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Stocks Mentioned in Recent Research

GLOBAL OUTLOOK

Downtrend:

Rally Attempt:

Confirmed Uptrend:

Uptrend Under Pressure: /span>

Europe Detail
Asia Detail

FEATURED

Market View

Market Overview : The U.S. market is in a Confirmed Uptrend. The S&P 500 is now trading just 2% off highs, while the Nasdaq made a new all-time high after finding strong support at the 50-DMA last week. Distribution stands at five days on the S&P 500 and four on the Nasdaq, with one day expiring on the S&P 500 at the close next Wednesday. Leading ideas showed very strong price action this week, with more than 25% of the U.S. Focus List hitting a new all-time high. We recommend buying high relative strength ideas across leading and/or improving industry groups at risk-optimal entry points. Stocks on our U.S. Focus List: Current Sentiment Our USFL of 68 ideas gained 1.5% on average this week, in line with the S&P 500 (+1.5%) and underperform- ing the Nasdaq (+1.8%). Actionable Focus List ideas: Activision Blizzard ( ATVI ), Alphabet ( GOOGL ), Arista Networks ( ANET ), Calavo Growers ( CVGW ), Diamondback Energy ( FANG ), Edwards Lifesciences ( EW ), Fleetcor Technologies ( FLT ), Global Payments ( GPN ), Home Depot ( HD ), Nextera Energy ( NEP ), Paypal ( PYPL ), PRA Health Sciences ( PRAH ), RingCentral ( RNG ), SS&C Technologies ( SSNC ), Vertex Pharmaceuticals ( VRTX ), Worldpay ( WP ) USFL ideas weekly earnings line-up: Monday: Close: NFLX Tuesday: Open: SCHW, UNH Wednesday: Close: TCBI Thursday: Close: WAL By Sector Technology and Health Care ideas on the U.S. Focus List led this week. Within Technology, software led with NOW, ATVI, CRM, TEAM, and ADBE all moving back into new highs. PAYC, RNG, TYL, VEEV, and ADSK all re- gained their respective 50-DMA. Outside of software, GOOGL is actionable after breaking out of consolidation and back into all-time highs. Within Health Care, five of our nine ideas made new all-time highs. ILMN, IDXX, and PRAH continue to trend into higher highs, while VRTX just broke out on Friday from a 17-week cup. Payment Processors also continue to act well, with PYPL, WP, GPN, MA, V, and FLT all trading at or near new highs. Con- versely, Banks remain weak. WAL, ZION, and TCBI are all testing the low end of near-term support ahead of their respective earnings announcements in the coming days. SIVB remains the leader, despite trading below its 50-DMA and ~10% off highs.

MARKET VIEW

Market Overview :

The U.S. market is in a Confirmed Uptrend. The S&P 500 is now trading just 2% off highs, while the Nasdaq
made a new all-time high after finding strong support at the 50-DMA last week. Distribution stands at five days
on the S&P 500 and four on the Nasdaq, with one day expiring on the S&P 500 at the close next Wednesday.
Leading ideas showed very strong price action this week, with more than 25% of the U.S. Focus List hitting a new
all-time high. We recommend buying high relative strength ideas across leading and/or improving industry
groups at risk-optimal entry points.
Stocks on our U.S. Focus List: Current Sentiment

Our USFL of 68 ideas gained 1.5% on average this week, in line with the S&P 500 (+1.5%) and underperform-
ing the Nasdaq (+1.8%).

Actionable Focus List ideas: Activision Blizzard ( ATVI ), Alphabet ( GOOGL ), Arista Networks ( ANET ), Calavo
Growers ( CVGW ), Diamondback Energy ( FANG ), Edwards Lifesciences ( EW ), Fleetcor Technologies ( FLT ), Global
Payments ( GPN ), Home Depot ( HD ), Nextera Energy ( NEP ), Paypal ( PYPL ), PRA Health Sciences ( PRAH ),
RingCentral ( RNG ), SS&C Technologies ( SSNC ), Vertex Pharmaceuticals ( VRTX ), Worldpay ( WP )
USFL ideas weekly earnings line-up:
Monday: Close: NFLX
Tuesday: Open: SCHW, UNH
Wednesday: Close: TCBI
Thursday: Close: WAL

