GPAG Technical Analysis

Transcription

1 Technical Analysis Global Portfolio Advisory Group GPAG Technical Analysis Friday, January 6, 217 Global Portfolio Advisory Group, Scotia Capital Inc. Gord Wiesemann / (416) gord.wiesemann@scotiawealth.com Indexes Index Short Term Trend Medium Term Trend Support Resistance TSX Composite Bull Bull 1529, S&P5 Bull Bull 224, Nasdaq Bull Bull 485, DJIA Bull Bull* 1969, , 274 * Change in status Market Sector Trend Breakdown Total US Sectors Analyzed: 9 Bull confirmed or pending: 7 Energy, Financial, Technology, Industrials, Materials, Consumer discretion, Utilities Total CDN Sectors Analyzed: 12 Bull confirmed or pending: 7 Financial, Energy, Industrials, Info tech, Consumer discretion, Real estate, Utilities Bear confirmed or pending: 2 Consumer staples, Health care Bear confirmed or pending: 5 Materials, Health care, Global gold, Telecom, Consumer staples Influential Market Sample Product Short Term Trend Medium Term Trend Support Resistance Gold Bear Sideways , 126 Crude Oil Bull Sideways 5.1, Canadian Dollar Bear Sideways * Change in Status Please be advised that this material is not to be distributed to residents of the European Union Registered trademark of The Bank of Nova Scotia, used under license. Trademark of The Bank of Nova Scotia, used under license. Scotia Wealth Management consists of a range of financial services provided by The Bank of Nova Scotia (Scotiabank ); The Bank of Nova Scotia Trust Company (Scotiatrust ); Private Investment Counsel, a service of 1832 Asset Management L.P.; 1832 Asset Management U.S. Inc.; Scotia Wealth Insurance Services Inc.; and ScotiaMcLeod, a division of Scotia Capital Inc. Wealth advisory and brokerage services are provided by ScotiaMcLeod, a division of Scotia Capital Inc. Scotia Capital Inc. is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada. 1

2 Action and Changes The prevailing trends on the covered benchmark indexes are almost universally bullish with only the emerging markets struggling but there are points of resistance on many of the charts that have been proving influential and while I don t foresee this as warning of any severe market danger I do see this as consistent with my previously stated assessment that the quick and easy advances of November and December cannot continue without interruption. Specifically the S&P5, the Nasdaq and to a slightly lesser extent the Russell 2 are each contending with resistance that is a part of an ascending wedge formation. This formation is considered a bearish reversal pattern and carries with it a fairly high degree of reliability. In each case, the indexes have been held back at the upper boundary since mid- December with multiple contact points. In the case of the S&P and Nasdaq, should there be any corrective response, I would expect it to be fairly abrupt but with the charts well supported, kept to within 4 to 7 percent at worst. The Russell 2 could see a slightly steeper correction but given that its current formation parameters are considerably wider than the other indexes there is less incentive to offer a full order magnitude correction (which would be in range of 12 percent) so I would expect it to halt its downside in sympathy with its more influential peers. Sticking with North America, neither the TSX nor the Dow find themselves with similar chart patterns. Each index had a fairly protracted period of sideways activity last year which resulted in both the TSX and the Dow developing an ascending channel rather than a wedge which by contrast carries no corrective or reversal obligation. That these charts offer more stable technicals should also extend support to the somewhat more vulnerable peers. The Euro Stoxx 5 meanwhile has finally managed a rally through the resistance point at 3275 that I referenced in my December 16th Technical Update. This technical barrier was by no means part of any comparable formation to its North American peers so the breakout can be seen as a valid positive on the chart. Lastly the Emerging Market index has enjoyed a week of sharp upside chart development immediately on the heels of a fresh five month low. The rally correlates with easing US treasury yields. Looking at the technical prognosis for 1 Year Notes I would have to make the case that the reprieve is just that, a temporary recovery. After five weeks of relentless selling in treasuries the inevitable correction appears underway. As such I would be hesitant to believe that the chart improvement in Emerging Markets is anything other than temporary as well. All things considered I want to emphasize that while I am spending a considerable amount of time in analyzing the potential for a technical correction in the benchmarks I would look at any such development as healthy for the markets in the longer term. Within the covered North American sectors there has been a gradual improvement in the number of bullish participants which only makes sense given the broader index performance. On both the Canadian and US sides we have the utilities sectors improving to a pending bull trend while on the Canadian side alone the real estate sector has posted a similar jump. In the US, both the consumer staples sector and the health care sector have seen notable chart improvement. While I would consider both sectors still bearish in bias there has been enough improvement to monitor the sectors closely for a potential shift. Meanwhile back on the Canadian side both materials and the telecom sectors have likewise improved to an extent that closer scrutiny is required to be alert to the potential for a full trend shift. Speaking of the Canadian materials sector, while I usually keep my gold and other commodity analysis to the Tuesday Technical report I think it s significant to address what is developing in the gold market a little more immediately. In my December 2 th Update I made a case for early and small-scale, counter-trend exposure to some of Please be advised that this material is not to be distributed to residents of the European Union Registered trademark of The Bank of Nova Scotia, used under license. Trademark of The Bank of Nova Scotia, used under license. Scotia Wealth Management consists of a range of financial services provided by The Bank of Nova Scotia (Scotiabank ); The Bank of Nova Scotia Trust Company (Scotiatrust ); Private Investment Counsel, a service of 1832 Asset Management L.P.; 1832 Asset Management U.S. Inc.; Scotia Wealth Insurance Services Inc.; and ScotiaMcLeod, a division of Scotia Capital Inc. Wealth advisory and brokerage services are provided by ScotiaMcLeod, a division of Scotia Capital Inc. Scotia Capital Inc. is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada. 2

