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 June 16, 2017June 16, 2017 by Raj Gupta

The U.S. market remains in a Confirmed Uptrend. The S&P 500 continues to hold above its 21-DMA, while the Nasdaq is holding above its 50-DMA. Distribution remains low with an additional day set to expire next week. Though Technology has taken a hit over the last week, the sector is still sitting above its 50-DMA and looks to be consolidating rather than breaking down. We will become concerned should these support levels on both the major averages and leading ideas give way.

Stocks on our U.S. Focus List—Current Sentiment
Our USFL of 61 names lost 0.9% on average this week, underperforming the S&P 500 (0%) and in-line with the Nasdaq (-0.9%).

By Sector
Consumer Cyclical ideas, including the home builders, acted well early in the week before pulling back on Thursday and Friday. PHM is working on a cup-with-handle breakout. New addition, PLNT, broke into new highs on Wednesday and continued to work higher to close the week. The Banks (FRC, MS, CFG, WAL) consolidated gains from last week and are still holding above their respective 50-DMAs. Technology ideas were mixed, though the majority are still pulling back to short-term levels of support. Ideas showing the best relative strength over the past five days include PAYC, SSNC, ATVI, and MDSO. Ideas still in the process of pulling back include COHR, WB, NTES, VEEV, AMAT, NOW, MCHP, AVGO, MPWR, CRM, GOOGL, and RHT.

Market View

Posted on June 9, 2017June 9, 2017 by Raj Gupta

The U.S. market remains in a Confirmed Uptrend. The S&P 500 held its 21-DMA Friday, avoiding distribution. The Nasdaq, however, picked up its third distribution day after multiple Technology ideas came under severe selling pressure. We will be looking for the Nasdaq and individual Tech ideas to hold above Friday’s lows next week. Further downside in the Nasdaq will result in the index testing its 50-DMA at ~6057. We will remain positive on the market as long as the major averages and the majority of leadership ideas hold above their respective 50-DMAs.

Stocks on our U.S. Focus List—Current Sentiment
Our USFL of 61 names (including four additions) lost 1.1% on average this week, underperforming the S&P 500 (-0.3%), but outperforming the Nasdaq (-1.6%).

By Sector
There was clear rotation occurring in the marketplace Friday. USFL Bank ideas found support near their respective
200-DMAs and rallied strong to close the week. We view all four ideas (FRC, MS, WAL, and CFG) as actionable
at current levels. FRC is the clear leader among the four, breaking out of a Stage 2 flat base in heavy
volume. Conversely, Technology ideas sold off in very heavy volume and most are now testing short-term levels
of support. We will be looking for each of these ideas to hold Friday’s lows over the next several sessions and
continue to trade above their respective 50-DMAs.

Market View

Posted on June 2, 2017June 3, 2017 by Raj Gupta

The U.S. market remains in a Confirmed Uptrend. The S&P 500 and Nasdaq continue to move into higher
highs, constructively building on last week’s breakout. Leadership continues to act well while distribution remains
at just two days on each index. Additionally, one distribution day will expire on the Nasdaq next week. We remain
positive on the general market.

Stocks on our U.S. Focus List—Current Sentiment
Our USFL of 58 names gained 1.8% on average this week, outperforming the S&P 500 (1%) and the
Nasdaq (1.5%).
Actionable USFL ideas include BZUN, CAVM, CRTO, FDX, FIS, FRC, MTZ, NUVA, QTWO, SSNC, and ULTA.
PLAY is set to report earnings next week.

By Sector
USFL Health Care ideas led this week. Biotechs rallied ahead of the ASCO Conference, led by REGN and VRTX,
which quickly moved above their respective pivot points. Medical Products, the long-term leading industry group
within Health Care, also rallied. RGEN, ABMD, and IART continue to trade higher off their 21-DMA. NUVA
is building the right side of its base and is actionable at current levels. Retail ideas also fared well. OLLI, PLAY,
and ULTA each hit new highs, while BURL regained its 50-DMA. The Transportation sector also rallied this
week. Our lone idea, FDX, broke out of a long six-month consolidation in heavy volume, turning actionable.
Technology acted well, but most ideas are extended from an ideal entry point.

