Technical Review of Stocks

Transcription

1 CIO Wealth Management Research 17 February 2016 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 42. UBS does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.

2 Table of Contents Ticker Name Page Ticker Name Page AMGN AMGEN INC 4 KMB KIMBERLY-CLARK CORP 21 AMZN AMAZON.COM INC 4 KO COCA-COLA CO 22 APA APACHE 5 LB L BRANDS INC 22 AXP AMERICAN EXPRESS CO 5 MCD MCDONALD'S CORP 23 AZN ASTRAZENECA PLC 6 MHFI MCGRAW HILL FINANCIAL 23 BEN FRANKLIN RESOURCES INC 6 MMM 3M CO 24 BMY BRISTOL-MYERS SQUIBB CO 7 MO ALTRIA GROUP INC 24 BP BP PLC 7 MRK MERCK & CO 25 BRK.B BERKSHIRE HATHAWAY - CLASS B 8 NEE NEXTERA ENERGY INC 25 C CITIGROUP INC 8 NSRGY NESTLE SA/AG 26 CAT CATERPILLAR INC 9 NVS NOVARTIS AG 26 CELG CELGENE CORP 9 ORCL ORACLE CORP 27 COP CONOCOPHILLIPS 10 OXY OCCIDENTAL PETROLEUM CORP 27 COST COSTCOWHOLESALE CORP 10 PEP PEPSICO INC 28 CPB CAMPBELL SOUP CO 11 PFE PFIZER INC 28 CSX CSX CORP 11 PG PROCTER & GAMBLE CO 29 CTL CENTURYLINK INC 12 PM PHILIP MORRIS INTERNATIONAL 29 CVX CHEVRON CORP 12 RDSA ROYAL DUTCH SHELL PLC 30 D DOMINION RESOURCES INC 13 SBUX STARBUCKS 30 DD DU PONT (EI) DE NOMOURS 13 STJ ST JUDE MEDICAL INC 31 DE DEERE AND CO 14 T AT&T INC 31 DEO DIAGEO PLC 14 TEVA TEVA PHARMACEUTICALS 32 DIS THE WALT DISNEY COMPANY 15 TGT TARGET CORP 32 DOW DOW CHEMICAL 15 TOT TOTAL SA 33 DUK DUKE ENERGY CORP 16 TRV TRAVELERS 33 F FORD MOTOR CO 16 UPS UNITED PARCEL SERVICE 34 FB FACEBOOK INC 17 USB U.S. BANCORP 34 GIS GENERAL MILLS INC 17 V VISA INC-CLASS A 35 GSK GLAXOSMITHKLINE PLC 18 VOD VODAFONE GROUP PLC 35 HAL HALLIBURTON 18 VZ VERIZON COMMUNICATIONS INC 36 HD HOME DEPOT INC 19 WBA WALGREENS CO 36 HON HONEYWELL INTERNATIONAL INC 19 WFC WELLS FARGO AND CO 37 IBM INTL BUSINESS MACHINES CORP 20 WMT WAL-MART STORES INC 37 ITW ILLINOIS TOOL WORKS INC 20 XOM EXXON MOBIL CORP 38 JNJ JOHNSON & JOHNSON 21 UBS CIO WM Research 17 February

3 Changes since last report Additions Name Ticker Technical Rating Changes Name Ticker Old New Amazon.com, Inc. AMZN Bullish Neutral Apache Corp APA Neutral Bearish American Express AXP Neutral Bearish Citigroup Inc. C Neutral Bearish Celgene Corp. CELG Bullish Neutral Walt Disney Company DIS Bullish Neutral Ford Motor Company F Neutral Bearish Honeywell International Inc. HON Neutral Bullish Johnson & Johnson JNJ Neutral Bullish Coco-Cola Company KO Neutral Bullish Nestle S.A. ADR NSRGY Neutral Bullish Procter & Gamble Co. PG Neutral Bullish Philip Morris International PM Neutral Bullish AT&T Inc. T Neutral Bullish Verizon Communications VZ Neutral Bullish Wells Fargo & Co. WFC Bullish Neutral GILEAD SCIENCES INC (GILD) will be reviewed in the next edition of Technical Review of Stocks. The last update on these stocks was published on 26 January Going forward, our previously published ratings for all these stocks should not be relied upon. UBS CIO WM Research 17 February

4 Amgen Inc. (AMGN) /- 2 / Sector HealthCare Last Sale Price $ Rationale: We maintain a cautiously optimistic technical view on AMGN as the stock still retains its primary uptrend. However, a broadening wedge warns of a maturing rally. The selling in Sep '15 may have found key support near or just above its Oct '14 low (127.67), 38.2% retracement (130.20) from its rally and the bottom of 2013 uptrend channel. A successful test here can trigger a technical rally to the low-1s. In the near-term, a negative outside week on 1/26/16 can lead to further consolidation. Key support is at or near the Oct '14/Sep '15 lows. Amazon.com Inc. (AMZN) / / Sector C. Discretionary Last Sale Price $3.82 Rationale: We recommend moving to a Neutral technical outlook on this Consumer Discretionary name. The primary trend starting from 2001 lows remains up. Although a breakout of multi-year accumulation pattern above the low- s in 2010 and superior relative performance of the stock versus S&P 0 Index still supports longer-term higher prices continued market volatility and selling in momentum growth names can lead to further downside risks to 474 and below this to 4-4. A trading range scenario is likely to develop between the mid-0s and high 0s. UBS CIO WM Research 17 February