3 the gold miners premised on underlying gold having reached and held a downside chart objective of $113 as well as the notion that some of our portfolio construction is premised on reflationary policies. In the intervening time, gold maintained that support level and has rallied significantly, in fact more than $5, into its first point of resistance. I said in December and will restate again that as the chart stands the prevailing trend is even now, still bearish. The bounce here is not completely dissimilar to what is happening in the treasury charts and at this time we are still modeling higher yields yet again in coming months so it s not unreasonable to expect that gold prices too will yet see a stumble back from current levels. On the other hand a key case I made in December was the relative risk/reward ratio in having exposure to gold at and near current price levels. As is always the case there are strong arguments both for and against such a position and I would still make the argument that technicals on the whole need significantly more improvement before anything close to a bull trend emerges but I will go into more explicit coverage of the sector next week. In the meantime however, there is no denying the strong technical response to the market reaching and preliminarily stabilizing at the $113 level. This was not coincidence. Additional Featured Items Apple first covered 11/4/16 ARC Resources first covered 11/4/16 Boardwalk Reit first covered 9/3/16 Canadian Natural Resources first covered 11/4/16 Canfor first covered 11/24/16 Cenovus Energy first covered 11/4/16 CN Rail first covered 11/4/16 CP Rail first covered 11/4/16 Disney first covered 11/4/16 Dollarama first covered 11/4/16 Emera first covered 11/4/16 Empire Co first covered 11/4/16 Enbridge first covered 11/4/16 Encana first covered 11/4/16 Facebook first covered 12/2/16 Fortis first covered 11/24/16 General Electric first covered 11/18/16 Great West Life Co first covered 11/4/16 Home Depot first covered 1/7/16 Honeywell Intl. first covered 11/18/16 Please be advised that this material is not to be distributed to residents of the European Union Registered trademark of The Bank of Nova Scotia, used under license. Trademark of The Bank of Nova Scotia, used under license. Scotia Wealth Management consists of a range of financial services provided by The Bank of Nova Scotia (Scotiabank ); The Bank of Nova Scotia Trust Company (Scotiatrust ); Private Investment Counsel, a service of 1832 Asset Management L.P.; 1832 Asset Management U.S. Inc.; Scotia Wealth Insurance Services Inc.; and ScotiaMcLeod, a division of Scotia Capital Inc. Wealth advisory and brokerage services are provided by ScotiaMcLeod, a division of Scotia Capital Inc. Scotia Capital Inc. is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada. 3

4 Loblaw Companies first covered 11/4/16 Magna International first covered 11/4/16 Manulife first covered 1/7/16 Microsoft first covered 11/4/16 Pembina Pipeline Co first covered 11/4/16 Polaris Industries first covered 11/18/16 Power Corp of Canada first covered 1/7/16 Secure Energy Services first covered 1/7/16 Shaw Communications first covered 11/4/16 Sherwin Williams Co first covered 11/18/16 Signature Bank first covered 1/7/16 Spartan Energy first covered 1/7/16 Square Inc first covered 12/9/16 Sun Life Financial first covered 11/4/16 Suncor first covered 1/7/16 Telus first covered 11/4/16 Thomson Reuters Inc first covered 1/7/16 Transocean first covered 1/7/16 Valmont Industries first covered 11/18/16 Westjet first covered 1/21/16 Please be advised that this material is not to be distributed to residents of the European Union Registered trademark of The Bank of Nova Scotia, used under license. Trademark of The Bank of Nova Scotia, used under license. Scotia Wealth Management consists of a range of financial services provided by The Bank of Nova Scotia (Scotiabank ); The Bank of Nova Scotia Trust Company (Scotiatrust ); Private Investment Counsel, a service of 1832 Asset Management L.P.; 1832 Asset Management U.S. Inc.; Scotia Wealth Insurance Services Inc.; and ScotiaMcLeod, a division of Scotia Capital Inc. Wealth advisory and brokerage services are provided by ScotiaMcLeod, a division of Scotia Capital Inc. Scotia Capital Inc. is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada. 4

5 Technical Analysis Global Portfolio Advisory Group Benchmark Indexes 5

6 S&P TSX % 12:: AM VWAP: High: Low: Chg: 13.7% S&P TSX - EMA-6 S&P TSX - EMA-2 S&P TSX - Price Bull trend 13. The index has found support at a combination of trendline support and the 2 day moving average. The moving averages themselves are perfectly configured for a sustainable bull trend while RSI could be slightly better confirming but diminished holiday volumes could be a contributing factor here. All told the chart is in excellent shape to start the New Year MACD S&P TSX - MACD Signal (9) S&P TSX - MACD Divergence S&P TSX - Volume , 5. 6

