Technical Review of Stocks

Transcription

1 CIO Wealth Management Research 18 October 15 Broader list Peter Lee, Chief Technical Analyst , ext.01 This report provides technical analysis on stocks that, we believe, are of a wide interest. This list is not a template for the construction of your personal portfolio. You should discuss investment decisions with your Financial Advisor. For more information about this report, see Description and Methodology in the Appendix. We would like to thank Venkat Badri, an employee of Cognizant Group, for his assistance in preparing this research report. Cognizant staff provides research support services to UBS. ab This report has been prepared by UBS Financial Services Inc. (UBS FS). Analyst certification and required disclosures begin on page 43.

2 Table of Contents Ticker Name Page Ticker Name Page AMGN AMGEN INC 4 JNJ JOHNSON & JOHNSON 22 AMZN AMAZON.COM INC 4 KMB KIMBERLY-CLARK CORP 22 APA APACHE 5 KO COCA-COLA CO 23 AXP AMERICAN EXPRESS CO 5 LB L BRANDS INC 23 AZN ASTRAZENECA PLC 6 MCD MCDONALD'S CORP 24 BAC BANK OF AMERICA CORP 6 MHFI MCGRAW HILL FINANCIAL 24 BEN FRANKLIN RESOURCES INC 7 MMM 3M CO BMY BRISTOL-MYERS SQUIBB CO 7 MO ALTRIA GROUP INC BP BP PLC 8 MRK MERCK & CO 26 BRK.B BERKSHIRE HATHAWAY - CLASS B 8 NEE NEXTERA ENERGY INC 26 C CITIGROUP INC 9 NSRGY NESTLE SA/AG 27 CAT CATERPILLAR INC 9 NVS NOVARTIS AG 27 CELG CELGENE CORP 10 ORCL ORACLE CORP 28 COP CONOCOPHILLIPS 10 OXY OCCIDENTAL PETROLEUM CORP 28 COST COSTCOWHOLESALE CORP 11 PEP PEPSICO INC 29 CPB CAMPBELL SOUP CO 11 PFE PFIZER INC 29 CSX CSX CORP 12 PG PROCTER & GAMBLE CO CTL CENTURYLINK INC 12 PM PHILIP MORRIS INTERNATIONAL CVX CHEVRON CORP 13 RDSA ROYAL DUTCH SHELL PLC 31 D DOMINION RESOURCES INC 13 SBUX STARBUCKS 31 DD DU PONT (EI) DE NOMOURS 14 STJ ST JUDE MEDICAL INC 32 DE DEERE AND CO 14 T AT&T INC 32 DEO DIAGEO PLC 15 TEVA TEVA PHARMACEUTICALS 33 DIS THE WALT DISNEY COMPANY 15 TGT TARGET CORP 33 DOW DOW CHEMICAL 16 TOT TOTAL SA 34 DUK DUKE ENERGY CORP 16 TRV TRAVELERS 34 F FORD MOTOR CO 17 UPS UNITED PARCEL SERVICE FB FACEBOOK INC 17 USB U.S. BANCORP GILD GILEAD SCIENCES INC 18 V VISA INC-CLASS A 36 GIS GENERAL MILLS INC 18 VOD VODAFONE GROUP PLC 36 GSK GLAXOSMITHKLINE PLC 19 VZ VERIZON COMMUNICATIONS INC 37 HAL HALLIBURTON 19 WBA WALGREENS CO 37 HD HOME DEPOT INC WFC WELLS FARGO 38 HON HONEYWELL INTERNATIONAL INC WMT WAL-MART STORES INC 38 IBM INTL BUSINESS MACHINES CORP 21 XOM EXXON MOBIL CORP 39 ITW ILLINOIS TOOL WORKS INC 21 UBS CIO WM Research 18 October 15 2

3 Changes since last report Additions Name Ticker Technical Rating Changes Name Ticker Old New Honeywell International Inc. HON Bullish Neutral International Business Machines Corp. IBM Bearish Neutral Altria Group Inc. MO Neutral Bullish With the exception of Dow Chemical (DOW) and Merck (MRK), the last update on these stocks was published on 14 September 15. The last update on DOW and MRK was published on 1 October 15. Going forward, our previously published ratings for all these stocks should not be relied upon. UBS CIO WM Research 18 October 15 3

4 Amgen Inc. (AMGN) /182 Sector HealthCare Last Sale Price $ Rationale: Despite recent volatility we maintain a favorable technical outlook on AMGN as long as the stock retains its primary uptrend. However, a broadening wedge pattern still warns of a maturing rally. Recent breakdown below 1 or the bottom of the 11 uptrend has led to a sharp decline to 1.09 or to its Oct '14 low (127.67), 38.2% retracement from rally and bottom of 13 uptrend channel. The ability to find support can lead to a trading range between low-1s and as this biotech repairs the technical damages incurred during recent sell off. Amazon.com Inc. (AMZN) / Sector C. Discretionary Last Sale Price $ Rationale: A broadening top pattern dating back to 09/11 may have been negated above 515. This bullish technical condition coupled with strong relative strength trend (versus SPX) and equally strong price momentum (MACD) support our bullish call for higher prices, over time. The ability to stay above or the Aug/Sep/Oct 15 highs hints of a retest of the Jul '15 all-time high of Above the record highs can extend the rally to 0-610, medium term and then to 6s, over time. Initial support moves up to and UBS CIO WM Research 18 October 15 4

