CIO Wealth Management Research 13 April 15 Peter Lee, Chief Technical Analyst peter.lee@ubs.com +1-212-713-8888, 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. This report has been prepared by UBS Financial Services Inc. (UBS FS). Analyst certification and required disclosures begin on page 28. 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.
Table of Contents Ticker Name Page AAPL APPLE 4 ABBV ABBVIE INC 4 ABT ABBOTT LABORATORIES 5 ACN ACCENTURE 5 ACT ACTAVIS 6 ADSK AUTODESK 6 AET AETNA INC 7 AMAT APPLIED MATERIALS INC 7 AMP AMERIPRISE FINANCIAL INC 8 APC ANADARKO PETROLEUM CORP 8 BA BOEING 9 CL COLGATE-PALMOLIVE CO 9 CMCSA COMCAST CORP 10 CSCO CISCO SYSTEMS INC 10 DLPH DELPHI AUTOMATIVE 11 DOW DOW CHEMICAL 11 EMC EMC CORP/MA 12 GE GENERAL ELECTRIC CO 12 GOOGL GOOGLE INC 13 HLT HILTON WORLDWIDE 13 INTC INTEL CORP 14 IVZ INVESCO 14 JPM JPMORGAN CHASE & CO 15 KRFT KRAFT FOODS GROUP INC 15 LRCX LAM RESEARCH CORP 16 MCK MCKESSON 16 MDLZ MONDELEZ INTERNATIONAL INC 17 MDT MEDTRONIC INC 17 MET METLIFE 18 MRK MERCK & CO 18 MSFT MICROSOFT INC 19 NKE NIKE INC 19 QCOM QUALCOMM INC SBAC SBA COMMUNICATIONS SLB SCHLUMBERGER LTD 21 SNDK SANDISK CORP 21 SO SOUTHERN CO 22 TXN TEXAS INSTRUMENTS INC 22 UNP UNION PACIFIC CORP 23 UTX UNITED TECHNOLOGIES CORP 23 VMW VMWARE INC 24 UBS CIO WM Research 13 April 15 2
Changes since last report Additions Name Actavis Delphi Automotive Dow Chemical Hilton Worldwide McKesson Deletions Celanese Centene Express Scripts Macy's Marriott Ticker ACT DLPH DOW HLT MCK CE CNC ESRX M MAR Technical Rating Changes Name Ticker Old New EMC Corporation EMC Bullish Neutral Southern Company SO Bullish Neutral American Express (AXP) and Starbucks (SBUX will be reviewed in the next edition of - Broader List. The last update on these stocks was published on 2 February 15. Going forward, our previously published rating for these stocks should not be relied upon. UBS CIO WM Research 13 April 15 3
Apple Inc (AAPL) 1 1 11 12 13 14 15 Source: FactSet, UBS CIO WMR as of 08 April 15 Sector Technology 121.63 112.48-115.51.72/95.18 134-136 1-141 146-147 Last Sale Price $1. Rationale: AAPL has negated its 12-13 sharp decline (.38%) via a convincing move above its Sep 12/14 highs (.72/103.74). This breakout to new all-time highs coupled with the breakout above the extension of its 09 uptrend and above the top of a 2-plus year uptrend channel suggest next upside targets to 134-136 (near term), 1-141, intermediate term and then to 146-147, longer term. Initial support moves up to 121.63 or the Mar '15 low. Secondary support lies at 112.48-115.51 or the 1/28/15 gap up. Additional support lies at.72 or the Sep '12 high. AbbVie Inc (ABBV) 65 65 Jan '13 Mar '13 May '13 Jul '13 Sep '13 Nov '13 Jan '14 Mar '14 May '14 Jul '14 Sep '14 Nov '14 Jan '15 Mar '15 Source: FactSet, UBS CIO WMR as of 08 April 15 54.78 51-52. 61-62 65 69-71 Sector Healthcare Last Sale Price $58.81 Rationale: A breakout above 61-62 or the top of its 13 uptrend channel during Oct '14 suggest higher prices. Since the height of this channel is 10-points this renders upside targets to the low-to-mid s, near-to-medium term. However, an overbought condition developed into the low-s. This condition coupled with a negative outside week on 12/12/14 and an island reversal (1/8/15) warns of a correction. In the process ABBV has slipped below the top of its channel breakout (64-65) resulting in a retest of the bottom of its channel (mid-s). Initial supply is at 61-62. UBS CIO WM Research 13 April 15 4
Abbott Laboratories (ABT) 11 12 13 14 15 Source: FactSet, UBS CIO WMR as of 08 April 15 Sector Health Care 43-43..75-41.75 38-39. 47-48 51-52 -57 Last Sale Price $46.61 Rationale: For the past 4 years this Healthcare name has retained its bullish uptrend channel now rising near and 48, respectively. A smaller but equally important uptrend channel is also visible since 11 between 42 and 47. The ability to maintain its -week ma (44) may help to alleviate the recent pullback signalling another test of the top of its uptrend channels near 47-48. A convincing move above 47-48 confirms a channel breakout and renders targets to the low-to-mid s. Violation of 43 can trigger a correction to 39-41 or a retest of the bottom of its uptrend channel. Accenture PLC (ACN) 11 12 13 14 15 Source: FactSet, UBS CIO WMR as of 08 April 15 Sector Technology 89-86. 81.-83. 99-103-105 110-112 Last Sale Price $95.12 Rationale: An uptrend channel over the past 5-plus years as well as a recent breakout of a 2-year ascending triangle (above the high-s) hints of an outperformance cycle and hence our bullish stance. Targets as high as mid-to-high s are possible, medium-to-longer term. The 12/19/14 positive outside week pattern, the Feb '15 positive outside month pattern and relative outperformance of the stock support higher prices. Initial support now lies at 89- or near the top of the 2-year ascending triangle pattern and 10-wk ma. Secondary support lies near 86. or the Mar '15 low. UBS CIO WM Research 13 April 15 5
Actavis (ACT) 0 0 2 2 0 0 1 1 11 12 13 14 15 Source: FactSet, UBS CIO WMR as of 08 April 15 Sector Healthcare 2-292 285-287 277-278 6 312. 317-319 Last Sale Price $294.78 Rationale: We initiate Actavis with a technical Bullish outlook. The long-term term trend starting from 09 lows remains up. In addition, a breakout of a multi-year accumulation pattern above the low-s (in 12) led to accelerated gains. While we view ACT as a bullish condition based on the strong performances of the stock both on an absolute and relative basis, we urge investors to maintain a disciplined risk management strategy to protect gains. Initial support is at 2-292 or near the 10-wk ma. Secondary support is in mid-2s or near Jan '15 highs/mar '15 lows. Autodesk (ADSK) 65 65 11 12 13 14 15 Source: FactSet, UBS CIO WMR as of 08 April 15 Sector Technology 53-54 48-49 44.5-46 65 72-73 81-82 Last Sale Price $61.83 Rationale: Despite increased volatility over the near-term, we maintain an intermediate term bullish stance on ADSK as a breakout of a four-year symmetrical triangle pattern in late-13 above 42.5 still renders upside targets to the mid- s (medium term), 72-73 (intermediate term), and 81-82 (longer term). A positive outside month pattern in Oct '14 and again in Feb '15 suggests pullbacks to the low-to-mid s are technically constructive allowing for better entry points. Secondary support is also available along 48-49 coinciding with the pivotal reaction lows during Oct '14. UBS CIO WM Research 13 April 15 6
