CIO Wealth Management Research 26 January 2016 Broader list 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. 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.
Table of Contents Ticker Name Page Ticker Name Page AMGN AMGEN INC 4 JNJ JOHNSON & JOHNSON 21 AMZN AMAZON.COM INC 4 KMB KIMBERLY-CLARK CORP 22 APA APACHE 5 KO COCA-COLA CO 22 AXP AMERICAN EXPRESS CO 5 LB L BRANDS INC 23 AZN ASTRAZENECA PLC 6 MCD MCDONALD'S CORP 23 BEN FRANKLIN RESOURCES INC 6 MHFI MCGRAW HILL FINANCIAL 24 BMY BRISTOL-MYERS SQUIBB CO 7 MMM 3M CO 24 BP BP PLC 7 MO ALTRIA GROUP INC 25 BRK.B BERKSHIRE HATHAWAY - CLASS B 8 MRK MERCK & CO 25 C CITIGROUP INC 8 NEE NEXTERA ENERGY INC 26 CAT CATERPILLAR INC 9 NSRGY NESTLE SA/AG 26 CELG CELGENE CORP 9 NVS NOVARTIS AG 27 COP CONOCOPHILLIPS 10 ORCL ORACLE CORP 27 COST COSTCOWHOLESALE CORP 10 OXY OCCIDENTAL PETROLEUM CORP 28 CPB CAMPBELL SOUP CO 11 PEP PEPSICO INC 28 CSX CSX CORP 11 PFE PFIZER INC 29 CTL CENTURYLINK INC 12 PG PROCTER & GAMBLE CO 29 CVX CHEVRON CORP 12 PM PHILIP MORRIS INTERNATIONAL 30 D DOMINION RESOURCES INC 13 RDSA ROYAL DUTCH SHELL PLC 30 DD DU PONT (EI) DE NOMOURS 13 SBUX STARBUCKS 31 DE DEERE AND CO 14 STJ ST JUDE MEDICAL INC 31 DEO DIAGEO PLC 14 T AT&T INC 32 DIS THE WALT DISNEY COMPANY 15 TEVA TEVA PHARMACEUTICALS 32 DOW DOW CHEMICAL 15 TGT TARGET CORP 33 DUK DUKE ENERGY CORP 16 TOT TOTAL SA 33 F FORD MOTOR CO 16 TRV TRAVELERS 34 FB FACEBOOK INC 17 UPS UNITED PARCEL SERVICE 34 GILD GILEAD SCIENCES INC 17 USB U.S. BANCORP 35 GIS GENERAL MILLS INC 18 V VISA INC-CLASS A 35 GSK GLAXOSMITHKLINE PLC 18 VOD VODAFONE GROUP PLC 36 HAL HALLIBURTON 19 VZ VERIZON COMMUNICATIONS INC 36 HD HOME DEPOT INC 19 WBA WALGREENS CO 37 HON HONEYWELL INTERNATIONAL INC 20 WFC WELLS FARGO 37 IBM INTL BUSINESS MACHINES CORP 20 WMT WAL-MART STORES INC 38 ITW ILLINOIS TOOL WORKS INC 21 XOM EXXON MOBIL CORP 38 UBS CIO WM Research 26 January 2016 2
Changes since last report Additions Name Ticker Technical Rating Changes Name Ticker Old New Berkshire Hathaway - Class B BRKB Bullish Neutral Citigroup Inc. C Bullish Neutral Halliburton Co. HAL Neutral Bearish Target Corp. TGT Bullish Neutral United Parcel Service UPS Neutral Bearish US Bancorp USB Bullish Neutral BANK OF AMERICA CORP (BAC) will be reviewed in the next edition of Technical Review of Stocks. The last update on these stocks was published on 23 December 2015. Going forward, our previously published ratings for all these stocks should not be relied upon. UBS CIO WM Research 26 January 2016 3
Amgen Inc. (AMGN) 1 1 1 1 1 1 1 +/- 2 127.67-130.09 114-115 1-162/165.2 173-175 181.81 Sector HealthCare Last Sale Price $153.43 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 130.09 or just above its Oct '14 low (127.67), 38.2% retracement (130.20) from its 2011-2015 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, key initial resistance is at the 1/4/16 gap down at 159.22-162.05/165.23. Key support is 127.67-130.09 or Oct '14/Sep '15 lows. Amazon.com Inc. (AMZN) 0 0 0 0 0 0 0 0 300 300 200 200 5-5 490-0 4-4 622-635 658-676/696 755-7 Sector C. Discretionary Last Sale Price $596.53 Rationale: The longer-term bullish trend starting from 2001 lows, breakout of multi-year accumulation pattern above low-s in 2010 and superior relative performance of the stock versus S&P 0 Index supports our technical Bullish rating. Despite gains of nearly 143% over the past year the 21.43% correction from its Dec '15 all-time high appears to a normal correction as this stock retains a bullish underlying trend. Although the Jan '16 gap at 658-676 may offer key initial resistance on rallies the ability to maintain the mid-0s can lead to the resumption of the primary uptrend. UBS CIO WM Research 26 January 2016 4