5 Apache Corp (APA) Technical rating Bearish Sector Energy Last Sale Price $46. Rationale: After declining.77% from Jul '14 high (104.57) a positive outside week during the week of 10/2/15 is the first positive technical sign of a potential bottom for this battered Energy name. The ability to find support near.79 or close to the bottom of its 06 downtrend channel (not shown) can lead to an oversold rally. Although we are encouraged by the above technical developments we remain concerned about the sustainability of the rally until APA can clear above formidable resistance along the high-s to mid-s. Key initial support is American Express (AXP) Sector Financials Last Sale Price $76.74 Rationale: The technical breakdown below the mid-s earlier in the year paints a deteriorating near-to-intermediate term trend outlook and hence our Neutral stance. A secondary breakdown below the high-s during Summer 15 further reaffirms a medium term head/shoulders top. Next key support now resides at (Jun/Aug/Oct '13 and Aug '15 lows) and below this to to retest the 10 uptrend and pivotal 13 breakout. Additional support is or the 38.2% retracement from rally and 12 highs. Key initial resistance is / UBS CIO WM Research 18 October 15 5

6 AstraZeneca PLC ADS (AZN) / Sector HealthCare Last Sale Price $32.24 Rationale: AZN has completed a 4-year technical base breakout on a surge above in late-13. This breakout ignited a major rally that achieved several of our technical targets including or the Oct '06 record high and or the technical target based on late-13 breakout above The May '14 rally to the low-s also met longer term resistance associated with the extension of the 1998/06 trend line (not shown). Since the May 14 peak a well-defined downtrend channel has developed between the low-s (support) and the mid-s (resistance). Bank of America Corp (BAC) Sector Financials Last Sale Price $16.19 Rationale: The 2-year consolidation between (bottom of the 13 uptrend channel and the 14/15 lows) and (Mar '14/Jan/Aug '15 highs) remains intact. However, a weekly death cross sell signal and violation of its 11 uptrend warns of further volatility. The Jul-Aug '15 correction of 21% suggests a technical base before a sustainable rally. Key support remains at and key resistance is at A breakdown below confirms a top and suggests next downturn risks to A breakout above renders a retest of Jul '15 highs (18.5). 4 UBS CIO WM Research 18 October 15 6

7 Franklin Resources Inc. (BEN) / /58-59 Sector Financials Last Sale Price $37.81 Rationale: We maintain a cautious technical outlook on BEN as the 2-year consolidation between mid-to-high-s and the high-s has led to a major breakdown below 53 coinciding with the bottom of its 12 uptrend channel in Mar '15. Subsequent break downs below 48- and -46 in Jul '15/Aug '15 solidify a top. However, the 38.73% bear decline over the past year to is now trading at deeply oversold levels as it nears its % retracement (.62) from its rally. The ability to find support can lead to an oversold rally to and then to the mid-s. Bristol-Myers Squibb Co (BMY) Sector HealthCare /79. Last Sale Price $63.62 Rationale: A 3% rally from 08 bottom led to an overbought condition. 7/24/15 negative outside week and a subsequent Jul '15 negative outside month coupled with broad market volatility during Aug '15 have resulted in the violation of key initial support in the low-to-mid s coinciding with the 10-wk/-wk moving averages. Despite recent volatility BMY has maintained above its 13 uptrend in the low-s preventing a deeper and more extensive correction. Nonetheless, BMY needs to clear above its recent mid-aug/sep '15 highs at 64- to resume its primary uptrend. UBS CIO WM Research 18 October 15 7

8 BP PLC ADS (BP) / Technical rating Bearish Sector Energy Last Sale Price $.68 Rationale: This Energy name has fallen % from its May '14 highs (53.85). In the process, BP has violated its 10/11 uptrend at 44- in Sep '14 confirming a top. Although an oversold condition as well as a positive outside week (10/2/15) and the Jun '15 downtrend breakout (32-33) are encouraging it may be too early to confirm a major bottom within a technical basing effort. Key resistance is evident near coinciding with the -wk ma, -61.8% retracement from Apr-Sep '15 decline and 14 downtrend. Initial support moves up to and then to Berkshire Hathaway Inc. Class B stock (BRK.B) Sector Financials Last Sale Price $133. Rationale: We retain our cautiously optimistic outlook on BRK.B as the longer-term trend remains favorable. However, the rally to (Dec '14) basically achieved a technical target of (based on the early 13 breakout above ). The nearly 18% correction since then has led to violations of the 11/13 uptrends at 144 and 1-136, respectively. A weekly death cross sell signal during Apr '15 has also pressured the stock. Nonetheless, the ability to find support near its -mo ma (129.6) may help to establish a technical base between and UBS CIO WM Research 18 October 15 8

9 Citigroup Inc. (C) / Sector Financials Last Sale Price $52.97 Rationale: Despite an erratic Financial Sector and weakness in many Banking names we maintain an optimistic technical view on Citigroup as long as retains its 2-year technical base. A convincing move above confirms a major breakout and signals the start of the next major rally to the mid-s and then the mid-s, over time. In addition, a multi-year inverse head and shoulder pattern over the past of 6 years (not shown) is constructive. After establishing a high of.95 (Jul '15) the market correction has triggered another retest of the bottom its trading range at -47. Caterpillar Inc. (CAT) / / Technical rating Bearish Sector Industrials Last Sale Price $.83 Rationale: A death cross technical sells during Oct '14 and Jul '15, violation of the pivotal 10/11 uptrend (89-91), and neckline support (79) confirms a major intermediate term top. The 43.5% decline in the past year has resulted in a deeply oversold condition. A daily island reversal on 10/5/15 hints of a short-term oversold rally towards initial resistance at (10-wk ma) and above this to (-wk, Nov '14 downtrend and 38.2% retracement from decline. The recent 10/5/15 gap up at is initial support and then or the Oct '15 low. UBS CIO WM Research 18 October 15 9