By Sector

Technology and Health Care ideas on the U.S. Focus List led this week. Within Technology, software led with

NOW, ATVI, CRM, TEAM, and ADBE all moving back into new highs. PAYC, RNG, TYL, VEEV, and ADSK all re-
gained their respective 50-DMA. Outside of software, GOOGL is actionable after breaking out of consolidation

and back into all-time highs. Within Health Care, five of our nine ideas made new all-time highs. ILMN, IDXX,
and PRAH continue to trend into higher highs, while VRTX just broke out on Friday from a 17-week cup. Payment

Processors also continue to act well, with PYPL, WP, GPN, MA, V, and FLT all trading at or near new highs. Con-
versely, Banks remain weak. WAL, ZION, and TCBI are all testing the low end of near-term support ahead of

their respective earnings announcements in the coming days. SIVB remains the leader, despite trading below its
50-DMA and ~10% off highs.

Market Overview :

 

The U.S. market is in an Uptrend Under Pressure. We are encouraged by strong price action and the decline in

distribution this week, but would like to see confirmation next week with bigger volume before we move the mar-
ket back into a Confirmed Uptrend. Distribution now stands at four days on the S&P 500 and five on the

Nasdaq, with one day set to expire on the Nasdaq next Thursday. We are also encouraged by the action of
leading ideas over the last few sessions. Though the majority of leadership continues to consolidate, multiple

ideas have been able to hold and move higher off short-term levels of support over the past week. Our recom-
mendation will be to buy high relative strength ideas at ideal pivot points should we see the major averages hold

these gains early next week and move higher on more convincing volume.
Stocks on our U.S. Focus List: Current Sentiment

Our USFL of 68 ideas gained 1.9% on average this week, outperforming the S&P 500 (+1.5%), but underper-
forming the Nasdaq (+2.4%).

Actionable Focus List ideas: Activision Blizzard ( ATVI ), Alphabet ( GOOGL ), At Home ( HOME ), Calavo Growers
( CVGW ), Diamondback Energy ( FANG ), Fleetcor Technologies ( FLT ), Home Depot ( HD ), Nextera Energy ( NEP ),

Paypal ( PYPL ), PRA Health Sciences ( PRAH ), SS&C Technologies ( SSNC ), Unitedhealth ( UNH ), Vertex Pharmaceu-
ticals ( VRTX )

By Sector
Technology ideas across the U.S. Focus List recovered this week. QTWO, TEAM, SSNC, CRM, MPWR, PSTG, and
GOOGL all found support at their respective 50-DMA, while RNG, NOW, VEEV, and ADSK all regained that

same level. ON, ANET, PAYC, RP, TYL, and NVDA are still trading below their respective 50-DMA. Payment pro-
cessors also did well this week, with six of our eight ideas moving higher off 50-DMA support. SQ, FLT, and

PYPL are leading the group, while GPN and PAGS are lagging. Health Care ideas also remain strong, holding
up well on a relative basis during the market decline, and now beginning to move back toward highs. IDXX,
UNH, ILMN, and PRAH all found support at the 50-DMA, while VRTX is building momentum after last week’s
gap up and setting up to test all-time highs. Conversely, Banks on the list remain weak. TCBI, WAL, and ZION
are still trading around their respective 200-DMA, while SIVB has come 10% off its high and below its 50-DMA.

Market Overview

The U.S. market is in an Uptrend Under Pressure. The S&P 500 and Nasdaq are both holding support above
their respective 50-DMA after a sharp pullback earlier in the week. We are now looking for this level of support
to hold for the next few sessions before we recommend increasing risk in the market. Distribution also remains
elevated at six days on the S&P 500 and seven on the Nasdaq. Next week, however, two distribution days expire
on each index which would take the count back down to a more comfortable level. Lastly, we are still monitoring
the action of leading ideas which have come sharply off recent highs. We will be looking for new ideas to
emerge, while prior leadership consolidates. Our recommendation is still to remain patient here with a focus on
high relative strength ideas bucking the general market pullback.