Apache Corp (APA) 1 1 31-32 26-28 20-21 36-37/-42 46-47 -51.5/56.31 Sector Energy Last Sale Price $37.43 Rationale: After declining 65.77% from Jul '14 high (104.57) a positive outside week on 10/2/15 along with Jul/Aug '15 downtrend breakout hinted of a potential bottom. After successfully testing key support near 35.79 or the bottom of its 2006 downtrend channel (not shown) a near-term oversold rally developed that quickly faded near key resistance in the low-to-mid s (23.6% retracement (52.02) from its Jul '14 to Oct '15 decline and the Jul '15 breakdown). The 10% decline in the New Year has now violated mid-30s and now suggests a major test of the May '03 breakout (32). American Express (AXP) 90 90 53-54 41-43 36-37 59-61/63-65 68-69/72.5-82 Sector Financials Last Sale Price $55.02 Rationale: Violation of the mid-s earlier in 2015 paints a weak intermediate term trend outlook and hence a defensive Neutral stance. A secondary breakdown below the high-s during Summer 2015 further reaffirms a medium-term head/shoulders top. A breakdown below the bottom of a falling wedge, Jun/Aug/Oct '13 and Aug/Oct '15 lows at - 71.5 warns of a decline to 61-63 (38.2% retracement from 2009-2014 rally and 2012 highs). A gap down on 1/4/16 and violation of key supports along the high-s to low-s (bottom of the 2010/2011 uptrend) now suggests 53-54. UBS CIO WM Research 26 January 2016 5
AstraZeneca PLC ADS (AZN) 35 35 30 30 25 25 20 20 29.5-30.5 28.2/26.75-27 25.09 32.5-33.1/34.9 36.69-38.28.-41.34 Sector HealthCare Last Sale Price $31.55 Rationale: AZN has completed a 4-year technical base breakout on a surge above 26-27 in late-2013. This breakout ignited a major rally that achieved several of our technical targets including 38-38. based on late-2013 breakout above 26.77. The May '14 rally to the low-s also met longer term resistance associated with the extension of the 1998/2006 trend line (not shown). Since the May 2014 peak a well-defined downtrend channel has developed between the low-30s (key support) and the mid-30s (key resistance). Initial supply is 32.5-33.1 or the Jan '16 gap down. Franklin Resources Inc. (BEN) 55 55 45 45 35 35 30 30 30-30. 29.24 28/26 36.5/38-38.5 41-42/45-45.5 48-49 Sector Financials Last Sale Price $32.53 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 45.9% from its Dec '14 high (58.91) as multiple key supports have been broken. A series of lower-highs and lower-lows suggest a return to the 2010-2011 lows at 28-30. Key initial resistance is at 37- or 10-week/30-week ma. A large trading range is likely between high-20s and high-30s. UBS CIO WM Research 26 January 2016 6
Bristol-Myers Squibb Co (BMY) 30 30 59-61 56.32-57.5 51.82/47.55 66-67.5-71.5/75.5 79- Sector HealthCare Last Sale Price 62.92 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 prevented a deeper correction and has ignited another rally. Having said that, a negative outside week on 12/18/15 followed by the Jan '16 gap down led to a sharp pull back of the stock price. Key initial support is 59-61 and then 56.32-57.5 or the Sep/Oct '15 lows. BP PLC ADS (BP) 55 55 45 45 35 35 30 30 26.75-27 25 +/- 0.5 23.1/21.2 31.5-33.5 35.5-37.5 43.5-44/47-48 Technical rating Bearish Sector Energy Last Sale Price $29.47 Rationale: This Energy name has fallen 48.48% from its May '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 37.5-38.5 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 26.75-27 or the Jun '10 low and bottom of 2014 channel. Initial supply is at 31.5-33.5 (10-wk/30-wk ma) and then 35.5-37.5. UBS CIO WM Research 26 January 2016 7
Berkshire Hathaway Inc. Class B stock (BRK.B) 1 1 130 110 90 1 1 130 110 90 125./122.72 116-119 108-110 130-135 141-144.5 151.63-152.94 Citigroup Inc. (C) Sector Financials Last Sale Price $124.13 Rationale. We recommend downgrading intermediate term technical trend in this Financial name to Neutral as a violation of the 2013 uptrend at 141-144 and a subsequent weekly death cross signal warn of a maturing trend. BRKB is headed towards another key test of support along 122.72-125.5 or the Aug/Oct '14 lows. Although the longer-term trend is still favourable and relative strength against SPX is positive a convincing violation of 122.72-125.5 would confirm a top and warn of a deeper setback towards 116-119 and below this to 108-110. Key initial supply is 135-1. 55 45 35 30 25 55 45 35 30 25 20 38.5-33.5-34 25-27 47-48 53-55 59-61 Sector Financials Last Sale Price $39.55 Rationale: Many of the S&P 0 Financial names have quickly succumbed to strong selling soon after the FED FOMC rate hike. We are concerned about the recent breakdown of the bottom of a well-defined 3-year trading range trend between the mid-s and the high-s. Last July's breakout above 59-61 may have been a false breakout and/or a bull trap as this financial name has quickly reversed direction falling below its breakout and the bottom of its trading range in the mid-s. We downgrade to a Neutral outlook as many of the financial names including C have deteriorated. 20 UBS CIO WM Research 26 January 2016 8