10 Celgene Corp. (CELG) Sector HealthCare Last Sale Price $ Rationale: We retain a technical Bullish outlook on CELG as the primary trend starting from 1998 low remains up and the recent Jul-Aug '15 decline of 34% found key support near its 61.8% retracement (95.07). However, a head/shoulders top has developed over the past year. Left and right shoulders are visible near 129/127 and neckline support is at CELG needs to surge above its key initial resistance at or the Jul '15 downtrend, the 10- /- wk ma and 61.8% retracement form Jul-Aug '15 decline to signal a recovery to and then 141. ConocoPhillips (COP) Technical rating Bearish Sector Energy Last Sale Price $.23 Rationale: The S&P 0 Energy sector has suffered a major sell-off (-41.5%) over the past year falling from its Jun '14 high (738.71). COP also followed suit with a -52.8% decline from its Jul '14 high of A two-year head and shoulder top breakdown below at has led to a sharp decline towards (8/24/15) or close to its 76.4% retracement (.43) from its rally. Given a deeply oversold condition and two positive outside weeks (9/18/15 and 10/2/15), a technical rally can trigger a retest of key initial resistance at and above this to UBS CIO WM Research 18 October 15 10

11 Costco Wholesale Corp. (COST) / Sector Cons. Staples Last Sale Price $ Rationale: We retain a technical Bullish stance on COST as this leadership continues to progress higher via its 09 uptrend channel. Over the last 6-plus years the stock witnessed steady gains as the channel rises between low-to-mid 1s and high-1s to low-1s. After establishing a high of on Mar/Oct '15 an overbought condition soon developed. Although Aug '15 negative outside month hints of a consolidation, the ability of COST to find key support above the mid-1s reinforce a -point trading range allowing for the continuation of the primary uptrend channel. Campbell Soup Co. (CPB) / Sector Cons. Staples Last Sale Price $49. Rationale: An ascending triangle breakout during 13 (above the high-s) coupled with a subsequent 2 year triangle pattern breakout above 36 (Jan '15) confirms a Bullish medium to longer-term trend. However a near-term overbought condition coupled with broader market weakness during Jul-Sep 15 has led to a correction to the 12 uptrend near mid-s. Despite the near-term volatility a retest of Apr '98 all-time highs (62.88) is possible, over time. Initial support is or the recent breakout and the -wk ma and then the mid-s or the 12 uptrend. UBS CIO WM Research 18 October 15 11

12 CSX Corp. (CSX) / / /38 Sector Industrials Last Sale Price $27.89 Rationale: We maintain a cautious Neutral technical stance on CSX. A sharp rally from 13 to early 14 faltered near its all-time high of on Nov '14. As the broad market (SPX) set new highs in May '15 a lower-low pattern soon developed on CSX at This negative divergence, a weekly death cross sell signal in May '15 and violation of the bottom of its 13 uptrend channel (33) confirm a medium-term top. The ability to find support near the top of the 11 ascending triangle along in Aug '15 may lead to a trading range between the mid-s and low-s. CenturyLink Inc. (CTL) /-37.5 Sector Comm. Services Last Sale Price $26.98 Rationale: This Telecom remains confined to downtrend channel over the past 5-years between 24- and A weekly death cross sell signal during Jan '15 first warned of another downturn. Since then a series of lower lows and lower highs led to a steeper downtrend channel. The 47.21% decline from 14 highs to a low of (Oct '15) led to an extreme oversold condition prompting the recent technical rally. A convincing surge above or the top of channel and 10-wk ma solidifies a potential bottom allowing for a rally to and above this to.5 (-wk ma). UBS CIO WM Research 18 October 15 12

13 Chevron Corp (CVX) Sector Energy / / Last Sale Price $.72 Rationale: The selling accelerated as CVX violated its key support along the bottom of its 11 uptrend channel at A weekly death cross sell, a negative outside week (5/1/15) and violation of next support at 98- (Dec '14/Jan-Mar '15 lows) has triggered a 48.5% decline (from its Jul '14 highs) to Aug '15 low of An extremely oversold condition coupled with a successful test of major support at. (61.8% retracement from rally) ignited a technical rally to key resistance at or the -wk ma and 38.2% retracement from Jul '14 to Aug '15 decline. Dominion Resources Inc. (D) Sector Utilities Last Sale Price $72. Rationale: The S&P 0 Utility sector and D appear to have peaked, at least from a near-to-intermediate term basis. Although the longer-term trend remains up, failure to surpass key resistance at -81 coinciding with the top of the 09/11 uptrend channels warns of an intermediate-term top. In addition, a head/shoulders top over the past 2 years reaffirms selling pressure. Key neckline support is in the mid-s. Breeching support confirms a top and renders downside risks to the low-s and possibly to the mid-s. Left/right shoulders at are key resistances. UBS CIO WM Research 18 October 15 13

14 E.I. DuPont de Nemours & Co. (DD) 54.5/ /76.61 Sector Materials Last Sale Price $56. Rationale: Two gap downs during Mar '15, a weekly death cross sell signal in Apr '15, negative outside week patterns (5/15/15 and 6/5/15), and 12 uptrend channel breakdown triggered a sharp decline to 47.11(Oct '15). The selling may have subsided near as it bounces off of its crucial 10 uptrend. The ability to find support coupled with a deeply oversold condition can trigger a technical rally to key resistance at or -wk ma, Mar 15 downtrend and 38.2% retracement from its 15 decline. The 10/6/15 gap up at is initial support and then Deere and Co (DE) /88-92/97-98 Sector Industrials Last Sale Price $76.23 Rationale: We retain a cautious Neutral technical stance on Deere. Earlier, two technical breakdowns below 11/12 uptrend at 88/84 and 12 downtrend channel at warn of a major top. The downturn quickly accelerated during Aug '15 broad market correction. A deeply oversold condition into this decline suggests a technical rally is possible back to the prior breakdowns near the low-to-mid s. A convincing surge above the prior breakdowns is necessary to reassert its uptrend. In the meantime, a trading range is now likely between low-s and low-s. UBS CIO WM Research 18 October 15 14