7 emini S&P 5 (CME) Continuous % 7:5:42 AM VWAP: High: Low: Chg: 7.59% emini S&P 5 (CME) Continuous - EMA-6 emini S&P 5 (CME) Continuous - EMA-2 emini S&P 5 (CME) Continuous - Price Bull trend Over mid to late December we note that projected resistance did exert an influence on the index and daily highs followed a generally predictable path. The subsequent retracement to trendline support likewise found a predictable bounce. Moving averages and momentum studies are bullish and in synch. On the whole the chart remains bullish but the constricting ascending wedge is a technical negative that could encourage a fall of 1 to 15 points. While somewhat concerning on the face of it, this would be constructive for longer term trend development provided that remains the extent of the correction MACD emini S&P 5 (CME) Continuous - MACD Signal (9) emini S&P 5 (CME) Continuous - MACD Divergence emini S&P 5 (CME) Continuous - Volume

8 emini Dow ($5) (CBT) Continuous % 7:6:2 AM VWAP: High: Low: Chg: 9.82% emini Dow ($5) (CBT) Continuous - EMA-6 emini Dow ($5) (CBT) Continuous - EMA-2 emini Dow ($5) (CBT) Continuous - Price 21. Bull trend The Dow finally made contact with its 2 day moving average for the first time since the US election bull breakout so we are in a position to change chart perspectives slightly and upgrade the intermediate trend condition to a bull. The moving averages are strongly bullish while momentum studies confirm. Unlike the S&P and Nasdaq there is no immediate threat from an ascending wedge so the slower performance through much of 216 is turning into a technical strength for MACD emini Dow ($5) (CBT) Continuous - MACD Signal (9) emini Dow ($5) (CBT) Continuous - MACD Divergence emini Dow ($5) (CBT) Continuous - Volume

9 emini NASDAQ 1 (CME) Continuous % 7:6:44 AM VWAP: High: Low: Chg: 5.47% emini NASDAQ 1 (CME) Continuous - EMA-6 emini NASDAQ 1 (CME) Continuous - EMA-2 emini NASDAQ 1 (CME) Continuous - Price Bull trend The bull trend remains intact and there are no grounds for imminent downgrade as yet but performance has definitely been underwhelming. Projected resistance has been a barrier throughout December and into January while the ascending wedge is likewise a troubling technical feature although there is still room to breathe for now. A fall to the 46 level would not be a surprising development and as with the S&P, such a decline would be technically constructive for the longer term MACD emini NASDAQ 1 (CME) Continuous - MACD Signal (9) emini NASDAQ 1 (CME) Continuous - MACD Divergence emini NASDAQ 1 (CME) Continuous - Volume

10 Mini Russell 2 (IFUS) Continuous % 7:16:53 AM VWAP: High: Low: Chg: 14.4% Mini Russell 2 (IFUS) Continuous - EMA-6 Mini Russell 2 (IFUS) Continuous - EMA-2 Mini Russell 2 (IFUS) Continuous - Price Bull trend The index has struggled to breach projected resiistance but it has also found support at its 2 day moving average. RSI has been modestly non-confirming but was 99 percent addressed at the turn of the New Year so we'll consider the chart well structured on the whole MACD Mini Russell 2 (IFUS) Continuous - MACD Signal (9) Mini Russell 2 (IFUS) Continuous - MACD Divergence Mini Russell 2 (IFUS) Continuous - Volume

11 EURO STOXX 5 (EUR) % 7:2: AM VWAP: High: Low: Chg: -5.64% EURO STOXX 5 (EUR) - EMA-6 EURO STOXX 5 (EUR) - EMA-2 EURO STOXX 5 (EUR) - Price 34. Bull trend After struggling at resistance for much of December the index has finally posted a breakout. This trendline was previously support, originating in June of 213 so while the upside move is a welcome development the index is really only just recovering from its breakdown of one year ago. Present technicals are bullish and studies are in synch but RSI is on the doorstep of overbought in the short term MACD EURO STOXX 5 (EUR) - MACD Signal (9) EURO STOXX 5 (EUR) - MACD Divergence EURO STOXX 5 (EUR) - Volume , 2, 1,

12 DJ Emerging Total Stock Market % 7:3:9 AM VWAP: High: Low: Chg: 6.13% DJ Emerging Total Stock Market - EMA-6 DJ Emerging Total Stock Market - EMA-2 DJ Emerging Total Stock Market - Price Bear trend 32. Interestingly, after declining to a new low and confirming a bear trend the index has bounced back to its 6 day moving average and a tentatively supportive trendline. Year end flows and a break from rising treasury yields are likely behind the swing so we defer to underlying chart studies and maintain that at present the index is following a bear trend and that we are unlikely to rally much beyond what we've already seen in the short term MACD DJ Emerging Total Stock Market - MACD Signal (9) DJ Emerging Total Stock Market - MACD Divergence DJ Emerging Total Stock Market - Stochastic %D (3) DJ Emerging Total Stock Market - Stochastic %K (5,3)

13 Technical Analysis Global Portfolio Advisory Group TSE/TSX Sector Trends 13

14 S&P TSX Capped / Financial % 12:: AM VWAP: High: Low: Chg: 13.86% S&P TSX Capped / Financial - EMA-6 S&P TSX Capped / Financial - EMA-2 S&P TSX Capped / Financial - Price The sector has encountered and responded to projected resistance but moving averages are momentum studies remain uniformly positive. Gains for the sector could slow in the first quarter but we have no technical reason to change our overweight view. Bull trend MACD S&P TSX Capped / Financial - MACD Signal (9) S&P TSX Capped / Financial - MACD Divergence S&P TSX Capped / Financial - Volume