5 Apache Corp (APA) / / /56.31 Technical rating Bearish Sector Energy Last Sale Price $34.38 Rationale: We recommend downgrading to a Bearish technical outlook on Apache Corp. Despite declining 69.21% from Jul '14 high (104.57), the stock paints a weak picture both on absolute and relative (versus S&P 0) charts. In the process, multiple supports were breached. A move below mid-s or 6+ year symmetrical triangle in 3Q of 2014, another breakdown below low-s or the lows and continued relative underperformance (vs SPX) warn of further selling. Key initial support lies at (Feb '16 low) and then or Jan '16 lows and 2003 breakout. American Express (AXP) / Technical rating Bearish Sector Financials Last Sale Price $51.11 Rationale: Violation of the mid-s earlier in 2015 paints a weak intermediate term trend outlook and hence downgrade to Bearish view. A secondary breakdown below the high-s during Summer 2015 further reaffirms a mediumterm head/shoulders top. A breakdown below the bottom of a falling wedge, Jun/Aug/Oct '13 and Aug/Oct '15 lows at warned of a decline to low-s or the bottom of the 2011 broadening wedge pattern. Initial support lies at -53. Violation of the low-s suggests next downside risk to or the 61.8% retracement from rally. UBS CIO WM Research 17 February

6 AstraZeneca PLC ADS (AZN) Sector HealthCare Last Sale Price $29.15 Rationale: We maintain a cautiously optimistic Bullish technical stance on AZN but recognize that a well-defined downtrend channel remains between the low-to-mid 30s and the high-20s. More recently, multiple gap downs below low-30s in Feb '16 and 2/5/16 negative outside week pattern warn of a retest of key initial support at or the bottom of the 2014 downtrend channel, late 2014 breakout and the % retracement from rally. The ability to find support here coupled with 2/10/16 gap up can trigger another rally to key supply near and then 35. Franklin Resources Inc. (BEN) / / Sector Financials Last Sale Price $31.45 Rationale: We maintain a cautious Neutral stance on BEN. The Dec '14 negative outside month pattern coupled with a move below low-s or the bottom of the 2012 uptrend channel warned of an intermediate term weakness in the stock. This diversified financials name has now declined 47.84% from its Dec '14 high (59.43) as multiple key supports have been broken. The Dec '15 negative outside month pattern and a series of lower-highs and lower-lows suggest a return to the lows at Key resistance is at or the Dec '15 month reaction highs. UBS CIO WM Research 17 February

7 Bristol-Myers Squibb Co (BMY) / Sector HealthCare Last Sale Price Rationale: A 343% rally from the 2008 bottom (16) has led to an overbought condition. The 7/24/15 negative outside week and a subsequent Jul '15 negative outside month triggered a sharp setback of 26.5% back towards the bottom of its 2011/2013 uptrends along the low-to-mid s. A successful test of support has ignited another rally. Having said that, a negative outside week on 12/18/15 followed by the Jan '16 gap down led to an % decline from Dec '15 high (.87). Key support lies at or the Aug '15 low and the top of 2011 uptrend channel (shown above). BP PLC ADS (BP) / / /47-48 Technical rating Bearish Sector Energy Last Sale Price $27.64 Rationale: This Energy name has fallen 49.% from its Jun '14 highs (53.48). In the process BP has violated its 2010/11 uptrend channel (44-45) in Sep '14 confirming a top. Although an oversold condition and a positive outside week (10/2/15) has developed, failure to clear above key resistance along or the 61.8% retracement from its Apr-Sep '15 decline and Jul '14 downtrend led to another round of selling. Initial support now lies at or the Jun '10 low and bottom of 2014 channel. Initial supply is at (10-wk/30-wk ma) and then UBS CIO WM Research 17 February

8 Berkshire Hathaway Inc. Class B stock (BRK.B) / Citigroup Inc. (C) Sector Financials Last Sale Price $ Rationale. We maintain a Neutral stance on this Financial name as a violation of the 2013 uptrend at and a subsequent weekly death cross signal warn of a maturing trend. BRKB is headed towards another key test of support along or the Aug '14 lows. Although the longer-term trend is still favourable and relative strength against SPX is positive, a convincing violation of would confirm a top and warn of a deeper setback towards and below this to Initial supply lies at 135 or the 30-wk ma and the 2012 uptrend / / / Technical rating Bearish Sector Financials Last Sale Price $34.98 Rationale: We recommend moving to a defensive Bearish technical stance due to recent actions. Last July's breakout above may have been a bull trap as many of the S&P 0 Financial names have quickly succumbed to strong selling soon after the Dec '15 FED FOMC rate hike. C has also reversed direction as it has broken the bottom of a welldefined 3-year trading range trend between the mid-s and the high-s. More recently, another breakdown below a 5-year uptrend () solidifies a top and suggest downside risks to and below this to as low as the mid-20s. 20 UBS CIO WM Research 17 February