15 Diageo PLC ADS (DEO) / / Sector Cons. Staples Last Sale Price $ Rationale: Although the longer term trend still remains favorable, this global consumer staples name have underperformed SPX for the past two plus years as evident a well-defined downtrend channel. A slight break of its channel during the Sep-Oct '14 market downturn and the rolling over of its 10- /- wk moving averages reinforce our intermediate term Neutral technical outlook. Nonetheless, the ability to maintain its 38.2% retracement (98.5) from rally and its early 12 breakout (93.12) is positive and this can lead to another rally to key resistance at The Walt Disney Co (DIS) /94 89-/ / Sector Cons. Disc. Last Sale Price $ Rationale: Despite the broad market correction during Jul-Aug '15 and the equally sharp pullback in the Movies/Entertainment sector a 4+ year uptrend channel still remains intact. The top of the channel is at 117 and the bottom of channel is 94. Nonetheless, a large gap down on 8/5/15, a subsequent 8/7/15 negative outside week pattern and the crossing of the 10-wk ma (103) below its -wk ma (109) still warn of further market volatility over the nearto-medium term. We would not be surprised to see a trading range develop between mid-to-high s and UBS CIO WM Research 18 October 15 15

16 Dow Chemical Co. (DOW) Source: FactSet, UBS CIO WMR as of 15 October / Sector Materials Last Sale Price $47.58 Rationale: The 34.7% correction during Jul-Aug '15 may have breeched its key 01 uptrend at 43 resulting in a dramatic decline towards.11 (8/24/15) before witnessing a technical oversold rally. Since the pivotal 09 uptrend has been violated the key challenge is for DOW to maintain above its Aug '15 low and surge above the extension of its 09 uptrend at 44-. During the week of 10/2/15 a positive outside week and a gap up breakout above its 10-wk ma (44) reinforce the start of a recovery to key resistance at 48. (-wk ma) and above this to 54- (14/15 highs). Duke Energy Corp. (DUK) /89.87 Technical rating Bearish Sector Utilities Last Sale Price $73.48 Rationale: The failure of DUK to clear above the top of its uptrend channel (high-s) and the subsequent weekly death cross technical sell signal in late Mar '15 warn of a peak for this Utility name. Recent violation of the mid-s (74-) coinciding with the Mar/May '15 lows, 09 uptrend, and the Oct '14 breakout reaffirms a top and hence our defensive technical outlook. In addition, continued relative underperformance versus SPX and UTY and Aug '15 negative outside month warn of further downside risks. Nonetheless, an oversold rally is still possible to -77.5, near-term. UBS CIO WM Research 18 October 15 16

17 Ford Motor Co (F) / Sector C. Discretionary Last Sale Price $15.22 Rationale: A potentially large technical base has developed over the past 14-years (not shown). However, repeated failures to clear above formidable resistance at have led to intermediate term trading ranges and hence our Neutral outlook. On a near-term basis, recent decline to on Aug '15 and the sharp recovery may be nearing key near-term resistance at coinciding with the Jul '14 downtrend and -wk ma. A breakout here signals a sustainable recovery to the Mar '15 high at and above this to /18.97 or the and 11 highs. Facebook Inc. (FB) 8 Jul '12 Oct '12 Jan '13 Apr '13 Jul '13 Oct '13 Jan '14 Apr '14 Jul '14 Oct '14 Jan '15 Apr '15 Jul '15 Oct ' / / Sector Technology Last Sale Price $95.96 Rationale: Despite the lack of a trading history for FB (started trading on May '12) the primary trend remains bullish. A breakout above low-s during Jul '13 and a subsequent breakout above during Sep '14 led to a steeper uptrend channel. This leadership Technology name fell 27.5% from its Jul '15 high (99.3) but has quickly rallied above the bottom of its channel and is now challenging its Jul '15 downtrend at A breakout here signals a retest of 99.3 and above this to and then , medium term. Initial support is available at and then -82. UBS CIO WM Research 18 October 15 17

18 Gilead Sciences Inc. (GILD) / Sector HealthCare Last Sale Price $ Rationale: GILD has rallied 94.28% from its Apr '14 low (63.5) to its Oct '14 record high (123.37). An overbought condition has led to the current high level consolidation between the mid-s or the Dec/Aug '15 lows and or the Oct '14/Jun '15 highs. Although new all-time highs are still possible we expect a technical base is necessary before the resumption of the primary uptrend. In addition, the Aug '15 negative outside month and the crossing of the 10-wk (105) below its -wk ma (109) reinforce a trading range scenario. Key initial support is at and then General Mills Inc. (GIS) 54-/ / Sector Cons. Staples Last Sale Price $56. Rationale: The primary trend remains up and this suggests higher prices are likely, over time. However, failure to clear above its 2-year uptrend channel at has created a 6-month head/shoulders top formation. Trading above the left/right shoulders at helps to negate a potential distribution top pattern and allows for a retest of the top of the channel and its all-time high at A breakout here renders upside targets into the mid-s and above this to the high-s to low-s, longer term. On the downside, a breakdown below 54- warns of a deeper correction. UBS CIO WM Research 18 October 15 18