15 S&P TSX Capped / Energy % 12:: AM VWAP: High: Low: Chg: 24.65% S&P TSX Capped / Energy - EMA-6 S&P TSX Capped / Energy - EMA-2 S&P TSX Capped / Energy - Price Bull trend Moving averages are still appropriately positioned for a sustained rise while the consolidation at the 2 day moving average has been constructive for the chart. Resistance levels from longer term timelines are still well overhead and the climb going back to April of last year is technically very well structured. There are no reasons to change the outlook or the overweight rating MACD S&P TSX Capped / Energy - MACD Signal (9) S&P TSX Capped / Energy - MACD Divergence S&P TSX Capped / Energy - Volume

16 S&P TSX Capped / Industrials % 12:: AM VWAP: High: 2.9 Low: Chg: 18.68% S&P TSX Capped / Industrials - EMA-6 S&P TSX Capped / Industrials - EMA-2 S&P TSX Capped / Industrials - Price Bull trend 17. Since rising through the prior all-time high for the sector we've seen mostly sideways action. Moving averages and momentum studies remain positive and there is still no reason to alter the trend assessment despite the lack of recent new highs.. We could see the sector decline to trendline support at which time we expect we'd see better value within the sector constituents MACD S&P TSX Capped / Industrials - MACD Signal (9) S&P TSX Capped / Industrials - MACD Divergence S&P TSX Capped / Industrials - Volume

17 S&P TSX Capped / Information Technology % 12:: AM VWAP: High: Low: 5.75 Chg: 6.66% S&P TSX Capped / Information Technology - EMA-6 S&P TSX Capped / Information Technology - EMA-2 S&P TSX Capped / Information Technology - Price 6. Waning bull trend It's debatable whether the bull trend is waning or slowly intact but since moving averages have maintained their positioning and momentum studies are climbing slightly we'll just leave the net trend assessment as-is for now. The longer term trend, since 212 at least, shows consistent gains so we'll still make the case for selective exposure to sector constituents despite the ambivalence of the last five months MACD S&P TSX Capped / Information Technology - MACD Signal (9) S&P TSX Capped / Information Technology - MACD Divergence S&P TSX Capped / Information Technology - Volume

18 S&P TSX Capped / Consumer Discretionary % 12:: AM VWAP: High: Low: Chg: 3.% S&P TSX Capped / Consumer Discretionary - EMA-6 S&P TSX Capped / Consumer Discretionary - EMA-2 S&P TSX Capped / Consumer Discretionary - Price Bull trend After checking projected resistance in early to mid December we've seen the sector retrace to its 2 day moving average. Chart studies remain bullish in all cases but performance has been uneven and we are approaching resistance stemming from previous sector highs which should prove fairly robust. Record high household debt levels will be an additional, non-chart barrier to protracted upside sector development MACD S&P TSX Capped / Consumer Discretionary - MACD Signal (9) S&P TSX Capped / Consumer Discretionary - MACD Divergence S&P TSX Capped / Consumer Discretionary - Volume

19 S&P TSX Capped / Real Estate % 12:: AM VWAP: High: Low: Chg: 2.21% S&P TSX Capped / Real Estate - EMA-6 S&P TSX Capped / Real Estate - EMA-2 S&P TSX Capped / Real Estate - Price Bull trend pending confirmation Moving averages have crossed positively over the holiday period and momentum studies have followed which offers an upgrade to the trend condition from bearish to a tentative bull. All things considered the development looks sustainable although the much lower than normal volume levels are a potential vulnerability. For now we need to take the development at face value and consider that some modest exposure to the sector might be prudent MACD S&P TSX Capped / Real Estate - MACD Signal (9) S&P TSX Capped / Real Estate - MACD Divergence S&P TSX Capped / Real Estate - Volume

20 S&P TSX Capped / Utilities % 12:: AM VWAP: High: Low: Chg: 11.7% S&P TSX Capped / Utilities - EMA-6 S&P TSX Capped / Utilities - EMA-2 S&P TSX Capped / Utilities - Price Bull trend pending confirmation Moving averages have just barely posted a positive cross while momentum studies are likewise modestly positive. As with its US counterpart the Canadian utilities sector thereby earns a trend upgrade to a pending bull. Lower than normal volumes and a slight downtick in US treasury yields may be contributing factors so while the chart improves we would still wait for confirmation of sustainability before altering exposure to sector constituents MACD S&P TSX Capped / Utilities - MACD Signal (9) S&P TSX Capped / Utilities - MACD Divergence S&P TSX Capped / Utilities - Volume

21 S&P TSX Capped / Materials % 12:: AM VWAP: High: Low: Chg: 36.63% S&P TSX Capped / Materials - EMA-6 S&P TSX Capped / Materials - EMA-2 S&P TSX Capped / Materials - Price Waning bear trend It remains to be seen if the lighter than normal holiday volumes are an issue but the moving averages have once again begun to show positive convergence while momentum studies have jumped sharply into positive territory. The sector has now posted at least a couple closes above both medium term moving averages and support at the lowest point of the band (216) has held. As such we again upgrade the trend to a waning bear and must acknowledge the influence of the gold recovery on the sector. A growing technical case can be made for expanded exposure MACD S&P TSX Capped / Materials - MACD Signal (9) S&P TSX Capped / Materials - MACD Divergence S&P TSX Capped / Materials - Volume