Global Health Care Sector

Posted on June 1, 2017July 19, 2017 by Raj Gupta

According to the Congressional Budget Office (CBO), the Trump administration’s American Health Care Act (AHCA) will reduce the deficit by $119B over 10 years, the total number of uninsured would increase by 14M in 2018 (23M by 2026) as individual/employer mandates will be repealed, and, on average, premiums for individual insurance would likely fall in states that narrow the scope of essential health benefits. Additionally, the minimum Health Savings Account (HSA) investment will nearly double (from $3,400 to $6,550) and the Obamacare-mandated 2.4% medical device tax will be eliminated.

Market View

Posted on May 26, 2017May 27, 2017 by Raj Gupta

The U.S. market has been moved back into a Confirmed Uptrend. The S&P 500 broke into new highs Thursday after consolidating since March 1. Volume has been below average likely due to the holiday weekend, however, price action has been strong and leadership continues to act very well. Distribution also fell this week to just two days on the S&P 500. We will be looking for the rising 21-DMA to act as a shorter-term level of support should the market pull back.

Stocks on our U.S. Focus List—Current Sentiment
Our USFL of 59 names gained 2.3% on average this week, outperforming the S&P 500 (1.4%) and the Nasdaq (2%). Year-to-date, the list is up 19%, beating the S&P 500 and Nasdaq by 11% and 4%, respectively.

By Sector
USFL Technology ideas continue to lead. Gaming and software related ideas (ATVI, TTWO, VEEV, NOW, ADBE, GOOGL, CRM, etc.) are under heavy accumulation and continue to outperform. USFL Retail ideas also fared well over the last week. AMZN, ULTA, and OLLI each made new highs while BURL retook its 50-DMA post earn-ings before pulling back Friday. Health Care ideas are also acting well. NUVA retook its 50-DMA while ABMD, PRAH, UNH, and IART all made new highs. VRTX also looks set to break into new highs but is still sitting just be-low $122 resistance. Conversely, USFL Capital Equipment names are under pressure. MTZ sold off on DY’s guidance and is back under its 50-DMA. DY was subsequently removed from the USFL.

Market View

Posted on May 19, 2017May 20, 2017 by Raj Gupta

The U.S. market was downgraded to Uptrend Under Pressure after Wednesday’s broad based sell-off, which
caused indices to slice through their respective 50-DMA. However, leadership ideas, particularly across Technology,
have bounced back in strong fashion. Going forward, we would like to see the S&P 500 and Russell regain
and hold above their 50-DMA while stocks consolidate into areas of price or moving average support. If this can
happen while distribution remains low, we will likely move the U.S. market back into a Confirmed Uptrend in the
near future.
Stocks on our U.S. Focus List—Current Sentiment
Our USFL of 58 names declined 0.3% on average this week, outperforming the S&P 500 (-0.39%) and
the Nasdaq (-0.61%).

By Sector
USFL Technology ideas outperformed yet again, led by strong earnings from WB and AMAT, while VEEV continues
to trend higher along its 10-DMA. Strength within the Retail sector is due to e-commerce platforms including
BABA and BZUN. Capital Equipment ideas underperformed and were led lower by CRTO and MTZ.

Market View

Posted on May 12, 2017May 13, 2017 by Raj Gupta

The U.S. market is in a Confirmed Uptrend as indices continue to consolidate in a tight range above support
levels. Signs of institutional selling (distribution days) remains muted with four on the S&P 500 and two on the
Nasdaq, with an additional day set to expire on each index next week. With growth ideas in favor, and many
accelerating higher, we highly recommend not chasing ideas, but rather waiting for stocks to consolidate or pullback
into areas of support. We maintain our positive outlook on the U.S. market.

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

Our USFL of 58 names (one net removal) gained 0.7% on average this week, outperforming the S&P
500 (-0.4%) and the Nasdaq (0.4%).

By Sector
Across the USFL, the Retail sector outperformed, led by China based e-commerce ideas including JD and
BZUN. BABA continues to trend higher along its 10-DMA and is testing all-time highs at ~$120. Breadth of
ideas across Technology remains wide as COHR jumped higher on better-than-expected results, while gaming
stocks, ATVI and TTWO, continue to benefit from strong industry tailwinds. Conversely, Capital Equipment ideas
lagged, led lower by WAGE. The Company reported positive Q1 results; however, traded lower off its 50-DMA
and is currently finding support along the lower end of its base.