Aetna Inc (AET) 110 110 11 12 13 14 15 Source: FactSet, UBS CIO WMR as of 08 April 15 Sector Healthcare 104-105 98.78- -93 110-111 116-117 123. Last Sale Price $107.46 Rationale: Trading above the top of a 17+ year internal trend line in the high s during 14 (not shown) renders upside targets to the 110-111 (near term), 116-117 (medium) and 123-124 (long-term). The 12/19/14, 01/09/15, 02/06/15 positive outside week patterns are constructive and reinforce the favorable uptrend. Initial support now lies at 104-105 or near Apr '15 lows. Secondary support also lies along 98.78- or near the Mar '15 lows, top of 2+ year uptrend channel and 10-wk ma. Additional support resides near -93 or close to the Feb '15 lows and the -wk ma. Applied Materials Inc (AMAT) 26 24 22 18 16 14 12 10 26 24 22 18 16 14 12 10 8 11 12 13 14 15 Source: FactSet, UBS CIO WMR as of 08 April 15 Sector Technology 21.46-21.71.48 18.37/18.63 24.59.71-26.5 27.95 Last Sale Price $22.38 Rationale: This semiconductor manufacturing name has been closely tracking the semiconductor index (SOX) as well as the SPX Index. Despite suffering a sharp.6% correction during Jul-Oct '14 downturn we were encouraged by the sharp recovery above its Jul '14 highs (23.46). However, the inability of the stock to maintain above its prior support levels led to recent pull back. From a near-term basis, a mixed technical picture has developed as evident by the Feb '15 positive outside month and the Mar '15 negative outside month. A consolidation may help to improve the risk-reward profile. 8 UBS CIO WM Research 13 April 15 7
Ameriprise Financial Inc (AMP) 1 1 11 12 13 14 15 Source: FactSet, UBS CIO WMR as of 08 April 15 Sector Financials.47-121.57 116.02 105.41 133 137.15-138.26 148-1 Last Sale Price $128.72 Rationale: A breakout in Jan 13 above mid-s and a subsequent 6-year symmetrical triangle breakout renders upside targets to 148-1 (intermediate term). However, recent failure to convincingly clear above the top of its 09 uptrend channel (138.26) and a negative outside week on 12/12/14 have led to correction that successfully filled its Oct '14 gap up (.47-121.57). Although a positive outside week pattern on 1/23/15 led to a strong rally in the stock, a 3/27/15 negative outside week pattern also suggests an important near-term battle developing between the bulls and bears. Anadarko Petroleum Corp (APC) 110 110 11 12 13 14 15 Source: FactSet, UBS CIO WMR as of 08 April 15 Technical rating Neutral Sector Energy 77-77. 71-73 65.82.10 96-97 104.5 Last Sale Price $86.12 Rationale: We maintain a Neutral technical stance on APC based primarily on the favorable relative strength of this energy stock compared to its peers. However, even strong Energy names such as APC are subject to further volatility especially if there is another sell off in WTI Crude/Brent Oil. The 37.% decline from the Aug '13 peak has broken its pivotal Jun '10 uptrend at 83-84 confirming an intermediate term top. However, a positive outside week pattern on 12/19/14 coupled with an oversold condition hint of the start of a trading range between the low-s and the low-s. UBS CIO WM Research 13 April 15 8
Boeing (BA) 1 1 1 1 11 12 13 14 15 Source: FactSet, UBS CIO WMR as of 08 April 15 Sector Industrials 144.57 138-139 133-136 156-159 168 176-177 Last Sale Price $153.36 Rationale: A breakout of a multi-year technical accumulation pattern above 107.83 in 13 suggests higher prices are possible, over time. A 79-point technical base breakout renders a target to the mid-to-high 1s (near-term), high-1s (intermediate term) and then to the mid-to-high 1s, longer term. A 1-year consolidation as depicted by a declining trend channel between 115-116 and 133-136 has finally been completed on a convincing breakout above high-1s. This signals the resumption of the primary uptrend. The prior breakout now offers key near term support on pullbacks. Colgate Palmolive Co (CL) 65 65 11 12 13 14 15 Source: FactSet, UBS CIO WMR as of 08 April 15 Sector Cons. Staples 65-67 62.5-63 59.75 71.56 76-77 82-82. Last Sale Price $69. Rationale: Defensive sectors including Healthcare, Utilities and Consumer Staples have been mixed as the result of the strong surge in the US Dollar. This leadership Consumer Staples stock has been more volatile than usual during the corrections from Jul-Aug '14, Dec '14-Jan '15 and recently from Mar '15 to present correction. Despite the bullish long term trend, the relative strength has lagged versus S&P 0 and the Mar '15 negative outside month pattern warn of a consolidation. A surge above its key initial resistance at 71.56 signals the resumption of its primary uptrend channel. UBS CIO WM Research 13 April 15 9
Comcast Corp. Cl A (CMCSA) 15 11 12 13 14 15 Source: FactSet, UBS CIO WMR as of 08 April 15 Sector Cons. Disc..67 51.56-52. 47.91. 64-65 69- Last Sale Price $59.18 Rationale: There remain wide dispersions within the Consumer Discretionary sector. Although CMCSA has completed a 12-year accumulation pattern breakout in 12/13 above the low-s/low-s, it has been erratic since 14 as it has struggled to follow through to new highs. Two recent negative outside weeks on 1/2/15 and on 3/13/15 warn of a correction back to key support near the low-to-mid s coinciding with previous breakout levels. To the upside, initial supply is at. coinciding with the Mar '15 high. Additional resistances are available at 64-65 and then 69-. Cisco Systems Inc (CSCO) 15 32 28 26 24 22 18 16 14 32 28 26 24 22 18 16 14 12 11 12 13 14 15 Source: FactSet, UBS CIO WMR as of 08 April 15 Sector Technology.92 24.88 22.5 28.69.31 31-32/34.24 Last Sale Price $27. Rationale: A Fan formation breakout via 3 downtrends during late-11, early-13 and recently in late-14 is technically significant as this confirms a major trend reversal favoring a sustainable intermediate term recovery. This breakout suggests a rally to.31 or the Mar '15 highs and then to 31-32. The 07 high at 34.24 is also achievable on an intermediate term perspective. On a near-term basis, a slightly overbought condition coupled with two negative outside week patterns on 3/6/15 and 3/27/15 warns of a correction to key initial support along.92 or the Feb '15 month low. 12 UBS CIO WM Research 13 April 15 10