Caterpillar Inc. (CAT) 110 110 90 90 56-58 49-51 44-45 63-65 69-71 76-77.5/-81 Technical rating Bearish Sector Industrials Last Sale Price $57.91 Rationale: The violation of the pivotal 2010/11 uptrend (89-91) as well as key neckline support (79) confirmed a top. The 45.4% decline from Jul '14 high has created a new downtrend channel between the low-s and the low-s. A deeply oversold condition coupled with a daily island reversal on 10/5/15 led to a short-term oversold rally to mid-s before resuming its downtrend. Although oversold rallies are possible to mid-to-high s, a negative outside week pattern on 12/04/15 and two gap downs during Jan '16 warn of the continuation of the 2014 downtrend channel. Celgene Corp. (CELG) 1 1 20 20 99-101 92.98 83-87 110-112 -123 127-129/1.7 Sector HealthCare Last Sale Price $106. Rationale: We retain a technical Bullish stance on this Biotechnology name as long as it maintains above its 2012 primary uptrend (low-s). The recent Jul-Aug '15 decline (-34%) warns of a waning bull trend as a head/shoulders top is developing. Mixed technical signals are also developing as the relative strength (vs SPX) has been good over the past year but a weekly death cross sell signal as well as a gap down on 1/4/16 warns of further volatility. Initial support resides along its 2012 uptrend at 99-101 and then 92.98 (Aug '15 lows). Key initial resistance is 110-112 and -123. UBS CIO WM Research 26 January 2016 9
ConocoPhillips (COP) 90 90 32-33 29-30 26.01-41 45-46/-51 53.5-56.5 Technical rating Bearish Sector Energy Last Sale Price $34.20 Rationale: The S&P 0 Energy sector suffered a major sell-off of -49% from its 2014 high (739). COP also declined 62.44% from its Jul '14 high 739. A 2-year head and shoulder top breakdown below at 59-61 led to a sharp decline towards next support at 41.10 (8/24/15) or its 76.4% retracement (.43) from its 2009-14 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 (32) may trigger a technical rally to the low-to-mid s. Costco Wholesale Corp. (COST) 1 1 1 1 1 1 145 135-1 -125 154-158 164/169.73 174-176 Sector Cons. Staples Last Sale Price $1.78 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 159-1 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 135-1. Key resistance is at 154-158. UBS CIO WM Research 26 January 2016 10
Campbell Soup Co. (CPB) 55 55 45 45 35 35 30 30-51/7-48 44-45 41-42/38-39 55.08-57 59-62.88 Sector Cons. Staples Last Sale Price $54.61 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 correction back to its prior breakout. Nonetheless, we remain optimistic on the stock based on its 11/20/15 positive outside week, gap up on 11/24/15 and the Nov '15 positive outside month pattern. Initial support lies at -51/47-48 (Nov '15/Jan '16 lows). CSX Corp. (CSX) 35 35 30 30 25 25 20 20 22-22.5 20/18.88 17.69 24. +/- 0.10 26-27/30.53 31.9/33-34 Sector Industrials Last Sale Price $21.97 Rationale: A sharp rally from 2013 to early 2014 faltered near its all-time high of 37.99 on Nov '2014. As the broad market (SPX) set new highs in May '15 a lower-low pattern soon developed on CSX at 37.67. 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 extension of the 2011 ascending triangle breakout at 24.47 (Aug '15 low). Next support is 22-22.5 and then 20-18.88. Key initial resistance is mid-to-high 20s. UBS CIO WM Research 26 January 2016 11
CenturyLink Inc. (CTL) 45 45 35 35 30 30 25 25 21.15 20.45 19.10/17 25/27-27.5 29.2-29.5 32.5-33.5 Sector Comm. Services Last Sale Price $23.76 Rationale: CTL has violated the bottom of its 5-year downtrend channel along the mid-20s. A weekly death cross sell signal CTL earlier in 2015 has transitioned this stock into an even steeper decline as evident by the 52% decline from its 2014 highs. Although an extremely oversold condition is developing the recent breakdown below key support in the mid-20s warn of further downside to 20.45 to the 2008 low before a firmer bottom is confirmed. Key initial resistance is at 25-27 or the 10-wk and the 30-wk moving averages. A breakout here would help to stabilize the recent selling. Chevron Corp (CVX) 130 110 90 130 110 90 Sector Energy 75 69.58/66.83-61 95-97 -102 109-112 Last Sale Price $.89 Rationale: Violation of the bottom of its 2011 uptrend channel at 116-117 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 134.10 Jul '14 highs) to Aug '15 low of 69.58. An extremely oversold condition coupled with a successful test of major support at.55 (61.8% retracement from 2003-2014 rally) triggered a technical rally to 98.64 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 26 January 2016 12