22 S&P TSX Capped / Health Care % 12:: AM VWAP: High: Low: Chg: % S&P TSX Capped / Health Care - EMA-6 S&P TSX Capped / Health Care - EMA-2 S&P TSX Capped / Health Care - Price There are finally some modest signs of life with a climb through declining trendline resistance and a small push into positive momentum. So far the advance has been held back at the 6 day moving average so while notable, there are no changes as yet to the prevailing trend. On longer term timelines we are entering a consolidative zone that finds the lower support point around a sector reading of 59. We will wait for confirmed technical improvement before changing our avoid rating for the sector Bear trend MACD S&P TSX Capped / Health Care - MACD Signal (9) S&P TSX Capped / Health Care - MACD Divergence S&P TSX Capped / Health Care - Volume

23 S&P/TSX Equal Weight Global Gold % 12:: AM VWAP: High: Low: Chg: 51.58% S&P/TSX Equal Weight Global Gold - EMA-6 S&P/TSX Equal Weight Global Gold - EMA-2 S&P/TSX Equal Weight Global Gold - Price Bear trend Trend-wise we are still looking at a confirmed bear but with both the sector and physical gold finding support at projected levels and subsequently climbing to declining resistance we have to consider the current bout of strength as something potentially more than just a bear trend bounce. Simply put, there are interesting technical developments that are somewhat hidden within longer term patterns. The sector deserves closer scrutiny than we've given it of late MACD S&P/TSX Equal Weight Global Gold - MACD Signal (9) S&P/TSX Equal Weight Global Gold - MACD Divergence S&P/TSX Equal Weight Global Gold - Volume

24 S&P TSX Capped / Telecommunications % 12:: AM VWAP: High: Low: Chg: 1.2% S&P TSX Capped / Telecommunications - EMA-6 S&P TSX Capped / Telecommunications - EMA-2 S&P TSX Capped / Telecommunications - Price Waning bear trend Moving averages are converging, momentum has risen into positive territory and we have now seen a few closes above medium term moving averages, all of whcih contribute to a modest trend upgrade in that we consider bearishness to be waning. Additionally, regaining the lower bounds of the 216 bull trend is a positive MACD S&P TSX Capped / Telecommunications - MACD Signal (9) S&P TSX Capped / Telecommunications - MACD Divergence S&P TSX Capped / Telecommunications - Volume

25 S&P TSX Capped / Consumer Staples % 12:: AM VWAP: High: Low: Chg: 7.95% S&P TSX Capped / Consumer Staples - EMA-6 S&P TSX Capped / Consumer Staples - EMA-2 S&P TSX Capped / Consumer Staples - Price Bear trend Moving averages and momentum studies remain bearishly configured. Support at 517 has however remained largely intact. That said this remains an area best avoided with the longer term technical view looking particularly top-heavy MACD S&P TSX Capped / Consumer Staples - MACD Signal (9) S&P TSX Capped / Consumer Staples - MACD Divergence S&P TSX Capped / Consumer Staples - Volume

26 Technical Analysis Global Portfolio Advisory Group S&P Sector Trends 26

27 Energy Select Sector % 12:: AM VWAP: High: Low: Chg: 13.1% Energy Select Sector - EMA-6 Energy Select Sector - EMA-2 Energy Select Sector - Price Moving averages are still bullishly configured while momentum studies are in synch with sector levels. With the retracement in late December we can now add an upper boundary to define a rising channel that will give us some measure of resistance going forward. The sector continues to hold strong technicals and as such remains a portfolio overweight. Bull trend MACD Energy Select Sector - MACD Signal (9) Energy Select Sector - MACD Divergence Energy Select Sector - Stochastic %D (3) Energy Select Sector - Stochastic %K (5,3)

28 Financial Select Sector % 12:: AM VWAP: High: Low: Chg: 13.92% Financial Select Sector - EMA-6 Financial Select Sector - EMA-2 Financial Select Sector - Price Bull trend Modest resistance has accumulated around the 292 level but the sector has retraced to its 2 day moving average, a minimum and routine development within a bull trend. This has eased RSI well off overbought levels but there is still some early non-confirmation here that would be better addressed with a fall to the 6 day moving average in the 272 range. That said the trend is still comfortably bullish and the sector remains a portfolio overweight but patience before adding new positions could be rewarded MACD Financial Select Sector - MACD Signal (9) Financial Select Sector - MACD Divergence Financial Select Sector - Stochastic %D (3) Financial Select Sector - Stochastic %K (5,3)

29 Technology Select Sector % 12:: AM VWAP: High: Low: Chg: 1.95% Technology Select Sector - EMA-6 Technology Select Sector - EMA-2 Technology Select Sector - Price Bull trend 42. The chart trend is still bullish and there are no imminent warnings with moving averages comfortably ascending with RSI trends mostly sideways in positive territory. Momentum and sector levels are in synch but performance on the whole has been very slow to materialize and we have not seen the surges we've witnessed in the energy, financial and industrial sectors. Exposure to sector constituents should be carefully considered as a potential opportunity cost MACD Technology Select Sector - MACD Signal (9) Technology Select Sector - MACD Divergence Technology Select Sector - Stochastic %D (3) Technology Select Sector - Stochastic %K (5,3)