Market View

Posted on May 5, 2017May 8, 2017 by Raj Gupta

The market remains in a Confirmed Uptrend. U.S. indices are consolidating gains over the last few weeks, still
holding above support levels, and avoiding distribution. There are currently four distribution days on the S&P
500 and three on the Nasdaq, with each set to lose an additional day next week. The majority of leadership
ideas continue to act well, with most moving higher post earnings. Therefore, we remain constructive on the general
market until we see concerning technical action among leadership ideas and the major averages alike.

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

Our USFL of 59 names gained 1.5% on average this week, outperforming the S&P 500 (0.6%) and the
Nasdaq (0.9%).

By Sector
Earnings continued to play a heavy role in sector performance this week. Cap Equipment names, TNET and
MTZ, gapped up into new highs after reporting better than expected earnings. HEI has yet to report, but remains
actionable after breaking out of a flat base. Health Care ideas also acted well post earnings. RGEN
moved back into new highs, while ABMD reversed off its 50-DMA and is now testing the highs from last week.
Biotech ideas, VRTX and CELG, have pulled back into their respective bases. VRTX is actionable off the 21-
DMA. Retail ideas have also continued higher. BURL, PLAY, and OLLI are trending constructively higher, while
ULTA is emerging from a new base.

Market View

Posted on April 28, 2017May 1, 2017 by Raj Gupta

The market was moved back into a Confirmed Uptrend on Monday after the S&P 500 broke above its downward
trending upper channel line and the Nasdaq broke into all-time highs. Distribution fell to five days on the
S&P and two on the Nasdaq, however no expiration will occur next week. Leadership continues to act well, with
multiple USFL ideas breaking out into new highs on strong earnings results. After such a strong move, consolidation
should be expected. We are looking for the S&P 500 to hold its 50-DMA should this occur.
Stocks on our U.S. Focus List—Current Sentiment
Our USFL of 59 names gained 2.2% on average this week, outperforming the S&P 500 (1.5%) and inline
with the Nasdaq (2.3%).

By Sector
Earnings played a heavy role in sector outperformance this week. Technology ideas continued to move higher,
led by GOOGL, RNG, NOW, WDC, MDSO, and CAVM, all of which reported better-than-expected earnings.
AMZN also gapped up on earnings Friday. Health Care ideas within the USFL were mixed with ALGN and IDXX
gapping up on earnings, and NUVA and CELG pulling back into their respective bases. Banks continue to form
the right side of their respective bases with most still finding resistance along their 50-DMAs. CFG has cleared
above this level of resistance and is now offering an aggressive entry point ahead of new highs.

Market View

Posted on April 21, 2017April 24, 2017 by Raj Gupta

The market status remains Uptrend Under Pressure. There are six distribution days on the S&P 500 with one
set to fall off next week. There are three distribution days on the Nasdaq with one also set to expire next week.
Though the major averages have been unable to rally above resistance, leadership continues to act well. Multiple
ideas are making new highs and there have been few major technical breakdowns among leading names.
However, we are waiting for the S&P 500 to clear above its downward trending upper channel line and for the
Nasdaq to reach new highs before shifting the market back into a Confirmed Uptrend.

Stocks on our U.S. Focus List—Current Sentiment
Our USFL of 59 names (including five additions) gained 2.7% on average this week, outperforming
the S&P 500 (0.8%) and the Nasdaq (1.8%).

By Sector

USFL Retail ideas came under heavy accumulation this week. OLLI, BURL, BABA, and PLAY were the standout
names, each trading at or near new highs. BURL looks set to breakout in the coming days. Capital Equipment
ideas also acted well with MTZ breaking out of a flat base in heavy volume and HEI bouncing off its 50-DMA.
IBP bounced off its 21-DMA and is now trading at an all-time high once again. Banks were able to hold their
March lows after reporting earnings. MS, FRC, WAL, and CFG are all now building the right side of their respective
bases with resistance at their 50-DMAs. Cyclical names came under pressure, with NFLX closing just
under its 50-DMA. Homebuilders also reversed lower and PHM is now testing support along its 50-DMA ahead
of earnings next week.