QUICK TAKES: Watching LIBOR Rates GOLD Runs into Resistance Buy TIME WARNER Sell DAVITA & DENTSPLY Follow Ups

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1 QUICK TAKES: Watching LIBOR Rates GOLD Runs into Resistance Buy TIME WARNER Sell DAVITA & DENTSPLY Follow Ups In the face of concerns about negative interest rates, I find it fascinating what is happening in LIBOR Rates. While 10-year European bonds are yielding between (0.6%) in Switzerland and 1.06% in Italy, 3-month LIBOR Rates are surging from a 3-year base! As a primary interest rate from which loans are priced, its surge will mean an increase in funding costs in Europe. The chart shows that a rounding base was hurdled decisively to the upside. Once rates pushed through 0.65%, they confirmed upside projections to % (0.82% currently). We will be monitoring the equity markets to see if this will be creating any stresses in the months ahead.

2 GOLD is beginning to enter the lower end of a strong resistance zone from The weekly chart illustrates trendline resistance dating back to mid Last month, bullion posted a bearish weekly key reversal (higher high than the previous week & a close below the prior week s low). Not occurring often, the prior bearish key reversal occurred in March From that point, gold sank (24%) to 1052 by December Currently, momentum as evidenced by the rate-ofchange has been diverging bearishly since March. While my work is not projecting a double-digit decline at this time, it is critical that bullion not violate important But if broken, then bullion would project down to We are recommending TIME WARNER (TWX ). After solidifying 70 support with a weekly key reversal to the upside, TWX begun to advance from a rounding base. With improving relative strength and volume flows, Time Warner projects to 95. Earnings meanwhile continue to increase steadily consensus estimates are for earnings/share of $5.40 versus 2015 s $4.75. Further gains to the $ area are expected next year. DAVITA (DVA-69.15) is a sell, now that its rally failed at trendline resistance. While DVA made its all-time high last year, relative strength versus the S&P peaked in December Having broken down from a 2.5-year top versus the SPX, its secular advance from the 2003 low (vs. the SPX) has ended earnings/share are estimated to only equal 2013 s $3.80/share. With no earnings growth, Davita does not even pay a dividend. DENTSPLY SIRONA (XRAY-61) is a sell, as it is poised to under-perform the market. Pricewise, Dentsply is beginning to break its 5-year uptrend, which would be confirmed on a weekly close below 60. Versus the S&P, XRAY has been hemorrhaging, having declined from a V top. Below its down-trending moving averages, it is poised to under perform at least through year-end. It is selling at 20 times

3 earnings, yet profits/share are growing at just a 10% rate. A paltry dividend yield of 0.5% offers no supports. Follow Ups ALIBABA (98.25) - In our December 8 th report, we wrote that ALIBABA was on a Buy Watch, but would begin its bull market once it hurdled Last Wednesday BABA beginning its secular advance. Support is strong in the low-80 s. Long-term, BABA projects back to its 120 high. Place a closing mental CLEAN HARBORS (48.80) was recommended on March 3 rd However its relative strength vs. the S&P1500 Index broke a 9-month uptrend. Sell. FIVE BELOW (50.70) was recommend in the May 28 th With both price and relative strength vs. S&P1500 continuing to push higher, continue to hold. Raise the closing mental stop to 47. FLUOR (51.40) was recommended in the March 27 th Because its relative strength gains versus the SPX evaporated, Sell for a small loss. LULULEMON (79.30) was recommended in the June 9 th With relative strength vs. the S&P continuing to push higher, continue to hold. Raise the closing mental top to MICROCHIP (60.50) was recommended in the May 28 th Reacting well to a favorable earnings report last week, MCHP surged to an all-time high. With relative strength vs. the S&P confirming the price action, continue to hold and raise the closing mental stop to 54. NVIDIA (63) was recommended in the October 6 th One-half the position was (unfortunately!). Now that its advance has gone vertical, raise the closing mental stop to 55.

4 WELLCARE (116) was recommended in the May 25 th Relative strength versus the S&P is surging to new 9-year highs. A powerful stock in an industry that is underperforming the S&P, perhaps Wellcare is a potential takeover target. Raise the closing mental stop to 105.

5 3-month LIBOR Rate weekly closing chart

6 GOLD weekly chart

7 GOLD weekly chart with rate-of-change

8 TIME WARNER weekly chart

9 TIME WARNER vs. S&P 500 Index

10 DAVITA weekly closing chart

11 DAVITA vs. S&P 500 Index

12 DENTSPLY SIRONA weekly closing chart

13 DENTSPLY SIRONA vs. S&P 500 Index

14 ALIBABA weekly chart

15 ALIBABA vs. S&P 500 Index