30 Industrial Select Sector % 12:: AM VWAP: High: Low: Chg: 14.17% Industrial Select Sector - EMA-6 Industrial Select Sector - EMA-2 Industrial Select Sector - Price 66. Bull trend The sector has yet to make contact with projected resistance above the 64 level but the chart remains uniformly bullish. Moving averages have slowed their ascent but not converged while RSI has declined but remains positive. While the steep gains of November are not likely to repeat, the chart is well structured for steady and sustained advances and remains a preferred sector MACD Industrial Select Sector - MACD Signal (9) Industrial Select Sector - MACD Divergence Industrial Select Sector - Stochastic %D (3) Industrial Select Sector - Stochastic %K (5,3)

31 Materials Select Sector % 12:: AM VWAP: High: Low: Chg: 11.8% Materials Select Sector - EMA-6 Materials Select Sector - EMA-2 Materials Select Sector - Price Bull trend Moving averages have begun to converge while momentum studies have dipped into slightly negative territory. This is likely a response to the narrowing of the ascending wedge which is generally a bearish formation. This is an interesting development considering the bullish nature of base metals and soft products and suggests that perhaps the bull market in the underlying physicals is more speculative than industrially driven. For this week we will leave the bull trend status as is but we will watch this sector with interest and would consider allocations to the sector to be somewhat vulnerable at this time MACD Materials Select Sector - MACD Signal (9) Materials Select Sector - MACD Divergence Materials Select Sector - Stochastic %D (3) Materials Select Sector - Stochastic %K (5,3)

32 Consumer Discretionary Select Sector % 12:: AM VWAP: High: Low: Chg: 2.77% Consumer Discretionary Select Sector - EMA-6 Consumer Discretionary Select Sector - EMA-2 Consumer Discretionary Select Sector - Price Bull trend Moving averages have converged and momentum is slightly negative but the developments are still consistent with prevailing bullishness. The sector has been finding support in and around the lower bounds of the rising channel and the studies are in-synch with daily sector readings. There are no grounds to change the outlook at this time and allocations to any sector constituents still looks suitable MACD Consumer Discretionary Select Sector - MACD Signal (9) Consumer Discretionary Select Sector - MACD Divergence Consumer Discretionary Select Sector - Stochastic %D (3) Consumer Discretionary Select Sector - Stochastic %K (5,3)

33 Utilities Select Sector % 12:: AM VWAP: High: Low: Chg: 11.55% Utilities Select Sector - EMA-6 Utilities Select Sector - EMA-2 Utilities Select Sector - Price 56. Bull trend pending confirmation Moving averages have crossed positively over the holiday period and momentum studies have risen slightly along side. As such we have to consider the trend fully changed from bearish to a tentative bull but recent highs have been static and RSI has failed to produce a new high since mid December. The longer term three to five year technical period is still on the rise so despite rising interest rates it would appear the market still views the average dividend yield here positively MACD Utilities Select Sector - MACD Signal (9) Utilities Select Sector - MACD Divergence Utilities Select Sector - Stochastic %D (3) Utilities Select Sector - Stochastic %K (5,3)

34 Consumer Staples Select Sector % 12:: AM VWAP: High: Low: 479. Chg: 8.92% Consumer Staples Select Sector - EMA-6 Consumer Staples Select Sector - EMA-2 Consumer Staples Select Sector - Price 58. Moving averages have converged while momentum studies, notably RSI, have risen into marginally positive territory. On this basis we'll consider the bear trend to be waning albeit still in place. Progressively declining highs since mid December are a negative. Technically the sector remains questionable and while there has been some improvement it would still be prudent to keep exposure minimized. Waning bear trend MACD Consumer Staples Select Sector - MACD Signal (9) Consumer Staples Select Sector - MACD Divergence Consumer Staples Select Sector - Stochastic %D (3) Consumer Staples Select Sector - Stochastic %K (5,3) 4/15 7/15 1/15 1/16 4/16 7/16 1/16 1/

35 Health Care Select Sector % 12:: AM VWAP: High: Low: Chg: -2.7% Health Care Select Sector - EMA-6 Health Care Select Sector - EMA-2 Health Care Select Sector - Price Waning bear trend Moving averages have been converging and we see positive momentum in both RSI and MACD. We have also seen repeated spikes above both medium term moving averages with a couple closes as well. On this basis the trend remains bearish but upgrades to waning. The longer term three to five year chart outlook would still warn against wide-scale allocations to sector constituents MACD Health Care Select Sector - MACD Signal (9) Health Care Select Sector - MACD Divergence Health Care Select Sector - Stochastic %D (3) Health Care Select Sector - Stochastic %K (5,3)

36 Technical Analysis Global Portfolio Advisory Group Features and Notables 36

37 Apple Inc % 4::1 PM VWAP: High: Low: Chg: 47.66% Apple Inc. - EMA-6 Apple Inc. - EMA-2 Apple Inc. - Price There has not been much technical evolution over the holiday break. Moving averages have continued to show positive divergence and momentum studies are in synch with trading levels. There are however multiple points of resistance close overhead so there is better technical value on the buy side around the 11 level MACD Apple Inc. - MACD Signal (9) Apple Inc. - MACD Divergence Apple Inc. - Volume 4/14 7/14 1/14 1/15 4/15 7/15 1/15 1/16 4/16 7/16 1/16 1/