9 Caterpillar Inc. (CAT) / Technical rating Bearish Sector Industrials Last Sale Price $61.41 Rationale: The violation of the pivotal 2010/11 uptrend (89-91) as well as key neckline support (79) confirmed a top. The 49.43% decline from the Jul '14 high has created a steeper downtrend channel between the low-s and the low- s. CAT appears to have found key support near the 61.8% retracement (58) from rally. While we remain defensive on CAT we cannot rule out short-term technical rallies to the high-s to the low-s. Key initial support is at -.5 (Feb '16 lows) and then towards or the Jan '16 low. Key supply lies at or the top of downtrend. Celgene Corp. (CELG) / /141 Sector HealthCare Last Sale Price $99.59 Rationale: We recommend moving to a Neutral technical stance on CELG as the recent breakdown below the low- s or the 2012 uptrend warns of a waning bull trend. A large head and shoulders top pattern has developed with key neckline support at or the 2015/2016 lows. Also note that 38.2% retracement from rally is at 94 providing pivotal support. A weekly death cross sell signal and a negative outside week (1/29/16) further hint of a top. Key initial resistance is at or the 10-wk ma and 38.2% retracement from Jul-Aug '15 decline and UBS CIO WM Research 17 February

10 ConocoPhillips (COP) / /-51 Technical rating Bearish Sector Energy Last Sale Price $31.88 Rationale: The S&P 0 Energy sector suffered a major sell-off of -47.3% from its 2014 high (737). COP also declined 64.35% from its Jul '14 high A 2-year head and shoulder top breakdown below at led to a sharp decline to its 87.5% retracement (33.65) from its rally. Failure to find support here can lead to retest of its 2009 bottom (26), over time. Nonetheless, a deeply oversold condition and ability to find support near the bottom of its 2-year downtrend channel may trigger a technical rally to the low-s. Initial supply is at or the Feb '16 gap down. 30 Costco Wholesale Corp. (COST) / Sector Cons. Staples Last Sale Price $ Rationale: This Hypermarkets & Super centers name retains its leadership role as it progresses higher over the past 6-plus years as evident by a well-defined rising uptrend channel between the high-130s and the low-1s. A surge above would confirm a breakout rendering an upside target closer to the mid-1s, over time. However, the 12/11/15 negative outside week pattern and the recent broad market setback may temporarily delay the rally resulting in a retest of key support near the summer 2015 lows and the bottom of its uptrend channel at low-1s. Key resistance is at UBS CIO WM Research 17 February

11 Campbell Soup Co. (CPB) / / Sector Cons. Staples Last Sale Price $57.33 Rationale: An ascending triangle breakout during 2013 (above the high-30s) and a subsequent breakout above two and half year accumulation pattern above high-s in mid-2015 substantiate our Bullish technical outlook on this Food Beverage and Tobacco name. However, a moderately overbought condition has led to a near-term pull back to its prior breakout. Nonetheless, 11/20/15 positive outside week, gap up on 11/24/15 and a positive outside month pattern in Nov '15 and again in Jan '16 keep us optimistic. Initial support lies at -52/47-48 (Nov '15/Jan '16 lows). CSX Corp. (CSX) / /33-34 Sector Industrials Last Sale Price $23.41 Rationale: A sharp rally from 2013 to early 2014 faltered near its all-time high of on Nov '2014. 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 2013 uptrend channel (33) confirm an intermediate-term top. The recent market weakness led to a violation of the bottom of the 2011 ascending triangle at low-20s. That said, a positive outside week on 2/5/16 hints us of a bounce back from the Jan/Feb '16 lows ( ). UBS CIO WM Research 17 February

12 CenturyLink Inc. (CTL) / / / / Sector Comm. Services Last Sale Price $27.29 Rationale: We recommend developing a Bullish stance on this Integrated Telecom name. A breakdown below the bottom of its 5-year downtrend channel along the mid-20s could have been a bear trap. A weekly death cross sell signal earlier in 2015 led to a -52% decline from its 2014 highs. However, a deeply oversold condition coupled with the defensive nature of the stock helped outperform the broader benchmark in Jan '16. The Oct '15 positive outside month, a solid bounce back from Jan '16 low (21.94) and 2/12/16 positive outside week suggests accumulation of stock. Chevron Corp (CVX) Sector Energy / Last Sale Price $82.99 Rationale: Violation of the bottom of its 2011 uptrend channel at followed by a negative outside week (5/1/15) and violation of the Dec '14/Jan-Mar '15 lows at 98- have 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.55 (61.8% retracement from rally) triggered a technical rally to by Nov '15 or near the 38.2% retracement from Jul '14-Aug '15 decline and the Jul '15 downtrend. A trading range is possible between -75 and 95-. UBS CIO WM Research 17 February

13 Dominion Resources Inc. (D) Sector Utilities Last Sale Price $69.21 Rationale: Although the longer-term trend still remains up, failure to surpass key resistance at -81 or the top of the 2009/2011 uptrend channels warns of an intermediate-term top. In addition, a head/shoulders top has developed over the past 2 years. Key neckline support is in the mid-s. Breeching support solidifies a top and renders downsides to the low-s. However, the recent market weakness has triggered a flight to safety as classic defensives names like D outperformed SPX. In addition, 12/18/15, 1/8/16 and 1/22/16 positive outside week patterns bodes well for a rally. E.I. DuPont de Nemours & Co. (DD) / / Sector Materials Last Sale Price $56.62 Rationale: The impending merger between the two Chemical industry giants DuPont and Dow Chemical has impacted the share price performance of both of the stocks in the recent weeks. Earlier, the sharp 38.5% decline to 47.11(Oct '15) have subsided near its crucial 2010 uptrend (47-49). The ability to find support here coupled with a deeply oversold condition and 10/02/15 positive outside week pattern has triggered a sharp rally. However, the Dec '15 negative outside month and the M&A speculations hints of a volatile trading range between the low-s and the mid-s. 35 UBS CIO WM Research 17 February