Delphi Automotive (DLPH) Jan '12 Jul '12 Jan '13 Jul '13 Jan '14 Jul '14 Jan '15 Source: FactSet, UBS CIO WMR as of 08 April 15 Sector Consumer Disc. 76.23 73-74/71-72 66.10-67.65 85-86 -91 94.95 Last Sale Price $83.21 Rationale: We initiate Delphi with a technical Bullish outlook. Although the stock has limited history, the primary trend starting from Nov 11 has been up. In addition, a gradual rise in share prices has created a 3+ year uptrend channel. Strong relative strength outperformance to S&P 0, rising key moving averages, positive outside month patterns on Apr 13 and again on Feb 14 support our favorable view on this stock. Initial support lies at 76.23 or the Mar '15 low and its 10-wk ma. Secondary support lies at low-s coinciding with the Feb '15 upside gaps and the -wk ma. Dow Chemical Co. (DOW) 11 12 13 14 15 Source: FactSet, UBS CIO WMR as of 8 April 15 Sector Materials.93 41.5-43 38-53.-54.97 56.75 64-65 Last Sale Price $48.37 Rationale: Despite near-term technical weakness, we retain a Bullish technical view on DOW as a breakout above the top of an ascending triangle pattern at 36-37 (shown above - in 13) is technically significant. This confirms an intermediate term recovery. A subsequent breakout above the 08/11 highs at 42.23-43.43 (also shown above) also reaffirms a bullish longer-term trend. The ability to maintain key support in the low-s may trigger the next rally to the mid-to-high s. Initial support is at.93 or the Mar '15 low and then 41.5-43. 56.75 remains key resistance. UBS CIO WM Research 13 April 15 11
EMC Corp (EMC) 32 28 26 24 22 18 32 28 26 24 22 18 16 11 12 13 14 15 Source: FactSet, UBS CIO WMR as of 08 April 15 Technical rating Neutral Sector Technology 24.5-23-23. 21. 29.24.92 33.33. Last Sale Price $26.23 Rationale: A symmetrical triangle breakout in Mar '14 at 26-26.5 and a gap up breakout during 7/21/14 kept investors optimistic on EMC, longer-term. The 10-point technical base breakout rendered upside targets to 31-32 (nearterm) and 36-37 (longer term). The recent rally to 31 in Dec '14 basically achieved its near term target prompting a selloff (-18%) from overbought levels. A death cross sell signal (10-wk ma moving below -wk ma) earlier this year (15) and relative underperformance of the stock to S&P 0 forces us to downgrade EMC to a Neutral outlook. General Electric Co (GE) 16 28 26 28 26 24 22 24 22 18 18 16 14 16 14 11 12 13 14 15 Source: FactSet, UBS CIO WMR as of 08 April 15 Technical rating Neutral Sector Industrials 22.-23.41 21.11 +/- 0. 27.10-28.09 29 33.5-34 Last Sale Price $.01 Rationale: The 00 downtrend breakout above 26.5 during Nov 13 confirmed a major trend reversal. However, on a near-to-intermediate term basis there is formidable resistance at 27-28 coinciding with the top of the 09 uptrend channel, Jan '14 negative outside month and the 61.8% retracement from 07-09 decline. Repeated failures to clear convincingly above the high-s, as well as a rising 2+ year complex head and shoulder top pattern, down trending moving averages and relative underperformance against SPX still suggest more of a Neutral medium trend outlook. UBS CIO WM Research 13 April 15 12
Google Inc (GOOGL) 0 0 0 4 0 3 0 2 0 0 0 4 0 3 0 2 0 11 12 13 14 15 Source: FactSet, UBS CIO WMR as of 08 April 15 Sector Technology 487-491 447-467 422 5-585 0-615 624-6 Last Sale Price $548.84 Rationale: After establishing a record high of 615.04 in Feb 14 GOOGL has slowed considerably. A lower high (i.e., Mar 15 high (583.) is lower than its July 14 high (8.91)) and failure of GOOGL to reassert itself above its 1-year downtrend at 598-0 warn of range bound trading between 487-491 and 0-615. Having said that, GOOGL may be nearing an inflection point as the % decline over the past year has weakened the near term trend. A breakdown below 487-491 warns of a deeper correction. However, a surge above 5-585 also suggests a retest of 0-615. Hilton Worldwide (HLT) 0 28 28 26 26 24 24 22 22 Jan '14 Apr '14 Jul '14 Oct '14 Jan '15 Apr '15 Source: FactSet, UBS CIO WMR as of 08 April 15 Sector Consumer Disc. 27.62-27.68. 24 +/- 0. 31-31. 33. Last Sale Price $.51 Rationale: We initiate HLT with a technical Bullish outlook. Although there is limited data available, the primary trend has been up since its inception in Dec 13. In addition, a breakout of a 1-year accumulation pattern above.95 is technically significant. Rising 10/-wk moving averages coupled with superior relative performance of the stock to S&P 0 warrants a bullish view on the stock. Initial support lies at 27.62-27.68 or near its Mar '15 lows and its 10-wk ma. To the upside, initial supply resides near 31-31.. Above this supply, renders upside targets to 33. and then. UBS CIO WM Research 13 April 15 13
Intel Corp (INTC) 11 12 13 14 15 Source: FactSet, UBS WMR as of 08 April 15 Sector Technology 29.31 28.42.75 34.72-.57 37.5-38.0 43-44 Last Sale Price $31.31 Rationale: INTC has finally caught up to its peers with a key breakout above multi-year resistance along 29-29.5 during Jun '14. This breakout confirms a 05 head/shoulders bottom pattern and renders upside to mid-s (longer term). However, on near-term basis, the stock continues to consolidate soon after a large gap down in Jan '15. Nonetheless, INTC has fallen over 22% from its Dec '14 highs improving its risk-reward profile. A positive outside week on 3/27/15 still support a bullish view. On the downside, a convincing move below 29.31 can lead to further selling. Invesco (IVZ) 15 15 11 12 13 14 15 Source: FactSet, UBS CIO WMR as of 08 April 15 Sector Financials 34.-.52 31.73 41.98 44-44. 47 Last Sale Price $.04 Rationale: We maintain a technical bullish view on IVZ as long as the bullish trend starting from 08/09 lows remain intact. A move above 32. or the 07 highs in early 13 not only recovered all of its losses during the subprime crisis, but also completed a multi-year technical base breakout. A retest of its all-time highs in the low-s is still possible, long-term. However, the stock may need to consolidate as evident by the flattening of its key moving averages, near-term weakness in the relative strength versus S&P 0 and the Dec '14 negative outside month pattern. UBS CIO WM Research 13 April 15 14