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

Our USFL of 68 ideas (five net removals) lost 2.6% on average this week, underperforming the S&P 500 (-1.3%)
and the Nasdaq (-2.4%).
Actionable Focus List ideas: Activision Blizzard (

), Alphabet (

), At Home (

), Calavo Growers
(

), Continental Resources (

), Diamondback Energy (

), Fleetcor Technologies (

), Home Depot
(

), McCormick (

‘>

 

), Nextera Energy (

), Paypal (

), PRA Health Sciences (

), SS&C Technologies
(

), Supernus Pharmaceuticals (

), Unitedhealth (

), Vertex Pharmaceuticals (

)

By Sector
We did see early signs of rotation into Energy last week. This continued this week with

,

, WRD, and

all holding those gains despite the pullback in the market. Consumer Staple also came under accumulation

this week.

regained its 50-DMA and is now trading just 3% off all-time highs, while WTW and new addi-
tion

‘>

 

are both trading near new highs. Lastly, the two biotechs on the USFL,

and

, both broke

out and remain actionable at current levels. Conversely, Technology remains under pressure. The majority of

software ideas undercut short-term support levels and now need time to consolidate before presenting better en-
try points.

and RHT were both removed from our list due to severe technical deterioration, while PAYC,

ADSK, RNG, TYL, NOW, and RP all remain on the list, but are all trading below their respective 50-DMA.
Among software ideas,

does stand out positively with a relative strength line near new highs.

New Ideas or Deletions

We added McCormick (

‘>

 

) and removed Fedex (

), Splunk (

), Marvell Technology (

), MKS In-
struments (

), Morgan Stanley (

), and 58.com (

) from the U.S. Focus List this week.

 

SECTOR SUMMARY

Key points from this week’s commentary:

The U.S. is the second best market ( NDQC and Russell 200/S&P 600 ) globally year-to-date, behind just Saudi Arabia.

Despite defensive rotation, growth names in Health Care, Tech, and payments within Financials working extremely well. Top picks include Activision ( ATVI ), Paypal ( PYPL ), and Vertex ( VRTX ).

Global conditions improve further with Japan, China, Brazil, Mexico, Philippines/Indonesia all upgraded to Confirmed Uptrend over two weeks.

In the four APAC markets that were upgraded, a few top picks include Kose ( OSEC.JP; 4922 JP ), Pigeon ( PIGC.JP; 7956 JP ), Asahi Intecc ( [email protected]; 7747 JP ), and Shanghai International   Airport ( HIA.CN; 6000009 CH ).

Some highlights from the report:

U.S.
  • We recommend an overweight position within Medical Technology as long as the iShares U.S. Medical Devices ETF (IHI) remains above its 50-DMA.
  • The Medical Products industry group is ranked number 2 of 197 and remains the best performing industry group within Health Care.
  • The current 68 profitable companies above $500M in market cap within the Medical Product and Equipment industry groups have a five-year EPS median growth rate of 13% and a five-year median (high-to-low) P/E ratio range between 16 and 42. Over the next year, consensus calls for similar growth and valuation. Next fiscal year’s EPS is expected to grow by a median of 13% with a P/E ratio of 27x.
  • Top Picks: ABMD, ALGN, IDXX, ILMN, EW; Stocks of Interest: OMCL, GHDX
 EMEA
  • Health Care is outperforming over the last 26 weeks and improving over the last four weeks. Within the sector, the Medical Product and Medical Equipment industry groups are also outperforming over the last 26 weeks and improving over the last four weeks.
  • Top Pick: STMN.CH; Stocks of Interest: ELKB.SEBIM.FR
 APAC
  • Health Care is outperforming over the last 26 weeks and improving over the last four weeks, however much of the gains are coming from drug-related companies as opposed to Medical Technology.
  • Top Picks: [email protected], COH.AU; Stocks of Interest: TOAF.JP, HARA.MY

Key points from this week’s commentary:

 

Brazil is more than 6% off lows in two weeks and Mexico is back above its 40-WMA for the first time in five months after posting a follow-through day on Thursday.

Our top pick is sole Focus List name Banco del Baijo (BJI.MX; BBAJIOO MM).