14 Deere and Co (DE) / Sector Industrials Last Sale Price $76.41 Rationale: We keep a technical Neutral stance on Deere as the two technical breakdowns below 2011/12 uptrend at 87/82 warn of a major top. The selling escalated into Oct '15 as the stock fell to before generating a gap up short-term reversal on 10/5/15. A deeply oversold condition led to a short-term technical rally towards the 38.2% retracement (81.93) from the Jul to Oct '15 decline. Failure to breakout above low-s triggered a decline to.16 (Jan '16). 1/22/16 A positive outside week (1/22/16) hints of near-term trading between the low-s and the low-s. Diageo PLC ADS (DEO) / Sector Cons. Staples Last Sale Price $ Rationale: Although the long-term trend remains favorable, DEO has underperformed SPX over the past three years as evident by a well-defined downtrend channel. The Aug-Oct '15 correction violated the bottom of its 2013 downtrend channel but managed to maintain medium term support along the 38.2% retracement (98.5) from its rally. Despite the relief rally from Aug '15 low (.59), the broader market weakness coupled with the inability of the stock breakout led to a new low of.12 by Jan '16. Also, 2/5/16 negative outside week hints of further consolidation. UBS CIO WM Research 17 February

15 The Walt Disney Co (DIS) Sector Cons. Disc. Last Sale Price $90.31 Rationale: We recommend moving to a Neutral technical outlook on this Consumer Discretionary name as a gap down in Jan '16, a death cross signal and the violation of its 2011 uptrend near 98 warn of a medium term top. DIS has also violated its Aug '15 lows at setting into motion a lower low as it fell to next key support at or the 38.2% retracement from rally. The ability to find support here can trigger a technical rally to or the 10-wk ma and its prior breakdown. The 30-wk ma and Jan '16 gap down at remains secondary resistance. Dow Chemical Co. (DOW) Source: FactSet, UBS CIO WMR as of 11 February / Sector Materials Last Sale Price $44. Rationale: The impending merger between the two Chemical industry giants Dow Chemical and DuPont has impacted the share prices of both the stocks. Earlier, the 34.7% correction in Jul-Aug '15 have violated its 2009/2011 uptrend (43.5) and led to a sharp decline to (8/24/15) before stabilizing. A positive outside week (10/2/15) and a surge above the low-s triggered a recovery back to its 2014/2015 highs. However, failure to breakout and the Dec '15 negative outside month and the Jan '16 gap down hints of wide trading range between mid-30s and mid-to-high s. UBS CIO WM Research 17 February

16 Duke Energy Corp. (DUK) / / Sector Utilities Last Sale Price $76. Rationale: We retain a Neutral outlook on this Utility name. Earlier, the failure of DUK to breakout above the top of its uptrend channel (high-s) and a subsequent weekly death cross technical sell signal in late-mar '15 warn of a peak for this Utility name. Recent violation of the mid- coinciding with the Mar/May '15 lows, 2009 uptrend, and the Oct '14 breakout reaffirm a top. However, a solid bounce back from Dec '15 low (65.); the subsequent positive outside month coupled with the defensive nature of this Utility name suggests investors may continue to favor this area. Ford Motor Co (F) / / Sector C. Discretionary Last Sale Price $11.17 Rationale: We recommend taking a Bearish stance on the Consumer Discretionary name as further selling is now likely. The decline to during Aug '15 broad market correction and the ensuing failed rally to key resistance at have now created a well-defined downtrend channel. In addition, the continued relative underperformance of F to SPX coupled with the Jan '16 break down now suggest another test of the bottom of the channel and Aug '15 low (10.44). A move below could lead to a retest of 2012 lows near Key initial supply lies at UBS CIO WM Research 17 February

17 Facebook Inc. (FB) 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 '15 Jan ' / / Sector Technology Last Sale Price $ Rationale: The primary trend (starting from May '12) remains bullish and the prior breakout above low-30s during Jul '13 and a subsequent breakout above 45 during Sep '14 led to an even steeper uptrend channel between low-90s and high-s. The 27.5% correction from its Jul '15 high (99.3) to its Aug '15 low (72) has set the stage for the next rally. In due course, a breakout above the Nov '15 record high (110.65) and above the top of its 2013 uptrend channel led to a new all-time high of (Feb '16). In addition, the Jan '16 positive outside month pattern keeps us optimistic. General Mills Inc. (GIS) / Sector Cons. Staples Last Sale Price $55.98 Rationale: The primary trend remains up and higher prices are still possible, over time. However, recent failure to clear above the top of its 2-year uptrend channel (-61) in Aug '15 coupled with an overbought condition suggests a consolidation is now likely. Near-term support is or the 2012 uptrend and the Jun/Jul '15/Jan '16 lows. The bottom of the 2013 channel at offers secondary support. The recent correction has shifted investment interests to the classic defensive such as GIS as its relative strength is approaching a major breakout along its 2009 downtrend. UBS CIO WM Research 17 February