19 GlaxoSmithKline PLC ADS (GSK) / /-61 Technical rating Bearish Sector HealthCare Last Sale Price $41.54 Rationale: We reiterate our technical defensive stance on GSK as a breakdown below 53 in Jul '14 first warned of an intermediate term top. A subsequent breakdown below 47 in Sep '14 further reaffirmed selling. A negative outside month on Aug '15 and completion of a 1-year head/shoulders top breakdown (below neckline at 41.) suggests downside to However, a deeply oversold condition coupled with the ability to find key support at the bottom of its 2-year falling wedge ( Oct '15 low) hint of a technical oversold rally to and above this to -47. Halliburton (HAL) / /57. Sector Energy Last Sale Price $39.26 Rationale: The 58.39% decline from Jul '14 to Aug '15 has weakened both the absolute and relative (vs SPX) charts. However, it appears that the strong selling may be subsiding as evident by a positive outside month if confirmed by the end of the month (Oct '15). A surge above its -week ma (42.28) as well as above its Nov '14 downtrend (43) further reinforce a bottom allowing for a recovery to the 38.2% retracement (47.51) from the decline and its May '15 reaction high (.). Key support is visible at or Sep/Oct '15 lows and then.93 or the Aug '15 low. UBS CIO WM Research 18 October 15 19

20 Home Depot (HD) / Sector C. Discretionary Last Sale Price $ Rationale: We reiterate our technical Bullish outlook on this leading Home Improvement Retailer. The strong rally over the past 2 years has basically achieved our 123 technical target (based on its 13 breakout above ). The Aug '15 broad market correction led to a.5% sell-off. However, the ensuing recovery is impressive as it is now challenging its Aug '15 all-time high (123.). Key initial support resides along the 10-wk and -wk ma (117.5/114.5). Secondary support is also available at -112 or the Jul/Aug/Sep '15 lows and 23.6% retracement from rally. Honeywell International Inc. (HON) / /118.5 Sector Industrials Last Sale Price $98. Rationale: A 13-year breakout at 63 and 69 during the late-12/early-13 (not shown) renders upside technical targets to and then to HON has achieved one of the two technical targets ( ) during the summer rally to and is now undergoing a high level consolidation between the low-to-mid s and The Aug '15 negative outside month (intra-month high at ) warns of further consolidation and forces a downgrade to a technical Neutral outlook. Violation of initial support is suggests a decline to 87 (Aug '15 low) and UBS CIO WM Research 18 October 15

21 International Business Machines Corp (IBM) / /1.5 Sector Technology Last Sale Price $1.09 Rationale: We upgrade IBM to Neutral technical outlook as the risk/reward profile has improved. The 34.87% decline over the past 2-plus years has led to an extreme oversold condition. The successful test of the bottom of its downtrend channel (1) can trigger an oversold rally to key initial resistance at or the 23.6% retracement from decline and its -wk ma. A breakout here renders a retest of the large gap down on 7/21/15 ( ) and on 10//14 ( ). IBM is likely headed for a wide trading range between 1 and 1, medium term. Illinois Tool Works Inc. (ITW) / Sector Industrials Last Sale Price $85. Rationale: A breakout above 59- during late-12 and a surge above a 4-plus year rising uptrend channel during Apr/May 13 in the low-s area as well as positive outside month patterns on Aug '14 and Oct '14 reinforce the primary uptrend. However, a weekly death cross signal as early as Apr '15 and global market weakness in Aug '15 led to temporary decline below the top of its uptrend channel. However, a positive outside day on 10/2/15 and a subsequent gap up on 10/5/15 as well as the potential for a positive outside month on Oct '15 reaffirm the primary uptrend. UBS CIO WM Research 18 October 15 21

22 Johnson and Johnson (JNJ) 89.9/ / Sector Healthcare Last Sale Price $97.15 Rationale: We continue with our technical Neutral stance on JNJ. A large multi-year technical base breakout above the low-s basically achieved our technical target of the low-s during Nov 14 (109.49). Soon afterwards a weekly death cross sell signal and the onset of triangle pattern warn of a potential top. The global market sell-off during Aug '15 led to a break of key support in the mid-s prompting a sharp drop to the low-to-mid s. A successful test of support triggered the recent rally which is now challenging the prior breakdown and the 14 downtrend at 98-. Kimberly-Clark Corp. (KMB) / / Sector Cons. Staples Last Sale Price $ Rationale: We retain a technical Bullish view on KMB as long as the primary uptrend channel from lows remains intact. However, a 2-plus year complex head/shoulders top, a negative outside week (1/23/15) as well as a negative outside month (Jan '15), gap down on 8/24/15 ( ) and a subsequent Aug '15 negative outside month pattern hint of a consolidation. Nonetheless, the stock continues to maintain above key support near In addition, a positive outside day on 10/2/15 and a subsequent gap up on 10/5/15 reaffirm the primary uptrend. UBS CIO WM Research 18 October 15 22

23 Coca Cola Co (KO) / / Sector Cons Staples Last Sale Price $41.92 Rationale: We retain a Neutral technical outlook as a breakdown below its 4+ year uptrend channel warns of a consolidation. Despite the18% gain from the Feb '14 low (36.89) to the Nov '14 high () we continue to detect mixed signals suggesting that a trading range is likely over the near-to-medium term. A positive outside day (9/24/15), a gap up on 9//15 and a convincing move above confirms the resumption of the primary uptrend. However, a breakdown below uptrend line and the Aug '15 negative outside month hint of further selling pressure. L Brands Inc. (LB) / / / Sector C. Discretionary Last Sale Price $96.04 Rationale: The bullish uptrend channel from the 08/09 lows, and a multi-year accumulation breakout in 10/11 above the low-s still merit a medium to long-term technical Bullish outlook. However, a negative outside month on Apr '15 and the Jun '15 death cross technical sell signal led to a 21.6% decline from its Apr '15 high. The stock quickly recovered from its Aug '15 low (.11) as it successfully rallied from the top of its uptrend channel. A gap up on 9/3/15 as well as positive outside days during 9/11/15, 9/16/15, and on 10/1/15 bode well for the resumption of uptrend. UBS CIO WM Research 18 October 15 23