JPMorgan Chase & Co (JPM) 65 65 11 12 13 14 15 Source: FactSet, UBS CIO WMR as of 08 April 15 52.97-54.27 46.05 62.67-63.49 67.17 72-73 Technical rating Neutral Sector Financials Last Sale Price $61.05 Rationale: In Jan '13 a large symmetrical triangle pattern breakout above the mid-s signals the start of a bull rally. This breakout subsequently led to a rather steep and unsustainable uptrend channel, which soon reversed direction during late-13. In due course, a negative outside month in Jan '14 coupled with downside gaps on 4/11/14 and 5/5/14 prompted a consolidation. The erratic signals from the moving average crossovers suggest a likely trading range between the mid-s and the mid-s. Initial support now lies at 52.97-54.27 or near the May '14/Feb '15 lows. Kraft Foods Group (KRFT) Oct '12 Jan '13 Apr '13 Jul '13 Oct '13 Jan '14 Apr '14 Jul '14 Oct '14 Jan '15 Apr '15 Source: FactSet, UBS CIO WMR as of 08 April 15 Technical rating Neutral Sector Cons. Staples.12-72 62.33 91.32 95 Last Sale Price $88.38 Rationale: We have limited history as this Consumer Staples name has only been trading since Sep 12. Nonetheless, the dominant trend remains favorable. On 3//15 the stock surged by over % after Heinz and Kraft Foods announced a merger agreement to form the Kraft Heinz company creating the fifth largest food and beverage company in the world. While we note of recent developments, we would not chase the stock here. Rather, investors need to maintain a strict risk management to protect gains. Initial support now lies at.12 or the top of its 3//15 gap up. UBS CIO WM Research 13 April 15 15
Lam Research Corp (LRCX) 11 12 13 14 15 Source: FactSet, UBS CIO WMR as of 08 April 15 Sector Technology 65-67 58-. 78-85.-87 94 Last Sale Price $72.83 Rationale: We remain bullish on LRCX primarily due to its breakout above a large basing pattern dating back to 00. A positive outside month on Apr 13, an upside gap breakout in Apr/Jul 13 and favorable relative strengths against SPX helped this stock complete a 28-point basing pattern (shown above). The breakout (above ) suggests intermediate targets into the mid-to-high s. In due course, the stock consolidated from mid-s after testing initial target in Dec '14/Mar '15 months. A consolidation would improve the risk-reward profile offering a better entry in the mid-s. McKesson (MCK) 2 2 0 0 1 1 11 12 13 14 15 Source: FactSet, UBS CIO WMR as of 08 April 15 Sector Healthcare 9 0 +/- 2 1 232.69 2-247 2-7 Last Sale Price $222.49 Rationale: We initiate MCK with a technical Bullish outlook. The primary trend starting from 00 lows remains favorable. In addition, a breakout of a 14-year accumulation pattern above 96. or 1998 highs in late-12 support our long-term bullish stance. A successful move above 96. led to a 2-plus year uptrend channel. Rising key moving averages, superior relative performance of the stock versus S&P 0 and the recent Nov '14 positive outside month pattern all substantiates our positive outlook. Initial support lies at 9 or near the Feb '15 low as well as the -wk ma. UBS CIO WM Research 13 April 15 16
Mondelez International Inc (MDLZ) 11 12 13 14 15 Source: FactSet, UBS CIO WMR as of 08 April 15 33.97 32 +/- 0. 39.42-39.54 44 47-47. Technical rating Neutral Sector Cons. Staples Last Sale Price $37.39 Rationale: A key breakout during Mar 13 above an 11-year technical base supports our longer-term bullish outlook. However, from a near-to-intermediate term perspective this Food and Beverage company appears to be overbought and needs to consolidate further. The 19.5% correction during Jul-Oct '14 has led to a temporary breech of its 10- /- wk ma as well as a minor break of the top of its 09 uptrend channel. A consolidation between the low-s and the high-s helps to solidify the next rally. Initial support is 33.97 or the Mar '15 lows. 39.42-39.54 is initial supply. Medtronic Inc. (MDT) 11 12 13 14 15 Source: FactSet, UBS CIO WMR as of 08 April 15 Sector HealthCare +/- 2 +/- 1 +/- 1 79.-82 87-87. 95-96 Last Sale Price $76.39 Rationale: We retain a Bullish technical view based on MDT's favorable uptrend and superior relative strength soon after its successful acquisition of Covidien. This Healthcare name has confirmed a major breakout above its 00/06 highs at -62 in Jan/Apr 14. In addition, the negation of the Apr '14 negative outside month as well as positive outside months on Aug and Oct '14, 1/9/15 and 1/23/15 positive outside weeks, relative outperformance of the stock versus S&P 0 favor higher prices over the intermediate-to-longer term perspective. Initial support lies at +/- 2 levels. UBS CIO WM Research 13 April 15 17
MetLife (MET) 11 12 13 14 15 Source: FactSet, UBS CIO WMR as of 08 April 15 Technical rating Neutral Sector Financials.52-46.10.64 33.89-. 53.34 56 +/- 1.5 65. Last Sale Price $51.10 Rationale: Although the longer-term trend from the 09 lows still remains favorable, the stock continues to struggle over the near-to-intermediate term. This is depicted on the weekly charts by the declining weekly moving averages (10- wk and the -wk moving averages) as well as a rising wedge pattern. The Dec '14 negative outside month pattern and a breakdown below 12-13 uptrend line triggered a sell-off in Oct '14 and again in Jan '15. Initial support resides in the mid-s or near the Aug/Oct '13 and Oct '14/Jan '15 lows. A move below.52 confirms a lower low pattern. Merck & Co (MRK) 65 65 11 12 13 14 15 Source: FactSet, UBS CIO WMR as of 08 April 15 Sector Healthcare.64 52.49 47.61 63.62 66-68 71-72 Last Sale Price $57.15 Rationale: In 13, this Pharmaceutical name broke out of a major 00/07 downtrend (not shown) along the low- s. This action confirms the start of an intermediate term recovery. However, MRK is facing major resistance near the low-to-mid s or the 07/08 highs and the top of the 11 uptrend channel. The ability of the stock to clear above the mid-s can entice traders/investors to return. On the other hand, a move below low-s can trigger a sell-off. We urge investors to use a strict risk management strategy to protect gains..64 or the Mar '15 low is initial support. UBS CIO WM Research 13 April 15 18