18 GlaxoSmithKline PLC ADS (GSK) / Technical rating Bearish Sector HealthCare Last Sale Price $39.15 Rationale: We maintain a technical Bearish outlook on this HealthCare name based primarily on the breakdown below 53 in Jul '14 and a subsequent breakdown below 47 in Sep '14. A negative outside month on Aug '15 and completion of a 1-year head/shoulders top breakdown (below neckline at 41.25) led to a sharp decline to (Sep/Oct '15 low). Repeated attempts to surpass key resistance along the top of its falling wedge formation along the low-s suggests GSK may be vulnerable for a retest of the bottom of its wedge pattern and its Oct '15 lows near Halliburton (HAL) / / /-51 Technical rating Bearish Sector Energy Last Sale Price $28. Rationale: The 62.81% decline from Jul '14 high has weakened both the absolute and relative (vs SPX) charts. However, the Oct '15 positive outside month signalled a recovery from deeply oversold levels. Nonetheless, a falling wedge remains intact between 27 and. Recent failure to convincing surge above its 30-wk ma, above its Nov '14 downtrend, and a Dec '15 negative outside month has led to a decline to the bottom of its falling wedge near 27. The ability to find support can lead to a technical oversold rally to (10-wk ma) and above this to 37.5 (30-wk ma). UBS CIO WM Research 17 February

19 Home Depot (HD) / / /156 Sector C. Discretionary Last Sale Price $ Rationale: We retain a technical Bullish outlook on this Home Improvement retailer but recognize the rally over the past 2-years has achieved our technical target of 123 (based on the 2013 breakout above ). Although higher prices are still possible back to its prior 2015 highs at , HD may be vulnerable for a correction (considering 2/5/16 negative outside week) to or the Feb '16 low and below this to or the 2011 uptrend and % retracement from rally. Key resistance is at or the 10-wk ma and prior Nov/Dec '15 highs. Honeywell International Inc. (HON) / Sector Industrials Last Sale Price $ Rationale: We recommend moving to a Bullish technical outlook on this Industrials name. A 13-year breakout at 63/69 during the late-2012/early-2013 (not shown) renders targets to and then to HON has achieved the first of the two targets ( ) during last summer's rally to and is now consolidating its gains between -85 and An ascending triangle breakout above renders upside to Initial support is or the 23.6% retracement from rally and the Jan '16 lows. Key resistance is at (2015 highs). UBS CIO WM Research 17 February

20 International Business Machines Corp (IBM) / /1-179 Sector Technology Last Sale Price $ Rationale: The strong selling has again resumed as IBM has now fallen 45.85% from its 2013 highs (215.90) and has broken below the bottom of a 3-year downtrend channel (138-1) and its 61.8% retracement from 2008 to 2013 rally and the extension of its 2010 pivotal breakout at This suggests a decline to next support at 116 (May '10 lows) and below this to the 76.4% retracement (104). The Nov '08 and Jul '09 lows at offer additional support. An oversold condition can trigger a technical rally to key initial resistance at / (10/30- wk ma). Illinois Tool Works Inc. (ITW) / Sector Industrials Last Sale Price $89. Rationale: A breakout of multi-year accumulation pattern above 59- in late-2012 (not shown) renders upside target to ITW has surpassed this target as it traded to a high of.14 (Mar '15). A weekly death cross sell signal during Apr '15 led to a consolidation through Aug '15. The ability to find key support near its 2014/2015 lows at prevented a deeper correction. However, the stock experienced volatility during Jan '16 in sympathy with broad market weakness. A solid recovery from Jan '16 low coupled with relative outperformance (vs SPX) support our bullish view. UBS CIO WM Research 17 February

21 Johnson and Johnson (JNJ) / / / Sector Healthcare Last Sale Price $101. Rationale: We recommend upgrading to a Bullish technical outlook. A large multi-year technical base breakout above the low-to-mid s achieved one of our medium term technical targets of the low-110s during Nov 14 (109.49). An overbought condition coupled with a weekly death cross sell signal promptly lead to a correction. After declining 25.3% to (Aug '15) JNJ quickly generated a strong recovery that is now challenging its key initial resistance at and above this to its prior all-time highs (109.5). A breakout here confirms the start of the next major rally. Kimberly-Clark Corp. (KMB) 121.5/ / / / Sector Cons. Staples Last Sale Price $ Rationale: We retain a technical Bullish view on KMB as the primary uptrend channel ( and ) from 2008 remains intact. In addition, superior relative performance (vs SPX) and 1/29/16 positive outside week supports our stance. However, failure to clear above the top of its channel coupled with a recent 2/12/16 negative outside week now hint of consolidation over the near-to-medium term. Key initial support is at or the Jan '16 low. Below this, or the Nov '15 low and Oct '15 breakout as well as the 30-wk ma. Initial supply is or the Feb '16 high. UBS CIO WM Research 17 February

22 Coca Cola Co (KO) / / Sector Cons Staples Last Sale Price $42.41 Rationale: We recommend upgrading this consumer staples name to Bullish technical view. Although KO remains confined to a 3-plus year trading range between mid-to-high 30s and the mid-s a recent weekly golden cross buy signal hints of a breakout. A convincing move above or Nov '14/Oct-Dec '15 highs and the top of its triangle confirms a breakout. Key initial support is in the low-s coinciding with the Jan '16 lows and the 30-week ma. Continued relative outperformance (vs SPX) and a recent positive outside week (2/12/16) also bode well for an impending breakout. L Brands Inc. (LB) /116.5 Sector C. Discretionary Last Sale Price $84 Rationale: The bullish uptrend channel from the 2008/09 lows, and a multi-year breakout in 2010/11 above the low- 30s still merit a longer-term technical Bullish outlook. In addition, despite the near-term weakness, superior relative outlook of the stock (vs SPX) keeps us optimistic. However, a negative outside month on Nov '15, flattening key moving averages and a large negative outside week on 2/5/16 warn of a consolidation between mid-s and low-s over the near-to-medium term. Key support lies at or the Aug '15 low. Key supply lies at or the Nov '15 high. UBS CIO WM Research 17 February

