Technical Seasonalities

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1 Equity Clock: Seasonality Analysis February 18, 2015 Technical Seasonalities eresearch Corporation is pleased to provide technical opinions on the market from a seasonality standpoint, courtesy of Equity Clock, a division of the Tech Talk Financial Network.eResearch also posts, daily, the regular technical opinions provided by affiliate: Tech Talk: TimingTheMarket. Equity Clock ( is a market analysis company that provides, completely FREE, technical, fundamental and seasonality analysis on a daily basis via TimingTheMarkets.com and EquityClock.com.Equity Clock s mission is to identify periods of re-occurring strength among individual equities in the market using methodologies presented by some of the top analysts in the industry, including those of Donald Vialoux, author of TimingTheMarkets.com. Donald Vialoux, co-founder of Tech Talk, is a past president and director of the Canadian Society of Technical Analysts (CSTA). He holds the designation of Chartered Market Technician (CMT). Mr. Vialoux has 45 years of experience in the investment industry, including prominent positions held at Richardson Greenshields and RBC Investments. He is the author of a daily letter on equity markets, which is available free at TimingTheMarket.ca. Mr. Vialoux is also the author of a weekly column published at GlobeAndMail.com that combines technical, fundamental, and seasonality analysis. He is a frequent presenter on Business News Network (BNN) Television. Mr. Vialoux also offers advice to the Horizons Seasonal Rotation ETF (HAC). eresearch was established in 2000 as Canada's first equity issuer-sponsored research organization. Our various research packages allow corporate management to choose the form of research coverage that best meets their company s needs. We are a primary source for professional investment research, focused primarily on small- and mid-cap companies. Our research and analysis is of institutional quality, and has the potential to reach millions of global investors through our extensive electronic distribution network. Bob Weir, CFA: Director of Research Note: All of the comments, views, opinions, suggestions, recommendations, etc., contained in the TechTalk/Timing The Market articles, reports, files, documents, essays, etc., and which are distributed by eresearch Corporation, are strictly those of TechTalk/Timing The Market and do not necessarily reflect those of eresearch Corporation. eresearch Corporation 78 Cameron Crescent, Suite 202 Toronto, Ontario M4G 2A3

2 Stock Market Outlook for Wednesday, February 18, 2015 The Markets Stocks ended marginally higher on Tuesday, buoyed by optimism that Greece will reach a deal to satisfy creditors. The Euro continued to firm up on recent gains, attempting to chart a short-term double-bottom pattern around The currency rebounding from some of the most oversold levels in its over 16 year history. Short-term resistance around the 20-day moving average is presently being tested; significant resistance around the 50-day moving average, currently at 1.182, continues to suggest an upper limit to any potential rebound rally. Seasonally, the Euro, in US Dollar terms, typically trades flat in February and March, charting a bottom, on average, following the weak month of January. <continued> eresearch Corporation ~ 2 ~

3 The big story of the day was the substantial rise in US Treasury yields following the collapse of prices as investors flee the apparent safe-haven trade that has dominated for the past 13 months. We had been writing rather exhaustively over recent weeks about 30-year bond prices hitting long-term trendline resistance, a level that has resulted in many intermediate peaks in bond prices; bond prices have typically declined in the 12-month period that followed. The beneficiary from the bond market selloff during those past instances was the equity market as investors rotated out of the fixed income asset class and into riskier investments. Should the 30-Year T-Bond trade back down to trendline support at 135 over the weeks and months ahead, the decline would shed around 16.5% in value, a significant move for a fixed income investment. Seasonally, treasury prices trade lower between now and the end of April as investors take on more risk in the equity market; the month of March is by far the weakest period of the year for the treasury bond, declining by an average of 1.6%. The 30-Year Treasury Bond has declined in March 87% of the time over the past 24 years, a significant frequency for any asset class. Bonds seasonally come back into favour during the summer months when investors tend to be more risk averse. eresearch Corporation ~ 3 ~

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5 One of the reasons that investors may rotate away from bonds and into stocks is that the yield on the 10-year treasury note is approximately equivalent to the S&P 500 dividend yield. Since the middle of the last century, treasury yields have exceeded the dividend yield, enticing investors towards the fixed income asset class. With yields converging, the competitive advantage of treasury bonds has now been eliminated. Investors may now be willing to question which asset class will provide the best return over the long run. A rotation from bonds into stocks would increase the treasury yields and pressure dividend yields lower, once again opening the gap between the two asset classes that has persisted since the late 1950 s. <continued> eresearch Corporation ~ 5 ~

6 Put-Call Ratio Sentiment on Tuesday, as gauged by the put-call ratio, ended bullish at <continued> eresearch Corporation ~ 6 ~

7 Seasonal charts A. Stocks Entering Period of Seasonal Strength Today BP plc (ADR) (NYSE:BP) Seasonal Chart Comstock Resources, Inc. (NYSE:CRK) Seasonal Chart Foot Locker, Inc. (NYSE:FL) Seasonal Chart eresearch Corporation ~ 7 ~

8 O Reilly Automotive, Inc. (NASDAQ:ORLY) Seasonal Chart B. Seasonal Charts of Companies Reporting Earnings Today eresearch Corporation ~ 8 ~

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20 Horizons Seasonal Rotation ETF (TSX: HAC) Closing Market Value: $16.03 (down 0.50%) Closing NAV/Unit: $16.02 (down 0.40%) Performance* 2015 Year-to-Date Since Inception (Nov. 19, 2009) HAC.TO 5.88% 60.2% * performance calculated on Closing NAV/Unit as provided by custodian Click Here to learn more about the proprietary, seasonal rotation investment strategy developed by research analysts Don Vialoux, Brooke Thackray, and Jon Vialoux. Special Free Services Available through Equityclock.com is offering free access to a data base showing seasonal studies on individual stocks and sectors. The data base holds seasonality studies on over 1000 big and moderate cap securities and indices. Notice that most of the seasonality charts have been updated recently. To login, simply go to ########## BW: Information on Equity Clock is provided on the ensuing page. eresearch Corporation ~ 20 ~

21 Equity Clock is a division of the Tech Talk Financial Network, a market analysis company that provides technical, fundamental, and seasonality analysis on a daily basis via TimingTheMarkets.com and EquityClock.com. Equity Clock s mission is to identify periods of reoccurring strength among individual equities in the market using methodologies presented by some of the top analysts in the industry, including that of Don Vialoux, author of TimingTheMarkets.com. Feel free to use any of the content or seasonality studies (charts, timelines, or otherwise) presented as long as a link-back to this site at EquityClock.com is provided. For further information on indicators used in reports presented on this site, please visit our reference page. Equity Clock Website: Horizons AlphaPro Seasonal Rotation ETF (HAC) Interested in the methodologies and strategies presented by Tech Talk? The Horizons AlphaPro Seasonal Rotation ETF (trading on the Toronto Stock Exchange under symbol HAC) uses a proprietary, seasonal rotation investment strategy developed by research analysts Don Vialoux and Brooke Thackray. The strategy s core position consists of broad markets at seasonally favourable times of the year and money market securities at seasonally unfavourable times of the year. The strategy allocates from the core portfolio to various sectors when those sectors offer favourable opportunities. Rotating a portfolio in anticipation of these opportunities is designed to deliver returns that are superior to a static investment in broad markets. As seasonal periods are never the same, this investment strategy is supported by additional fundamental and technical analysis. For more information, Click Here. ############ eresearch Corporation ~ 21 ~