Microsoft Inc. (MSFT) 11 12 13 14 15 Source: FactSet, UBS CIO WMR as of 08 April 15 Sector Technology -. 37-38 32-33 44. 46.24-47.39.05/54.- Last Sale Price $41.42 Rationale: MSFT finally cleared above key neckline resistance at 37-38 in 13. This action completes a large 13-plus year Head and Shoulders bottom pattern and suggests 21-points or upside targets to as high as 58-59, longer term. Over the near-term, a large gap down on 1/27/15 and 3/27/15 negative outside week pattern paints a weak picture. A near-term trading range environment between low-s and high-s is likely. We remain optimistic on the recovery as long as MSFT retains key support at 37-38. Violation of support here would warrant a technical downgrade. Nike Inc. Cl B (NKE) 11 12 13 14 15 Source: FactSet, UBS CIO WMR as of 08 April 15 Sector C. Discretionary 95.18.69 83.85 103.79 110 +/- 2 116-116. Last Sale Price $.84 Rationale: We retain a technical Bullish stance on NKE based on the breakout above its 09 uptrend channel as well as the positive outside month patterns during Feb '14 and Aug '14. However, the 12/13/13, 3/21/14, 8/1/14 and 01/16/15 negative outside weeks and an overbought condition warn of a consolidation. Nonetheless, a gap up on 9/26/14, a large positive outside week formation also during Sep '14 and favorable relative outperformance versus S&P 0 Index support higher prices, over time. Initial support rises to 95.18 or to the Mar '15 lows and the 10-wk ma. UBS CIO WM Research 13 April 15 19
Qualcomm Inc (QCOM) 11 12 13 14 15 Source: FactSet, UBS CIO WMR as of 08 April 15 Technical rating Neutral Sector Technology +/- 2-57 46-47 74.09 75.72-78.53 81.97 Last Sale Price $67.26 Rationale: QCOM has become increasingly volatile as evident by the following mixed technical signals: A gap down on 7/24/14 soon led to a negative outside month pattern by July 14. On the other hand, a positive outside month on Oct '14 hint of a recovery. However, another gap down on 11/6/14 soon led to the Nov '14 negative outside month. On 12/19/14 a positive outside week developed but a recent large gap down on 1/29/15 and 3/13/15 negative outside week pattern warns of renewed selling. A wide trading range is likely between the low-s and the mid-to-high s. SBA Communications (SBAC) 1 1 11 12 13 14 15 Source: FactSet, UBS CIO WMR as of 08 April 15 Sector Telecom 111.-111.85 107. 103.83 126.65 1-136 142-143 Last Sale Price $118.05 Rationale: We maintain a technical Bullish stance on SBAC as a multi-year breakout above the high-s in mid-12 suggests higher prices. This 57-point technical base suggests a technical target to the high-s, near-term. More recently, 01/23/15, 2/27/15 and 3//15 positive outside week patterns reaffirm the bulls are in control of this stock. Also the strong relative strength of this stock as it relates to the S&P 0 index indicates a leadership name. Initial support lies near 111.-111.85 or near the Jan '15 gap up. To the upside, Initial supply is at 126.65 or near the Mar '15 highs. UBS CIO WM Research 13 April 15
Schlumberger Ltd (SLB) 110 110 11 12 13 14 15 Source: FactSet, UBS CIO WMR as of 08 April 15 79.39 75. 66.85-69 86.68-92..54 112 Technical rating Neutral Sector Energy Last Sale Price $86.12 Rationale: A 5-year triangle pattern breakout (mid s) and the rally to 118.76 (Jul '14) appears to have been a false breakout/bull trap. SLB and many energy counterparts quickly reversed directions and plummeted across the board. The 36.34% decline in SLB from its Jul '14 highs has weakened the near-to-intermediate term trend. Deteriorating relative strength (vs SPX) and negative outside weeks on 11/14/14 and 11/28/14 warn of continued volatility. Key support is at 75. or the Jan '15 low. Violation here warns of the next selloff. Initial supply is 86.-92. (11/28/14 gap down). SanDisk Corp (SNDK) 110 110 11 12 13 14 15 Source: FactSet, UBS CIO WMR as of 08 April 15 Technical rating Neutral Sector Technology 63 58.-59 52 +/- 2 69. 75 +/- 1 81.08 Last Sale Price $68.89 Rationale: Gap down on 01/12/15 and again on 3/26/15 weakened both the absolute and relative charts at least from a near-to-intermediate term basis. A lower low pattern on the price charts, death cross signal (10-wk ma moving below -wk ma) and the Mar '15 negative outside month pattern coupled with continued relative underperformance of the stock paint a weak technical picture. While we note the negative developments, the risk-reward profile continues to improve notably following the % decline from Dec '14 highs. Initial support now lies at 63 or the Apr '15 low. UBS CIO WM Research 13 April 15 21
Southern Co. (SO) 11 12 13 14 15 Source: FactSet, UBS CIO WMR as of 08 April 15 Technical rating Neutral Sector Utilities 42.73 47 53-54 57. Last Sale Price $44.34 Rationale: A breakdown below 09 uptrend line (in mid-13 shown above) and the longer-term relative underperformance of the stock to SPX substantiates our Neutral technical view. However, positive outside week patterns on 11/28/14 and 12/19/14, a golden cross signal, an improvement in relative strength and a breakout above its previous resistance along 47.69-48.74 or the 09 uptrend failed to maintain above the low-s warn of a bull trap. Hence we recommend downgrading SO to Neutral. Key support levels lie near and 42 or the Dec 13 and Aug 14 lows. Texas Instruments Incorporated (TXN) 11 12 13 14 15 Source: FactSet, UBS CIO WMR as of 08 April 15 Sector Technology +/- 2 44.- -41. -61 65-66 -72 Last Sale Price $56.97 Rationale: TXN completed a major breakout above or the 07 highs as well as neckline resistance along a large 02 head/shoulders bottom pattern. In addition, the surge above the low-to-mid s solidifies a 4 year symmetrical triangle breakout. The Oct '14 positive outside month pattern as well as improving relative strength against SPX reaffirms the bulls remain in control, at least from an intermediate term perspective. Initial support lies at +/- 2 or near the Apr/Jul/Sep '14 highs and Dec '14/Jan '15 lows. Initial supply is evident at -61 or near the Mar '15 high. UBS CIO WM Research 13 April 15 22