23 McDonald s Corp (MCD) / / Sector C. Discretionary Last Sale Price $ Rationale: We retain a technical Bullish rating on this Restaurant name. A convincing surge above confirms a (gap up) breakout of the top of a well-established 5-year technical base. This major breakout is technically significant as this renders next upside target to (near-term), (intermediate), and 1 (longer-term). Having said that, a negative outside week on 2/5/16 and a potential Feb '16 negative outside month hints of consolidation in the near-term. Initial support lies at or the 10/22/15 gap up, the prior major breakout, 30-wk ma and the Nov '15 lows. McGraw Hill Financial Inc. (MHFI) Sector Financials Last Sale Price $82.26 Rationale: We retain a cautiously optimistic Bullish outlook on MHFI considering its constructive relative outlook (vs SPX). Trading above 72. during Oct '13 confirmed a major technical breakout. A 48% rally from Oct '14 low (73.96) to Mar '15 high (109.13) led to an overbought condition resulting in the Aug/Sep '15 correction to the mid-s. However, increased volatility in Jan '16 after a gap down at warns of another correction to major support at or the Oct '13 breakout. That said 2/5/16 positive outside week pattern keeps bulls optimistic on a recovery. UBS CIO WM Research 17 February

24 3M Co (MMM) 146/1 +/ /179/185 Sector Industrials Last Sale Price $1.67 Rationale: An inverse head and shoulder pattern breakout dating back to 2004 (not shown) ignited a strong rally that achieved a new all-time high at 1.5 (Mar '15). Soon after, a weekly death cross sell signal (May '15) led to a 21.4% decline to its Aug '15 low of 134. A gap up (10/5/15) and a positive outside week (10/23/15) led to a rally towards key resistance at 1. However, failure to breakout coupled with a potential head/shoulders top led to a retest of neckline support (134.64) before witnessing a bounce back. Superior relative performance (vs SPX) keeps investors optimistic. Altria Group Inc. (MO) 56/ /- 0.5 / Sector Cons Staples Last Sale Price $59.99 Rationale: MO appears to be negating its 2009 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/Aug '15 negative outside months as well as the Jan '16 positive outside month hint of higher prices. The recent breakout renders upside targets to the low-s (near-term), mid-s (medium term) and then to the low-s (long-term). Key initial support is 56 or near the Nov '15/Dec '15/Jan '16 lows and 30-week ma. UBS CIO WM Research 17 February

25 Merck & Co (MRK) / /71-72 Sector Healthcare Last Sale Price $48.85 Rationale: The breakout of the 2000/2007 downtrend (not shown) above low-s signals a longer-term recovery. However, the recent 2011 uptrend channel breakdown (mid-s) weakens the medium-term technical outlook. Negative outside months (Jun/Aug '15) and rolling of key moving averages led to a sell-off. The 10/16/15 positive outside week pattern helped to stabilize the selling but a negative outside week pattern (12/4/15) and failure to break above mid-s suggest a retest of key support at or the Aug '15 low, 2009 uptrend. 55 +/- 1 is initial supply. NextEra Energy Inc. (NEE) / /132 Sector Utilities Last Sale Price $ Rationale: We retain a Bullish technical outlook on NEE as evident by a breakout of multi-year accumulation pattern above or the 2008 highs. However, a 4-year broadening top pattern warned of a maturing trend. The stock suddenly reversed direction after making a high of on Jan '15. Soon after, a gap down during Aug '15 and a negative outside month have broken the bottom of its 2011 uptrend channel. However, the Dec '15 positive outside month, the recent 1/8/16, 1/22/16 positive outside weeks resumed primary trend and led to a new all-time high of UBS CIO WM Research 17 February

26 Nestle S.A. ADS (NSRGY) /63-61/ /94-95 Sector Cons. Staples Last Sale Price $73.23 Rationale: After rallying to all-time highs at.65 (Jun '14) a triangle pattern has developed between the mid-s and the high-s. A breakout above renders upside to the mid-to-high s and then mid-90s, over time. On the downside, recent violation of 2009 uptrend (not shown) in the low-s and the Jan '15 lows as well as a Jan '16 gap down led to a successful test of key initial support at 68. or the 23.6% retracement from rally. We believe a relative strength breakout (vs SPX) and a surge above or 10/30-wk ma and the prior breakdown merit an upgrade. Novartis AG (NVS) / / / Sector HealthCare Last Sale Price $72.20 Rationale: A breakout above a multi-year basing pattern in the mid-s during early 2013 led to well-defined uptrend channel. After achieving a record high of (Jul '15) negative outside weeks on 7/24/15 and 8/21/15, gap downs on Aug/Sep '15 and the violation of 2012 uptrend channel at warn of a top/trend reversal and hence our technical Neutral stance. NVS has fallen 33% from Jul '15 highs and is now testing its key support at (61.8/% retracements from and rallies). Initial supply lies at +/- 2 or 1/27 gap down and 10-wk ma. UBS CIO WM Research 17 February