24 McDonald s Corp (MCD) / /114 1/126. Sector C. Discretionary Last Sale Price $ Rationale: 09 uptrend breakdown during Jul '14 around mid-s hints of either a maturing trend or a potential top. In addition, a range bound trading between 88- and , the flattening of the 10- /-wk ma support the basis for the continuation of a Neutral intermediate term trading range. However, the Aug '15 negative outside month still warns of further volatility. Having said that, a positive outside week on 10/2/15 and a subsequent gap up on 10/5/15 suggests a retest of its all-time high of A convincing move above confirms breakout and an upgrade. McGraw Hill Financial Inc. (MHFI) / / / Sector Financials Last Sale Price $93.10 Rationale: We maintain a favorable technical view on MHFI. A breakout above 72. or the 07 highs and another breakout above during Oct '14 confirm our bullish technical outlook. A 48% rally from Oct '14 low (73.96) to Mar '15 high (109.13) led to an overbought condition. The stock has quickly corrected during Aug/Sep '15 as the broad market impacted almost all major S&P sectors and stocks. Despite lacklustre performance this year, this stock continues to show superior relative strength against S&P 0 Index and against its peer group indicating a relative leader. UBS CIO WM Research 18 October 15 24

25 3M Co (MMM) / / Sector Industrials Last Sale Price $ Rationale: An inverse head and shoulder pattern breakout dating back to 04 (not shown) ignited a strong rally that achieved our intermediate term target of 153. After overshooting its technical target and setting a new all-time high of 1.5 on Mar '15, a negative outside week on 3/6/15 warns of a consolidation. A weekly death cross sell signal (May '15) led to a 21.4% decline from its Mar '15 high to its Aug '15 low of 134. A successful test of the top of its uptrend channel as well as a positive outside day (10/2/15) and gap up (10/5/15) suggest a retest of supply at 1-1. Altria Group Inc. (MO) 54-56/ /- 0.5 / Sector Cons Staples Last Sale Price $57.87 Rationale: MO appears to be emerging from its 09 broadening wedge pattern (shown above). More recently, a breakout above the top of its 1-year trading range at as well as a weekly golden cross buy signal in the mid- Aug '15 and the negation of the Mar '15 negative outside month warrant a technical upgrade of the intermediate term trend to Bullish. The recent breakout renders upside targets to the low-s (near-term), mid-s (medium term) and then to the low-s (long-term). Initial support moves up to (10-wk ma) and then to (-wk ma) UBS CIO WM Research 18 October 15

26 Merck & Co (MRK) Source: FactSet, UBS CIO WMR as of 15 October / /71-72 Sector Healthcare Last Sale Price $.72 Rationale: We maintain a technical Neutral stance on MRK. The longer-term trend remains favorable as the breakout of the 00/07 downtrend (not shown) above low-s signals a sustainable recovery. However, the recent 11 uptrend breakdown weakens the intermediate term technical outlook. In addition, negative outside months (Jun/Aug '15), rolling of key moving averages and a violation of 11 uptrend at warn of further selling to the Nov '13 low (44.62). More recent, negative outside days on 9/9/15, 9//15, 10/6/15 and 10/13/15 hint of further weakness. NextEra Energy Inc. (NEE) / / /128 Sector Utilities Last Sale Price $103. Rationale: We retain a cautiously optimistic technical view on NEE. A breakout of multi-year accumulation pattern above 73. or the 08 highs led to a 4-year broadening top pattern. The stock suddenly reversed direction after making a high of during Jan '15. More recently, a gap down during Aug '15 as well as a negative outside month triggered a break of the bottom of its 11 uptrend channel. A head/shoulders top over the past year also warns of a potential top. Failure to clear above coupled with a break of the low-s confirms a peak. UBS CIO WM Research 18 October 15 26

27 Nestle S.A. ADS (NSRGY) / /94-96 Sector Cons. Staples Last Sale Price $79.16 Rationale: The longer-term trend is Bullish but the near-to-intermediate term remains Neutral. A trading range has developed over the past year between low-s and the high-s via a triangle pattern. The multiple moving average crossovers in the past year signals an impending inflection point. A gap up on 9//15 and subsequent gap ups in Oct '15 hints of a breakout above A breakout here renders upside to the mid-to- high s and then 94-96, over time. On the downside, initial support is the mid-s or the 10-wk/-wk ma and then to the low-s (09 uptrend). Novartis AG (NVS) / / Sector HealthCare Last Sale Price $93.86 Rationale: A convincing breakout above a multi-year basing pattern in the mid-s during early 13 broadly drives our technical Bullish stance. Also, an uptrend channel has developed between the high-s and the low-s since 12. More recently, a negative outside week pattern on 7/24/15, 8/21/15 and Sep '15 gap down led to a violation of 12 uptrend channel. While we note the recent negative developments, constructive outlook in relative charts versus SPX keeps us optimistic. Failure to move convincingly back above the 12 uptrend channel near warns of a top. UBS CIO WM Research 18 October 15 27

28 Oracle Corp. (ORCL) / Sector Technology Last Sale Price $37. Rationale: Although the longer term trend remains favorable we maintain a technical Neutral outlook on a near-tointermediate term basis. A failure to clear convincingly above the top of its 13 uptrend channel as well above its Aug '00 record high (46.41) and a negative outside week/month during 6/19/15, Jun '15 led a test of its prior breakout levels (36.) and top of 11 ascending triangle pattern. That said, the 10/2/15 positive outside day and a subsequent gap up on 10/5/15 led to a bounce back from oversold levels. Trading range is likely between mid-s and mid-s. Occidental Petroleum Corp. (OXY) / Technical rating Bearish Sector Energy Last Sale Price $74.72 Rationale: A breakdown from two symmetrical triangles below in Sep/Oct '14 and again below in Nov/Dec '14 coupled with falling crude prices broadly drives our technical bearish rating. A failure to clear above low-s or 12 and Jun/Jul '14 highs led to a gradual decline which appears to have found support near 11 lows near low-s. Although the prevailing trend is bearish and relative strength (versus SPX) is still weak; a positive outside week pattern (10/2/15) and a subsequent gap up breakout (10/5/15) signal an oversold rally to the high-s to low-s, near term. UBS CIO WM Research 18 October 15 28