Union Pacific Corp (UNP) 11 12 13 14 15 Source: FactSet, UBS CIO WMR as of 08 April 15 Sector Industrials 96.17 85 118-119 124.52-127 134-1 Last Sale Price $108.13 Rationale: We maintain a technical bullish outlook on UNP despite the near-term weakness in the Transportation name. Positive outside month formations during Aug '14 and Oct '14 support a favorable view. Although an 11/28/14 negative outside week pattern led to a consolidation, the 12/19/14 positive outside week pattern also triggered a rally to a new all-time high of 124.52 by Feb '15 before witnessing a round of weakness again. Given the Jan '15 negative outside month pattern, we expect further consolidation is required before the resumption of primary bull trend. United Technologies Corp (UTX) 110 110 11 12 13 14 15 Source: FactSet, UBS CIO WMR as of 08 April 15 Technical rating Neutral Sector Industrials 108-110.23 +/- 3 +/- 2 124. 129-1 1-136 Last Sale Price $117.84 Rationale: Although the longer-term trend remains bullish, the July 14 breakdown of 12 uptrend and a death cross technical sell signal suggests a trading range scenario. Nonetheless, the 11/21/14 positive outside week pattern triggered a rally from oversold levels. In addition, improving relative strength versus SPX as well as a golden cross buy signal has prompted a rally above its previous all-time highs at 121 (Apr '14/Jan '15 highs). A convincing move above 124. could entice investors to return to this stock. Initial support resides at 108-110.23 or near the Jan '15 low. UBS CIO WM Research 13 April 15 23
VMware Inc (VMW) 110 110 11 12 13 14 15 Source: FactSet, UBS CIO WMR as of 08 April 15 Technical rating Bearish Sector Technology 73.65 64.86-65.02 61.17 86.91 89 95 +/- 2 Last Sale Price $82.58 Rationale: We retain our technical bearish outlook on VMW primarily on the following negative developments: a Fan formation breakdown, a complex head and shoulders top breakdown in the low-s, increased volatility via downside gaps during Mar/Apr/Oct 14 and Jan '15 and a negative outside month in Apr '14. Also, recent failure to convincingly clear above the extension of the third fan line near -105 led to a correction. Initial support now lies at 73.65 or the Jan '15 low. Secondary support lies at 64.86 or the Jun '13 low. Initial supply lies at 86.91 or the Mar '15 high. UBS CIO WM Research 13 April 15 24
Statement of Risk Stock market returns are difficult to forecast because of fluctuations in the economy, investor psychology, geopolitical conditions and other important variables. Appendix Technical Research Rating Definitions Rating Corresponding Definition and criteria Rating Category Bullish Buy NeutralHold Bearish Sell N/A Well-defined, reliable uptrend, an increase in the rate of change (or strong momentum) and confirming technical indicators Trading range trend, a flat rate of change and confirming technical indicators Negative or weakened trend, momentum and confirming technical indicators Not enough historical data to make an evaluation Description and Methodology This report provides technical analysis on a dynamic list of stocks that, we believe, are of a wide interest. Please note that technical views are highly variable and will change with market conditions. Accordingly, these ratings are only valid as of the publication date. Because CIO WMR equity sector analysts and WMR technical analysts employ different analytical methodologies, technical recommendations are, at times, contradictory to fundamental recommendations for the same security. For the latest company ratings by WMR sector analysts, please refer to the most recent equity sector research reports, located in the Equity Section on the Online Services Research website. For more background on the content of this report, please see Technical Analysis Research Primer, 18 February 10. UBS CIO WM Research 13 April 15
Appendix Term / Abbreviation % +or- Moving Average (DMA) -Week Moving Average Adjusted Relative Strength (ARS) Base Beta Blow off stage to a major rally Breakdown Breakout Broadening Top Formation Channel Death Cross Downtrend Line Description / Definition The percentage above or below the moving average (see Moving Average) is used to help measure an overbought or oversold condition and is a component of risk management. It is calculated by taking the difference between the group price and its -week moving average (see below), and then dividing by the -week moving average times. Also known as the -week line or 1-day line), this is one of the most popular and respected moving average indicators (see Moving Average) in technical circles. It is calculated by totaling the latest weekly (usually Friday closing) prices and dividing by to arrive at the average. Each week, the most recent week s figure is added to the total, and the price level from weeks ago is subtracted hence the term moving. Please note that a breakout above or breakdown below this line does not, in and of itself, constitute a buy or sell signal. Number gives a % weighting to the 1-month relative strength, % to the 3-month, and % to the 6-month numbers to arrive at a single weighted number. A chart pattern marking a period of accumulation following a downtrend. The larger the base, the greater the upside potential following its completion. A base can take many forms. A measure of volatility of a security as it relates to the market as a whole. Beta is often calculated using regression analysis. A beta is basically the tendency of a security s returns to respond to swings in the market. A beta of 1 indicates that the security s price will move with the market. A beta of less than 1 means the security will be less volatile than the market. A beta of greater than 1 implies that the security s price will be more volatile than the market. This is often the last stage of a speculative bubble to a major rally. The blow off phase tends to be steep, but short-lived that often affords little opportunity for investors/traders to exit their positions. As price of a security or an asset advanced to an unsustainable level via a parabolic uptrend this give rise to the bursting of the speculative bubble resulting a quick and dramatic decline as investors/traders try to exit the market/security at the same time. A technical term indicating a downside resolution of a chart pattern. Its significance is determined by the same factors governing a breakout. A technical term indicating an upside resolution of a chart pattern. Breakouts can take many forms, and their degree of importance is determined by the significance of the chart pattern which preceded it. The Broadening top is a rare technical formation that resembles an inverted triangle pattern. It is formed by price swings that are increasingly widening and expanding volume. The most common of these broadening top patterns are the three ascending peaks and two descending troughs. The combination of wide price swings and increasing volume often convey an increasingly volatile and emotional market that's basically out of control. This