38 ARC Resources Ltd % VWAP: High: Low: 17.3 Chg: 28.52% ARC Resources Ltd. - EMA-6 ARC Resources Ltd. - EMA-2 ARC Resources Ltd. - Price We suggested in the last technical update that a better buy level would sit at trendline support and that we might reasonably expect to see such a move in the near term. That has materialized now early in the New Year. The negative cross in the moving averages is a little disconcerting but there is no appreciable angle of intersect and we have seen a similar development with no consequence back in September. As stated previously, the technical risk for any position is back to the 16 level while a breach of resistance at the level should encourage accelerated upside MACD ARC Resources Ltd. - MACD Signal (9) ARC Resources Ltd. - MACD Divergence ARC Resources Ltd. - Volume

39 Boardwalk REIT % 12:: AM VWAP: High: 55.4 Low: Chg: -2.72% Boardwalk REIT - EMA-6 Boardwalk REIT - EMA-2 Boardwalk REIT - Price Moving averages have posted a positive cross and we've risen through a couple points of resistance. The sector chart has also improved notably over the holiday break. RSI is nearly overbought and the chart has a lot of improvement to do in order to confirm any bullishness but the technical improvements from mid-november's low are significant. That said, the present condition does not suggest buying. Those looking to exit can take advantage of this rally MACD Boardwalk REIT - MACD Signal (9) Boardwalk REIT - MACD Divergence Boardwalk REIT - Volume

40 Canadian Natural Resources Limited % 12:: AM VWAP: High: Low: Chg: 41.16% Canadian Natural Resources Limited - EMA-6 Canadian Natural Resources Limited - EMA-2 Canadian Natural Resources Limited - Price Technicals remain bullish but so far prices remain above levels we would consider value (previously suggested at 42.1). A supportive trendline would in fact argue for value in the 41.1 range. The current rate of ascent is sustainable on three to five year charts with a six month target to match the prior peak at roughly MACD Canadian Natural Resources Limited - MACD Signal (9) Canadian Natural Resources Limited - MACD Divergence Canadian Natural Resources Limited - Volume

41 Canfor Corporation % 12:: AM VWAP: High: 29.5 Low: 14.3 Chg: -45.2% Canfor Corporation - EMA-6 Canfor Corporation - EMA-2 Canfor Corporation - Price Prices remain confined to a sideways trading band but the prevailing trend has held bullish and all chart studies support a slow push higher. Momentum and price gains should accelerate if and when we exceed All in all still a constructive looking chart with decent risk/reward potential at current levels. Risk should be set below MACD Canfor Corporation - MACD Signal (9) Canfor Corporation - MACD Divergence Canfor Corporation - Volume /15 7/15 1/15 1/16 4/16 7/16 1/16 1/

42 Cenovus Energy Inc % 12:: AM VWAP: High: 2.14 Low: Chg: 4.73% Cenovus Energy Inc. - EMA-6 Cenovus Energy Inc. - EMA-2 Cenovus Energy Inc. - Price The chart continues to evolve more or less as expected. Moving averages remain positively configured and while momentum is slightly negative at present that is not an unacceptable condition given the remainder of chart readings. As noted before, value still rests between trend support and the 2 dollar level which we admittedly have not seen despite our expectations that we would before year end. That said the trend is still exceptionally slow moving so we would not be inclined to rush an entry MACD Cenovus Energy Inc. - MACD Signal (9) Cenovus Energy Inc. - MACD Divergence Cenovus Energy Inc. - Volume

43 Canadian National Railway Company % 12:: AM VWAP: High: 88.9 Low: 58.6 Chg: 51.71% Canadian National Railway Company - EMA-6 Canadian National Railway Company - EMA-2 Canadian National Railway Company - Price The chart remains bullish but relative strength has not been confirming of price gains since the breakout to new highs. This does not however require a significant correction and should be adequately addressed with a correction to the 6 day moving average around the 89 level. This would also represent a preferred buy point with risks as noted before to the range MACD Canadian National Railway Company - MACD Signal (9) Canadian National Railway Company - MACD Divergence Canadian National Railway Company - Volume /14 7/14 1/14 1/15 4/15 7/15 1/15 1/16 4/16 7/16 1/16 1/

44 Canadian Pacific Railway Limited % 12:: AM VWAP: High: Low: Chg: % Canadian Pacific Railway Limited - EMA-6 Canadian Pacific Railway Limited - EMA-2 Canadian Pacific Railway Limited - Price We noted in the last update that the breakout through resistance had not paid off and in the intervening time we see moving averages cross negatively with weak momentum. Protectiing positions at still looks prudent particularly in light of the fresh chart deterioration MACD Canadian Pacific Railway Limited - MACD Signal (9) Canadian Pacific Railway Limited - MACD Divergence Canadian Pacific Railway Limited - Volume /15 7/15 1/15 1/16 4/16 7/16 1/16 1/17 44.

45 Walt Disney Company % 4:2:5 PM VWAP:18.1 High: Low: 7.55 Chg: 43.% Walt Disney Company - EMA-6 Walt Disney Company - EMA-2 Walt Disney Company - Price Prices have advanced to the 17.5 area target and while RSI is not yet overbought, it is close. As we stated previously, those looking to realize a gain can do so at present levels. Otherwise the chart is still bullish and constructive but perhaps due for a dip to the 6 day moving average which could be used as a buy/re-entry MACD Walt Disney Company - MACD Signal (9) Walt Disney Company - MACD Divergence Walt Disney Company - Volume /14 7/14 1/14 1/15 4/15 7/15 1/15 1/16 4/16 7/16 1/16 1/17 45.

