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 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 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 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.

Market View

Posted on by Raj Gupta

The U.S. market is in a Confirmed Uptrend. Indices, led by the Nasdaq, rallied back into all-timehighs. Alt-hough the distribution day count increased to six on the Nasdaq and fiveon the S&P, price action across leader-ship ideas remains constructive. We will become more cautiousif distribution remains elevated as indi-ces/leading stocks fall below key support levels.

Stocks on our U.S. Focus List—Current SentimentOur USFL of 73 ideas (no net change)gained 1.6% on averagethis week, outperforming the S&P 500(-0.1%) and the Nasdaq (0.5%).

By Sector

Technology ideas on the U.S Focus List continue to outperform. EXTRand WBrose over 10% after reporting good results last week. EXTRis buyable. ALRMregained its 100-DMA on strong volume but remains below its 50-DMA and is poised to consolidate. Consumer Staple outperformed, led by heavy accumulation in BUFFand MNST. Within Financial, payment processors including PYPLcontinue totrend higher.

Global Health Care Sector

Posted on by Raj Gupta

U.S. Health Care Sector
The Health Care Sector has slowed on a relative basis over the past two months and is now declining on an absolute basis over the last three weeks. The sector is now trading below its 50- and 100-DMAs, largely due to a recent sell-off in the Biotech and Ethical Drug industry groups, which make up the bulk of the sector. We are now looking for the lower channel line to hold before support along the 200-DMA. Though we have become cautious on the Biotechs due to multiple bellwethers breaking individual technical support levels, other industry groups within Health Care remain healthy, including Products, Equipment, and Managed Care. Also, long-term lagging industry groups (Hospitals and Wholesalers) remain weak and should continue to be avoided. Currently, S&P 500 Health Care companies are trading exactly in-line with the S&P 500. Both are trading at a median of 18x 2018 EPS with consensus 2018 median EPS growth of 10% y/y.