Most names in Brazil are still setting up and not yet actionable. However, in Mexico, given the recent follow-through day, several stocks are immediately buyable, in our view. These include Mexichem (CSB.MX; MEXCHEM MM); Alpek (ALP.MX; ALPEKA MM); Bolsa Mexicana de Volares (BMV.MX; BOLSAA MM), and Wal-Mart de Mexico (WAV.MX; WALMEX MM).

ECON SUMMARY

Q1 GDP third estimate revised downward.
As per the third estimate released by the Bureau of Economic Analysis, Q1 GDP increased 2.0% y/y, 200bps lower than
the second estimate.

Q1 GDP rate comes in above consensus.
As per the second estimate by the Bureau of Economic Analysis, Q1 GDP increased 2.2% y/y, 100bps higher than the
advance estimate. Median GDP growth rate forecast for 2018 was increased to 2.5% from 2.1%.

Q1 GDP rate comes in above consensus.
As per the advance estimate by the Bureau of Economic Analysis, Q1 GDP increased 2.3% y/y, 300bps higher than
consensus. Median GDP growth rate forecast for 2018 was increased to 2.5% from 2.1%.

EQUITY RESEARCH

Key points:

The stock is constructively building the right side of a 10-week flat base. We recommend buying shares here in anticipation of the stock clearing above resistance at ~INR 760.

Technical ratings: RS line is at a new high, RS Rating 90, and A/D Rating A-.

Fundamental ratings: EPS Rank 63, SMR Rating C, and Composite Rating 90.

Highlights from the report:

​​​​​​​Along with Mainland China markets yesterday, we are upgrading Japan to a Confirmed Uptrend as the Nikkei 225 staged a Day 6 follow-through, gaining 1.8% on greater volume than the previous day. The index is now trading above both the 50-DMA and 200-DMA. The TOPIX gained 1.1% but remains below its moving averages. We recommend a gradual approach to buying actionable ideas.

FOCUS LISTS

Jul 13, 2018
The U.S. market is in a Confirmed Uptrend. The S&P 500 is now trading just 2% off highs, while the Nasdaq made a new all-time high after finding strong support at the 50-DMA last week. Distribution stands at five days on the S&P 500 and four on the Nasdaq, with one day expiring on the S&P 500 at the close next Wednesday. Leading ideas showed very strong price action this week, with more than 25% of the U.S. Focus List hitting a new all-time high. We recommend buying high relative strength ideas across leading and/or improving industry groups at risk-optimal entry points.
Jul 13, 2018
This week through Thursday, the Stoxx 600 gained 0.5%, adding to last week's gain of 0.6%. The index has regained some momentum since its recent bottom on June 26 and is attempting to rally, but it is too early to turn bullish. We are looking for a follow‐through day, rising volume, and leadership to emerge. We maintain a cautious approach toward European equities. Short‐term momentum (over four weeks) has been led somewhat by defensive sectors, namely Utilities and Health Care. We recommend that investors bring Health Care names into their portfolios.
Jul 13, 2018
Australia’s ASX All Ordinaries Index declined 0.06% this week. It is trading 4.19% above its 40-WMA and is currently in a Confirmed Uptrend.
Jul 13, 2018
China's CSI 300 index (
) was up 3.79% over last week, staging a strong recovery from the previous week. The market was moved to a Confirmed Uptrend yesterday after a 2% daily gain. The index is trading 21% off its 52-week high, well below its 50- and 200-DMA. We view stiff resistance at the 200-DMA (~3,938).
Jul 13, 2018
Saudi Arabian Mining Company (
) is one of the leading mining and metals companies in the Kingdom of Saudi Arabia. The Company's key catalysts include production expansion of aluminium and phosphate and rising commodity prices.
Jul 13, 2018

WHITE PAPERS

EPS Rank Study

Oct 12, 2016

In this paper, we examine the effectiveness of using William O’Neil +Co.’s proprietary Earnings Per Share (EPS) Rank as a primary factor in managing a portfolio of U.S. equities. Our study included nearly 12,000 U.S. equities from January 1995 to December 2015.

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