. Focus List led this week. COG, CDEV, and NEPcontinue to build the right side of their respective bases while JAG remains in the pivot and FANGremains extended. Within Basic Materi-al, EXP and USCR both found support at their respective 50-DMA and remain actionable. Within Re-tail, FIVE, FND, HD, and OLLI all remain near all-time highs. Conversely, Technology ideas continue to consolidate, with most flat to down to close out the year. Most will enter their sixth week of consolidation next week. Software names MB, RHT, LOGM,QTWO, and TEAM and semiconductors NVDA, MPWR, AMAT, MCHP, and CY are all trading be-low their respective 50-DMA. Currently, the best acting Technology ideas include NOW, RNG, ON, RP,PAYC, and ATVI.

Market View

Posted on December 22, 2017October 17, 2019 by Raj Gupta

Market Overview
The U.S. market remains in a Confirmed Uptrend. Several distribution days have expired as rotation into new leadership continues. Energy and Basic Material broke into two-month highs this week, while seven other sectors remain at or near new highs. We maintain our positive view until we see further technical deterioration in lead-ing ideas and the major averages alike. The S&P 500 and Nasdaq are still trading ~3% above their respective 50-DMAs.

Stocks on our U.S. Focus List—Current Sentiment
Our USFL of 73 ideas (three additions) gained 0.1% on average this week, slightly underperforming the S&P 500 (+0.3%) and the Nasdaq (+0.3%).

By Sector
Energy ideas led this week with multiple new breakouts across the sector. New additions FANG and JAG both broke out from 10-month consolidations, while CDEV, NBLX, and NEP are all now forming the right side of their respective bases. Conversely, Technology ideas that bounced last week reversed this week as they continue to base. Most will enter their fifth week of consolidation next week. Software names MB, RHT, LOGM, QTWO, and TEAM, and semiconductors NVDA, MPWR, AMAT, MCHP, and CY are all trading below their respective 50-DMAs.

Market View

Posted on December 15, 2017October 17, 2019 by Raj Gupta

Market Overview
The U.S. market remains in a Confirmed Uptrend. The S&P 500 and Nasdaq moved back into all-time highs this week as distribution fell. There are now three distribution days on the S&P 500 and four on the Nasdaq. All three distribution days on the S&P 500 expire next week, while the Nasdaq loses one. The market continues to be led higher by value-oriented sectors, though Technology did retrace the majority of its pullback this week. We re-main patient on new buys as quality leadership continues to consolidate. Most will enter their fourth week of consolidation next week.
Stocks on our U.S. Focus List—Current Sentiment
Our USFL of 70 ideas (one removal) gained 0.8% on average this week, underperforming the S&P 500 (+0.9%) and the Nasdaq (+1.4%).

By Sector
Technology ideas primarily from Software-related industry groups led this week. Most ideas on the U.S. Focus List found support at the top of their prior bases and have now regained their respective 50-DMAs. Notable re-coveries include NOW, ATVI, TTWO, MB, RNG, and CRM. Retail/Consumer ideas continue to lead with SKX, EL, FIVE, OLLI, WING, and HD remaining at or near new highs.