29 Pepsico Inc. (PEP) /78- +/ /116 Sector Cons Staples Last Sale Price $98.28 Rationale: We maintain a technical Bullish stance on this Consumer Staples. A breakout of a multi-year technical base above during Apr '13 drives our positive technical outlook. A rally (+31%) from Feb '14 lows extended the gains and resulting in a record high of. by Nov '14. An overbought condition led to the current consolidation between the low-s and the low-s. Although the Aug '15 negative outside month pattern hints of further volatility, the wo gap ups in Oct '15 suggest buyers are returning. A breakout above -101 suggests upsides to / Pfizer Inc. (PFE) /48- Sector Healthcare Last Sale Price $34.08 Rationale: A 10-year downtrend breakout above 19 +/- 1 during 11 (not shown) has ignited a major trend reversal favouring a sustainable recovery. From the 09 bottom (11.62) the rally stalled near its 61.8% retracement (mid-s) from the decline. Although the Jul '15 positive outside month pattern kept investors optimistic, increased market volatility led to a 21.9% decline from its Jul '15 high. The ability of the stock to find support near the bottom of its 13 broadening top at coupled with a positive outside week during 9/11/15 suggests a rally to UBS CIO WM Research 18 October 15 29

30 Procter & Gamble Co (PG) /93.43 Sector Cons. Staples Last Sale Price $74.27 Rationale: A failure to clear the top of its 15-plus year uptrend channel (not shown) near the low-s and deteriorating relative strength (SPX) suggest a high level consolidation. A subsequent death cross sell signal during Mar '15, the onset of a potential 2-plus year head/shoulders and the Jul '15 negative outside month led to a.7% decline from Dec '14 highs. Interestingly the stock found support near the bottom of the 10/11 uptrend channel near key support at -67. The positive outside week (9/18/15) suggests a rally to key resistance at (-wk ma and breakdown). Philip Morris International (PM) Sector Cons Staples Last Sale Price $86.07 Rationale: This Consumer Staples name retains its longer term bullish uptrend dating back to 08/09. However, it still needs to clear above its 13 downtrend near to signal a sustainable, intermediate term recovery. In addition the recent breakdown below its 4+ year symmetrical triangle will likely test the resiliency of the bulls. Although the 04/19/15 gap up and the Apr '15 positive outside month pattern are encouraging, the increased volatility during Aug/Sep '15 hints of a trading range market between the mid-s and the low-s, near to medium term. UBS CIO WM Research 18 October 15

31 Royal Dutch Shell PLC ADS Cl A (RDSA) / Technical rating Bearish Sector Energy Last Sale Price $.93 Rationale: RDSA has also declined in sympathy with its energy peers falling.10% from Jul'14 highs. This has weakened both the absolute and relative (vs SPX) charts. We are concerned that the recent breakdowns below the 11 and 12 lows (shown above) warn of further selling. In addition, continued relative underperformance of the stock versus S&P 0 index and the Aug '15 negative outside month warn of more risk. That said, a positive outside week on 10/2/15 and subsequent gap ups in Oct '15 can lead to a technical rally back to and possibly to Starbucks Corp. (SBUX) / Sector C. Discretionary Last Sale Price $59.69 Rationale: We maintain a technical Bullish outlook on this leading consumer discretionary name based on; 1) uptrend channel since 08/09; 2) a successful breakout above the top of the uptrend channel at -52 in Apr '15; 3) a new and steeper uptrend channel has developed this year between high-s and low-to-mid s. Although a negative outside week pattern on 8/7/15 and again on 8/21/15 led to a 29.1% decline from Aug '15 high, an impressive rally from the bottom of its 11 uptrend channel led to a breakout above previous all-time high (59.32 or the Jul/Aug'15 highs). UBS CIO WM Research 18 October 15 31

32 St. Jude Medical Inc. (STJ) +/ / / +/ Sector HealthCare Last Sale Price $67.18 Rationale: We remain Bullish on STJ due to favorable technical developments including Oct '13 10-year breakout above the mid-s and the Apr '15 breakout above 69. The stock extended rally and made a high of.84 by Jul '15. Soon after, a negative outside week on 7/24/15 coupled with global market weakness led to a 24.5% decline from Jul '15 high. Despite a positive outside week pattern on 8/28/15, the stock continued to consolidate during Sep '15. That said the Oct '14 positive outside month and the recent 10/2/15 positive outside day bode well for further upside. AT&T Inc. (T) Support Levels Sector Comm. Services Last Sale Price $33.49 Rationale: We maintain a technical Neutral stance on AT&T. The stock remains confined to a broad trading range between low-s and high-s over the past 3 years starting from mid-12. Multiple cross overs of key moving averages, confined movement of the stock within a large + years symmetrical triangle (not shown) and also within a 13 symmetrical triangle pattern gives us an impression that battle between bulls and bears are very much on course. More recently, a positive outside week on 10/2/15 and a subsequent gap up on 10/5/15 gives bulls an edge over bears. UBS CIO WM Research 18 October 15 32