27 Oracle Corp. (ORCL) / /-52 Sector Technology Last Sale Price $34.84 Rationale: Although the longer term trend remains favorable, a Neutral defensive stance is recommended on a nearto-intermediate term basis. Recent failure to clear above the top of its 2013 uptrend channel as well as above its Aug '00 record high (46.41) and a negative outside month during Jun '15 led to a move below its prior breakout levels (36.) and top of 2011 ascending triangle pattern. A head/shoulders top pattern in both absolute and relative charts (vs SPX) as well as the Jan '16 gap down warns of further consolidation. Initial support is or the Jan '16 low. Occidental Petroleum Corp. (OXY) / / Technical rating Bearish Sector Energy Last Sale Price $66.20 Rationale: A breakdown from two symmetrical triangles below 90 in Sep/Oct '14 and again below the low-s during the Nov/Dec '14 coupled with falling WTI Crude prices substantiate our technical Bearish view. A falling wedge pattern has developed over the past 2 years. This pattern hints of a potential medium term bottom. The ability to find support near the bottom of wedge in the high-s triggered a technical oversold rally to key initial resistance at.49 or the Feb '16 high and 30-wk ma. Secondary supply lies at or the 38.2% retracement from decline. UBS CIO WM Research 17 February

28 Pepsico Inc. (PEP) 93.25/ / /116 Sector Cons Staples Last Sale Price $96.90 Rationale: A surge above during Apr '13 confirms a multi-year breakout and renders upside targets to as highs as , longer-term. On a medium term basis, the 34.32% rally from Feb '14 lows resulted in a record high of (Oct '15) prompting an overbought condition and the current consolidation between low-90s and low-s. Despite the near-term consolidation, the resiliency of the stock in withstanding the recent market weakness and relative outperformance (vs SPX) kept investors optimistic. Key supports lie at (Jan '16 low) and (Sep '15 low). Pfizer Inc. (PFE) / / /48- Sector Healthcare Last Sale Price $29.13 Rationale: A 10-year downtrend breakout above 19 +/- 1 during 2011 (not shown) ignited a major recovery. However, the 2009 to present rally stalled near its 61.8% retracement (mid-30s) from the decline. Although the Jul '15 positive outside month pattern is constructive, a 22.5% decline from its Jul '15 high has created a potential head/shoulders top pattern. Key neckline support is visible at A decisive breakdown confirms a top and warns of a decline to the low-to-mid 20s. Key resistance lies near or the left shoulder and the 10-/30- wk ma. UBS CIO WM Research 17 February

29 Procter & Gamble Co (PG) / / Sector Cons. Staples Last Sale Price $79.90 Rationale: We recommend moving to a Bullish outlook on this important Consumer Staples name. Earlier, failure to sustain above the top of its 15-plus year uptrend channel (not shown) in the low-90s signalled a correction. A subsequent death cross sell signal during Mar '15 and the Jul '15 negative outside month led to a 30.75% decline from the Dec '14 highs. However, the stock found support near the bottom of the 2010/11 uptrend channel near prompting the recovery. A positive outside month (Jan '16) and golden cross buy signal merits a sustainable recovery. Philip Morris International (PM) / Sector Cons Staples Last Sale Price $88.34 Rationale: This Consumer Staples name is showing technical signs of emerging from its 3-year consolidation. The 4/19/15 gap up, Apr '15 positive outside month and the ability to maintain above key support along the mid-s not only prevented a deeper correction but signals the start of an outperformance cycle. More recently, 12/18/15 positive outside week and triangle breakout above the mid-s hint of a retest of 96.7 or its (2013) all-time highs. Despite the challenging market outlook, the above actions as well as improving relative strength (vs SPX) merit a technical upgrade. UBS CIO WM Research 17 February

30 Royal Dutch Shell PLC ADS Cl A (RDSA) / / Technical rating Bearish Sector Energy Last Sale Price $42.48 Rationale: RDSA has also declined in sympathy with its energy peers falling 57.08% from its Jul'14 highs. The recent break below the 2003 and 2009 lows at 37/38 has established new lower-lows (35.5 on Jan '16) or to levels last witnessed during This dramatic downturn has led to this energy name to retrace nearly 61.8% (35.98) of its 1982 to 2008 rally. An extreme oversold condition coupled with gap up (1/22/16) led a technical rally to (10-wk ma and the 23.6% retracement from 2014 decline). Above this key supply lies at.5/54 (30-wk ma/38.2% retracement). Starbucks Corp. (SBUX) / Sector C. Discretionary Last Sale Price $54.92 Rationale: We retain a cautiously Bullish technical outlook on SBUX due to favorable primary trend starting from 2008/09 lows. Although SBUX has corrected 17.77% from its Oct '15 highs (64) the ability to maintain above key support in the mid-s coupled with superior relative performance (vs SPX) keeps us optimistic. Nonetheless, the stock is likely to consolidate further as the 2/5/16 negative outside week and a potential Feb '16 negative outside month pattern warn of further volatility. Key initial supply is at or the Feb '16 highs and then the prior all-time high of 64. UBS CIO WM Research 17 February