46 Dollarama Inc % 12:: AM VWAP: High: 1.16 Low: Chg: 15.2% Dollarama Inc. - EMA-6 Dollarama Inc. - EMA-2 Dollarama Inc. - Price We have noted technical weakness since late November when prices were unable to breach a previosuly supportive trendline. Moving averages have crossed bearishly in the meantime and momentum, while slightly positive now, has been largely negative. We still cannot make a technical case to buy or add at present levels. In fact, the longer this condition drags out, the greater the chance a pronounced top formation materializes MACD Dollarama Inc. - MACD Signal (9) Dollarama Inc. - MACD Divergence Dollarama Inc. - Volume

47 Emera Inc % 12:: AM VWAP: High: Low: Chg: 5.76% Emera Inc - EMA-6 Emera Inc - EMA-2 Emera Inc - Price Moving averages have converged and momentum is now slightly positive. That said, the price correction has only been to the 6 day moving average which is a routine mark in any trend. As such we would still consider the chart bias to be bearish but will watch for signs of further improvement MACD Emera Inc - MACD Signal (9) Emera Inc - MACD Divergence Emera Inc - Volume

48 Empire Co. Ltd. Class A % 12:: AM VWAP: High: Low: Chg: % Empire Co. Ltd. Class A - EMA-6 Empire Co. Ltd. Class A - EMA-2 Empire Co. Ltd. Class A - Price Prices collapsed and even exceeded our downside target and while there has been some consolidation and retracement the chart is still a well defined bear. We would expect further deterioration toward the 13.5 range MACD Empire Co. Ltd. Class A - MACD Signal (9) Empire Co. Ltd. Class A - MACD Divergence Empire Co. Ltd. Class A - Volume

49 Enbridge Inc % 12:: AM VWAP: High: Low: 46.1 Chg: 15.73% Enbridge Inc. - EMA-6 Enbridge Inc. - EMA-2 Enbridge Inc. - Price Moving averages have returned to a positive configuration and momentum remains modestly positive. We still view the chart net-bullishly but there is still no upside urgency evident at all. We would expect the trend to push prices through resistance eventually and look at a six month target around the 62 level MACD Enbridge Inc. - MACD Signal (9) Enbridge Inc. - MACD Divergence Enbridge Inc. - Volume

50 Encana Corporation % 12:: AM VWAP: High: Low: 6.46 Chg: 65.71% Encana Corporation - EMA-6 Encana Corporation - EMA-2 Encana Corporation - Price We made the case in our last update to take profits afetr prices reached the 17.7 target area and while that has still proven to be a good strategy we have not dipped back to the 15 level that we suggested would be a valid re-entry. In the meantime trendline support and moving averages would make the case that the buy point has risen slightly to the 15.6 area. Longer term the ascending triangle formation still bodes well for a bullish breakout MACD Encana Corporation - MACD Signal (9) Encana Corporation - MACD Divergence Encana Corporation - Volume

51 Facebook, Inc. Class A % VWAP:12.89 High: Low: Chg: 15.28% Facebook, Inc. Class A - EMA-6 Facebook, Inc. Class A - EMA-2 Facebook, Inc. Class A - Price In our last update we noted that the chart remained bearish despite some modest hints of improvement and that remains the case post-holidays. The 6 day moving average has been a barrier while momentum has been largely negative. Moving averages are still bearishly configured and a downside target in the 19 range is still viable MACD Facebook, Inc. Class A - MACD Signal (9) Facebook, Inc. Class A - MACD Divergence Facebook, Inc. Class A - Volume

52 Fortis Inc % 12:: AM VWAP: High: Low: Chg: 9.24% Fortis Inc. - EMA-6 Fortis Inc. - EMA-2 Fortis Inc. - Price Prices bounced above medium term moving averages in late December but the averages have so far failed to cross up and in fact show a subtle downward inflection. Momentum is neutral and prices are now dropping back after posting sequentially lower highs over the past week or so. On the whole the chart remains mildly bearish with a bias toward 38 still intact MACD Fortis Inc. - MACD Signal (9) Fortis Inc. - MACD Divergence Fortis Inc. - Volume

53 General Electric Company % 4::3 PM VWAP:31.55 High: Low: 29.7 Chg: 3.5% General Electric Company - EMA-6 General Electric Company - EMA-2 General Electric Company - Price Although prices have stalled and retraced somewhat at year end the chart on the whole is still comfortably bullish. A further decline to the 6 day moving average would offer technical value with risks for any positions set at MACD General Electric Company - MACD Signal (9) General Electric Company - MACD Divergence General Electric Company - Volume

54 Great-West Lifeco Inc % 12:: AM VWAP: High: Low: Chg: -.17% Great-West Lifeco Inc. - EMA-6 Great-West Lifeco Inc. - EMA-2 Great-West Lifeco Inc. - Price Still a well structured bullish chart. Though resistance at the 37.6 area is liable to be robust there are no technical indications that we will not be able to forge through and post new highs. Given that risk parameters suggest a stop sub-3 we may not be at the best point of value for a buy at current levels but it's difficult to argue against accumulation on pullbacks MACD Great-West Lifeco Inc. - MACD Signal (9) Great-West Lifeco Inc. - MACD Divergence Great-West Lifeco Inc. - Volume