33 Teva Pharmaceutical Industries Ltd. ADS (TEVA) / / Sector HealthCare Last Sale Price $.11 Rationale: We keep a technical Bullish view based on its breakout of a large symmetrical triangle dating back to 11. Also a successful move above its previous all-time highs established on March 10 (above 64.95) extended the rally to or the Jul '15 high. Thanks to the 7/3/15 positive outside week and the Jul '15 gap up. Soon an overbought condition developed that led to a.1% decline from Jul '15 high also helped by broader market volatility. The ability of the stock to find support near 11 highs, 10/7/15 positive outside day contain the selling and allows for a recovery. Target Corp (TGT) / Sector C. Discretionary Last Sale Price $.13 Rationale: This leadership retail name confirmed a major technical breakout in late-14 as it finally cleared above its prior 07/13 all-time highs at This impressive breakout ignited a sharp rally to new record highs at (Jun '15). Soon after the stock pared gains during Jul/Aug '15 in sympathy with broader market weakness and tested prior breakout levels (71.91 or Aug '15 low) before recovery. While we remain optimistic, a death cross signal, 10/14/15 negative outside day and Oct '15 negative outside month warn of further consolidation before higher prices. UBS CIO WM Research 18 October 15 33

34 Total S.A. ADS (TOT) / / Technical rating Bearish Sector Energy Last Sale Price $51.84 Rationale: We maintain a defensive technical outlook on TOT. After the global market correction, the energy name witnessed wide swings between the low- and the high- into the 3 rd quarter of 13. After setting a high of on Jul '14, a death cross signal developed which in turn led to a 44.9% decline from 14 highs. In the process, multiple support levels were broken including 11, 12 and 13 highs. Despite the Aug '15 negative outside month pattern, a positive outside week (10/2/15) and gap ups (Oct '15) can extend the rally to the mid-s Travelers (TRV) Sector Financials Last Sale Price $ Rationale: A breakout of a multi-year basing pattern above 57 in 11 still drives our longer-term technical Bullish outlook. After making a high of.49 by Mar '15, a negative outside week pattern on 3/27/15 signal a consolidation phase. More recently, a gap down in Aug '15 coupled with a negative outside month reaffirm a technical basing pattern before resumption of the primary uptrend. That said, the 10/2/15 positive outside day and a subsequent gap up on 10/5/15 signals a sustainable recovery. A convincing move above confirms this breakout. UBS CIO WM Research 18 October 15 34

35 United Parcel Service (UPS) / / Sector Industrials Last Sale Price $103. Rationale: Many of the Transportation sector including this Air Freight name continues to sustain strong selling pressure. Although UPS is still trading above the bottom of its pivotal 09 uptrend channel we are concerned about a large head/shoulders top pattern that has developed over the past 2 years. In addition, the numerous crossing of key moving average coupled with mixed technical readings (i.e. a Jul '15 positive outside month was followed by an Aug '15 negative outside month) suggests a Neutral trend between the mid-s and the low-s over the medium term. US Bancorp (USB) / Sector Financials Last Sale Price $41.01 Rationale: This Financial stock has recovered all of its losses from the global financial crisis. A gradual rise over the last 5+ years within a rising uptrend channel led to a breakout above or 08 highs by early-14. Soon an overbought condition developed. Despite Jul '15 positive outside month pattern; multiple gap downs in Aug '15 as the result of broad market correction led to a 16.1% decline from its Jul '15 highs. The ability to rally back above its uptrend channel could reassert the primary uptrend. A move below 38.81confirms a breakdown and lower prices. UBS CIO WM Research 18 October 15

36 Visa Inc Cl A (V) Sector Technology Last Sale Price $.34 Rationale: The primary trend starting from lows remains Bullish. In addition, continued relative outperformance of the stock versus SPX suggests a leadership name. More recently, the Oct '14 positive outside month pattern led to a successful breakout of a 1-year pennant formation above 54- levels. This breakout soon transitioned into a rising uptrend channel between the high s and the high-s. A move above high-s could attract new buyers to emerge leading to new record highs. Initial support moves up to or the Sep '15 low and below this to. Vodafone Group PLC ADS (VOD) / /-. Sector Comm. Services Last Sale Price $32.03 Rationale: A multi-year ascending triangle pattern (not shown) supports the longer-term bullish technical prospects of this stock. However, after a gradual rise from lows, the stock witnessed a high level consolidation between mid-to-high s and low-s from 11 to 13. A successful breakout above (Jan 11 high) in Sep '13 led to another rally that found resistance at which is just above 07 highs near A recent death cross signal coupled with a negative outside month on Aug '15 suggests a trading range between the low-s and the mid-s. UBS CIO WM Research 18 October 15 36

37 Verizon Communications Inc. (VZ) / / Sector Comm. Services Last Sale Price $44.67 Rationale: A multi-year breakout above 07 highs at in late-12/early-13 is still constructive. However, after successful breakout of 07 highs, the stock witnessed a high level consolidation between mid-s and mid-s over the past 2 years. In addition, the10-wk/-wk moving average have transitioned into a sideway trend substantiating our technical Neutral rating. While the 9/18/15 negative outside week pattern led to a move below mid-s, a convincing move above 46. or the Sep '15 highs can help to stabilize the selling. Initial support is 42. (Oct '15 low). Walgreen Co. (WBA) / / Sector Cons. Staples Last Sale Price $87.26 Rationale: We maintain a technical Bullish rating on WBA. A breakout of multi-year accumulation pattern above low- s in 13 broadly drives our positive outlook. In due course, the stock transitioned into a broadening wedge formation over the past three years. While the relative outperformance of the stock with reference to S&P 0 remains positive, we cannot rule out a consolidation the negative outside month on Aug '15 warns of further volatility. Initial support now lies near 81. or the Sep '15 low. Below this opens the door for a decline towards Aug '15 low at UBS CIO WM Research 18 October 15 37