pattern is often associated with market tops rather than market bottoms. The confirmation of the Broadening top occurs when the price violates the second of these two troughs. A chart pattern comprised of two parallel trend lines, which form a trading band. Channels take the form of uptrend, downtrend and horizontal. The opposite of a golden cross, this is a crossover on the chart resulting from a security s shorter-term moving average falling below its longer-term moving average. Technicians often see this as a bearish technical sign indicating the market has turned negative on the security. A trend line connecting successively lower peaks for a stock (or market). Its technical significance is determined by the same factors governing an uptrend line. Fan reversal pattern The fan formation is a technical pattern that is based on the use of multiple trend lines to denote a major trend reversal. The fan pattern gets its name as it basically resembles a fan. It should have a minimum of three trend lines (uptrends or downtrends). The break out/break down of the third downtrend/uptrend often completes the fan pattern and signals the start of a major trend reversal. The starting point of these trend lines should come from a significant peak or a significant trough. Fibonacci Retracement Level FSR Gap Golden Cross A technical analysis term used to describe potential areas of support (price stops declining) or resistance (price stops rising) on the charts. After a strong rally or decline there is a tendency for a security to retrace a certain portion of its prior move (up or down). Fibonacci retracements use horizontal lines to indicate areas of support or resistance at the key Fibonacci levels before continuing in the original direction. These levels are computed by taking the two extreme points and then dividing the vertical distance by the key Fibonacci ratios of 23.6%, 38.2%, %, 61.8% and %. Forecast Stock Return is defined as expected percentage price appreciation plus gross dividend yield over the next 12 months. An open space in a chart created when a stock (or market) opens either higher than its highest level attained during the prior session (referred to as a gap up or an upside chart gap) or lower than its lowest level reached during the prior day (called a gap down or a downside chart gap). Some gaps are caused by events and should be ignored: ex-dividend gaps, new share issues, and expiration of futures contracts. A crossover on the chart that involves a security s shorter-term moving average (such as the -day moving average) crossing above its longer-term moving average (such as the 1-day or 0-day moving average). Technicians often interpret this crossing of two moving averages as a bullish technical sign that suggests the market has turned in favour of the security. UBS CIO WM Research 13 April 15 26
Appendix Term / Abbreviation Description / Definition Head-and-Shoulders This technical formation is one of the best known of the reversal patterns. There are two types of head-and-shoulders patterns that Pattern often appear on the charts H/S top and H/S bottom. Both of these patterns often denote the process of a reversal either from a bullish or bearish trend. Head-and-shoulders formation often is comprised of a left shoulder, a head, and a right shoulder, and a line drawn across its shoulders defines its neckline. The breaking of the neckline to the upside confirms a head-and-shoulders bottom breakout, which signals the start of a bullish reversal favouring higher prices. The violation of neckline to the downside validates a head-and-shoulders top, reaffirming a bearish reversal of lower prices. Internal Trend Line A single trend line connecting at least several high and low points for a stock (or market) over time. Linear Regression Band Moving Average (m.a.) MRA Neckline Support/Resistance Overbought Oversold Positive/Negative Outside Day Relative Strength RRD Support Top Triangle Patterns A common statistical technique often used by investors/traders to better forecast values by utilizing the least squares fit method to plot a trend line. A linear regression band consists of upper and lower bands. These bands are calculated by computing the number of standard deviations above or below of the regression line. This is a technical indicator frequently used in technical analysis to show the average value of a security s price over a set period of time. This tool is designed to smooth out a stock s (or market s) shorter-term fluctuations to provide a better picture of an underlying trend. Moving averages generally are used to measure momentum and define areas of possible support and resistance. Moving averages can be helpful as they emphasize the direction of the dominant or prevailing trend and also tend to smooth out price and volume fluctuations, or noise, giving the trader or investor a clearer picture of the security in question. Many moving averages exist. Market Return Assumption is defined as the one-year local market interest rate plus 5% (a proxy for the equity risk premium and not a forecast). This is a trend line that is drawn across the bottoms or tops of the left shoulder, the head and the right shoulder of a potential headand-shoulders bottom or top pattern. When prices break through this neckline support level and continue falling after forming the right shoulder, it confirms a head-and-shoulders top formation. Conversely, neckline resistance is a trend line drawn across the tops of the left shoulder, the head and the right shoulder. When prices break above this neckline resistance level and keep on rising, it typically completes the head-and-shoulders bottom pattern. A technical condition in which the price of a security has risen to such a degree that the price becomes overvalued or has reached the upper band of its trading range resulting in a potential pullback in price. Opposite of Overbought. A technical condition that occurs when the price of a security has fallen to such a degree that the price becomes undervalued or has reached the lower band of its trading range prompting a potential rally. When one day s range (high and low) exceeds the prior day s range, and the stock (or market) in question closes near its daily peak, this is referred to as a positive outside day. A negative outside day would be recorded if the stock (or index) finished