31 St. Jude Medical Inc. (STJ) / / / /75-77 Sector HealthCare Last Sale Price $49.46 Rationale: The Oct '13 10-year breakout above the mid-s and the Apr '15 breakout above 69 render an upside target to 85, longer-term. The rally to new all-time highs on Jul '15 (.84) basically achieved its target. Negative outside weeks on 7/24/15, 10/23/15 and 12/4/15 coupled with a weekly death cross sell signal during mid Sep '15 and a complex head and shoulders top breakdown below confirm a top. Next support resides near the mid- s and then the low-s. Initial resistance is near the recent breakdown (53.63) and above this to the high-s. AT&T Inc. (T) Support Levels / / Sector Comm. Services Last Sale Price $36.21 Rationale: We recommend upgrading to a technical Bullish stance as the stock has recently broken out of a 3-year downtrend channel dating back to 2012 at This breakout signals the start of a sustainable intermediate term rally. In addition, the close proximity to its 10-wk ma (33.5) and the 30-wk ma (34.5) suggest a favourable risk/reward profile. Recent breakout above the mid-30s renders an upside target to the low-s on an intermediate term basis. A slightly overbought condition may lead to a pullback towards initial support along UBS CIO WM Research 17 February

32 Teva Pharmaceutical Industries Ltd. ADS (TEVA) 54-55/ / / Sector HealthCare Last Sale Price $54.08 Rationale: We remain optimistic on TEVA based on a longer-term basis due to its breakout of a large symmetrical triangle dating back to This breakout led to a new all-time high at during Jul 15. However, the stock soon generated an island reversal the following month (Aug '15) prompting a 25.1% decline to the mid-s (Oct '15). The ability to maintain this key support can trigger a consolidation to key initial resistance at and above this back to its high record high A breakdown below warns of a top and a deeper correction to the low-s. Target Corp (TGT) /91-92 Sector C. Discretionary Last Sale Price $68.05 Rationale: A major technical breakout in late-2014 above its prior 2007/2013 all-time highs at ignited a sharp rally to new record highs at (Jun '15). However, failures to trade to fresh new highs coupled with a weekly death cross sell (Sep '15) as well as a negative outside month (Oct '15) signal a correction. The correction from Jun '15 highs has deepen soon after a negative outside week (1/8/16) and a negative outside month (Jan '16) warn of a potential top. Key initial support is visible at Violation here opens the door for the next downturn to UBS CIO WM Research 17 February

33 Total S.A. ADS (TOT) / / Technical rating Bearish Sector Energy Last Sale Price $.62 Rationale: We maintain a defensive technical stance on this Energy name but a deeply oversold condition can produce a sharp but unsustainable technical induced rally. Since a large head/shoulders top pattern still warns of longer-term technical weakness. The ability to find support near +/- 1 or the 2009/2011/2015 lows may lead to a technical bounce towards or the 30-wk ma and above this to as high as the low-to-mid s (right shoulders). Below neckline support (39) confirms a major distribution top and suggests the next decline to and Travelers (TRV) / Sector Financials Last Sale Price $ Rationale: A breakout of a multi-year basing pattern above 57 (2011) and subsequent breakouts above mid-s in early 2013 and -102 in 2014 reaffirm a Bullish technical view. However, the Aug '15 negative outside month and a large Jan '16 gap down hint of a consolidation. Initial support is evident along 99- or the 2014 uptrend and below this to or the 2015 lows. Key initial resistance lies at (Jan gap down). Closing of the Jan gap down allows for a retest of its all-time high ( Nov '15). Trading range is now likely to develop between 97 and 113. UBS CIO WM Research 17 February

34 United Parcel Service (UPS) 92-94/ / Technical rating Bearish Sector Industrials Last Sale Price $95.09 Rationale: Although this Air Freight name has recovered from its strong selling in recent weeks a large 2-year head/shoulders top pattern, monthly death cross sell signal and breaking of its 2009 uptrend channel in the mid-tohigh 90s warn of an intermediate term top. This breakdown renders a downside target to or the 38.2% retracement from rally and the 2006 highs. Below this support triggers a deeper setback to and then to or the % retracement and 2012 breakout. Key initial resistance is near the high-90s to low-s. US Bancorp (USB) / Sector Financials Last Sale Price $37.45 Rationale: Although this Financial stock has recovered all of its losses from the global financial crisis as evident by the progression of the 5+ years uptrend channel failure to clear above the top of its 2014/205 highs (45-47) warn of a maturing uptrend. In addition, multiple gap downs during Aug '15 as a negative outside month (Dec '15), rolling over of weekly ma, 2011 uptrend breakdown and two subsequent gap downs during Jan '16 on 1/4/16 at and on 1/7/16 at confirm a top. Violation of renders downside risks to the low-to-mid 30s. UBS CIO WM Research 17 February

35 Visa Inc Cl A (V) 65-67/ / / Sector Technology Last Sale Price $68.47 Rationale: The longer-term primary trend starting from lows continues to trend higher and the relative strength trend in relationship to SPX remains positive. However, this trend may be maturing as evident by the failure to clear above key resistance near the low-s. In addition, 12/11/15 negative outside week, Jan '16 gap down and the weekly death cross sell signal hint of a consolidation to initial support at (Apr/Jun/Sep '15 lows). A breakdown here suggests downside risks towards the low-s. The mid-to-high s continues to provide key initial resistance. Vodafone Group PLC ADS (VOD) /41-42 Sector Comm. Services Last Sale Price $29.27 Rationale: A large ascending triangle pattern (not shown) and a triangle pattern signal a major battle between the bulls and bears. A breakout above can lead to major test of resistance coinciding with the 2007/2014 highs ( ). A weekly death cross sell signal coupled with Aug '15 negative outside month has triggered a correction that is now challenging the bottom of its triangle near Violation here confirms a breakdown and signals a decline to the low-to-mid 20s. Key initial resistance is now evident near and then to UBS CIO WM Research 17 February