near its daily low after having a wider range than the prior session. The same rule can be applied on a weekly and monthly basis as well. Relative strength is a performance comparison between a sector, group, or stock and the S&P 0 Index over a specified time frame. Our time frame is often a one-, three-, and six-month basis but does vary according to investment orientation. Rating/Return Divergence is automatically appended to the rating when stock price movement has caused the prevailing rating to differ from that which would be assigned according to the rating system and will be removed when there is no longer a divergence, either through market movement or analyst intervention. An area where increased buying interest is likely to develop during a decline. These points, which can take several forms (minor, major, etc.), often provide downside protection for an issue in a primary uptrend, but only temporary relief to an issue in a primary uptrend, during which time many support levels are often broken. A chart pattern marking a period of distribution following an uptrend. The larger the top, the greater the downside potential following its completion. It, too, can take many forms. There are three different types of Triangle patterns Symmetrical, Descending and Ascending. Symmetrical Triangle is considered to be a continuation pattern that often signals a period of consolidation in a trend followed by a resumption of the prior trend. It is formed by the convergence of a descending trend and an ascending trend. An Ascending Triangle is a bullish pattern, which is denoted by two trend lines a flat trend line and an ascending uptrend line. A Descending Triangle is a bearish pattern. It is the opposite of the Ascending Triangle in that there is a flat trend line and a downward sloping downtrend line. UBS CIO WM Research 13 April 15 27
Appendix Statement of Risk Stock market returns are difficult to forecast because of fluctuations in the economy, investor psychology, geopolitical conditions and other important variables. Analyst certification Each research analyst primarily responsible for the content of this research report, in whole or in part, certifies that with respect to each security or issuer that the analyst covered in this report: (1) all of the views expressed accurately reflect his or her personal views about those securities or issuers; and (2) no part of his or her compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed by that research analyst in the research report. Required Disclosures For a complete set of required disclosures relating to the companies that are the subject of this report, please mail a request to UBS CIO Wealth Management Research Business Management, 1285 Avenue of the Americas, th Floor, Avenue of the Americas, New York, NY 19. Disclosures (13 April 15) Abbott Laboratories 1, 4, 6, 7, 9, 10, AbbVie 4, 9, 10, Accenture Plc 6, 7, 9, Actavis 9, Aetna Inc. 1, 2, 4, 5, 6, 7, 9, 10, 12, 13; Ameriprise Financial 1, 2, 5, 9, 10, 11, 12, Anadarko Petroleum 1, 3, 4, 6, 7, 9, 10, 12, 13; Apple Inc. 4, 6, 7, 9, 10, Applied Materials Inc. 6, 7, 9, Boeing Co. 1, 6, 7, 9, 11, Cisco Systems Inc. 1, 2, 6, 7, 9, 10, 11, 12, Colgate-Palmolive Co. 1, 6, 7, 9, 12, 13; Comcast Corp. (Cl A) 1, 9, 11, 12, 13; Delphi Automotive PLC 9, Dow Chemical Co. 2, 4, 6, 7, 9, 10, 11, General Electric Co. 2, 4, 5, 6, 7, 9, 10, 11, 12, Google Inc. 1, 2, 4, 6, 7, 9, 10, 12, Hilton Worldwide 1, 9, 12, 13; Intel Corp. 2, 4, 6, 7, 9, 10, 11, Invesco 2, 3, 4, 5, 6, 7, 9, 10, JPMorgan 1, 2, 4, 5, 6, 7, 9, 10, 12, 13; Kraft Foods Group Inc. 1, 4, 9, 10, 12, LAM Research Corp. 9, McKesson Corp. 9, Medtronic Inc. 1, 2, 4, 9, 10, 12, Merck and Co Inc 1, 2, 4, 5, 6, 7, 9, 10, 11, 12, MetLife 1, 2, 4, 5, 6, 7, 9, 10, 12, 13; Microsoft Corp. 1, 2, 4, 6, 7, 9, 10, 12, Mondelez International 1, 2, 5, 6, 7, 8, 9, 10, 12, 13; Nike Inc. 9, QUALCOMM Inc 2, 6, 7, 9, 10, Sandisk 9, SBA Communications Corp. 5, 9, Schlumberger 6, 7, 9, Southern Company 1, 6, 7, 9, 12, 13; Texas Instruments Inc. 6, 7, 9, Union Pacific 6, 7, 9, United Technologies Corp. 6, 7, 9, 11, VMware, Inc 6, 7, 9, 1. This company/entity is, or within the past 12 months has been, a client of UBS Securities LLC, and investment banking services are being, or have been, provided. 2. This company/entity is, or within the past 12 months has been, a client of UBS Securities LLC, and non-investment banking securities-related services are being, or have been, provided. 3. UBS AG, its affiliates or subsidiaries beneficially owned 1% or more of a class of this company's common equity securities as of last month's end (or the prior month's end if this report is dated less than 10 days after the most recent month's end). 4. This company/entity is, or within the past 12 months has been, a client of UBS Securities LLC, and non-securities services are being, or have been, provided. 5. UBS AG, its affiliates or subsidiaries expect to receive or intend to seek compensation for investment banking services from this company/entity within the next three months. 6. This company/entity is, or within the past 12 months has been, a client of UBS Financial Services Inc, and non-investment banking securities-related services are being, or have been, provided. 7. Within the past 12 months, UBS Financial Services Inc has received compensation for products and services other than investment banking services from this company. 8. UBS is acting as exclusive financial adviser to Mondelez International, Inc. on its announced acquisition of a majority stake in Kinh Do Corporation. 9. UBS Securities LLC makes a market in the securities and/or ADRs of this company. 10. Within the past 12 months, UBS Securities LLC has received compensation for products and services other than investment banking services from this company/entity. 11. The equity analyst covering this company, a member of his or her team, or one of their household members has a long common stock position in this company. 12. Within the past 12 months, UBS AG, its affiliates or subsidiaries has received compensation for investment banking services from this company/entity. 13. UBS AG, its affiliates or subsidiaries has acted as manager/co-manager in the underwriting or placement of securities of this company/entity or one of its affiliates within the past 12 months. UBS CIO WM Research 13 April 15 28