Dominion Resources Inc. (D) 75 65 55 45 75 65 55 45 64.54-62 54-56 74-76.5-81 86-87 Sector Utilities Last Sale Price $69.56 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 and then to the mid-s. The recent market weakness may have triggered a flight to safety as classic defensives names like D outperformed SPX. I2/18/16 and 1/22/16 positive outside week patterns bodes well for a rally. E.I. DuPont de Nemours & Co. (DD) 75 65 55 45 75 65 55 45 35 51-54.5 47-49.5 +/- 2 65-67/72 69-71 75.72-76.61 Sector Materials Last Sale Price $52.99 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 Jan '16 gap down hints of the onset of a trading range between the low-s and the mid-s. 35 UBS CIO WM Research 26 January 2016 13
Deere and Co (DE) 95 90 85 75 65 95 90 85 75 65-71 69.51/-62 53-54 -82 86.39-90.37 97-98 Sector Industrials Last Sale Price $71.88 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 71.85 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 sell-off and the prior trend line breakdowns. Failure to breakout here coupled with 12/11/15 negative outside week suggests a range bound trading environment between low-s and low-s. Diageo PLC ADS (DEO) 130 130 110 110 90 90-101 98. 93.12/87.5 109-112 118-122 127-130 Sector Cons. Staples Last Sale Price $104 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 2009-2013 rally. Despite the relief rally from Aug '15 low (.59), the broader market weakness coupled with the inability of the stock breakout suggests the continuation of its 2013 downtrend channel between +/- 2 and +/- 2. UBS CIO WM Research 26 January 2016 14
The Walt Disney Co (DIS) 20 20 90 86 78.54 103-105 107-109.65-122.08 Sector Cons. Disc. Last Sale Price $95.29 Rationale: The broad market correction during Jul-Aug '15 led to a sharp pullback towards the bottom of its 2011 uptrend near 90-91 triggering a technical rally into year-end rally. However, failure to clear the top of its 5-year channel at -122 quickly led to another correction that has now broken the bottom of its uptrend channel. However, it has managed to maintain above its Aug '15 low (90) preventing a deeper setback. An oversold condition coupled with a gap up on 1/22/16 hint of a rally to 103-105 or the 1/4/16 gap down and above this to 107-109 or the 10/30-wk ma. Dow Chemical Co. (DOW) 55 45 35 30 25 20 55 45 35 30 25 20 Source: FactSet, UBS CIO WMR as of 25 January 2016-41 35.11 30-32 48-53-55 57-59 Sector Materials Last Sale Price $42.18 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 35.11 (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 warn of another test of support at -41 and below this to 35.11. UBS CIO WM Research 26 January 2016 15
Duke Energy Corp. (DUK) 90 85 75 65 55 90 85 75 65 55 64-65.5 62.5 58.5-59.63/56 75.29-77.53 79-81 84-85/89.87 Technical rating Bearish Sector Utilities Last Sale Price $71. Rationale: 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. In addition, a negative outside month on Aug '15 and a 2-year head/shoulders top warn of further downside risks to the mid-s. The ability to find support at 64-65.5 may ignite another rally to the left/right shoulders near the mid-s (75-77.5). Ford Motor Co (F) 20 20 18 18 16 16 14 14 12 12 10 10 8 8 10.44-11 9.71 8.82 13-13.5 14.5-15/16.74 18.02-18.12 Sector C. Discretionary Last Sale Price $11.98 Rationale: A potentially large technical base has developed over the past 14-years (not shown). However, repeated failures to clear above long-term resistance at 18-19 still suggest F is not ready to breakout and hence our Neutral outlook. The decline to 10.44 during Aug '15 broad market correction and the ensuing failed rally to key resistance at 15.5-16 have now created a well-defined downtrend channel. The continued relative underperformance of F to SPX coupled with the Jan '16 break down now suggest another key of the bottom of the channel and Aug '15 low (10.44). UBS CIO WM Research 26 January 2016 16
Facebook Inc. (FB) 20 20 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 '16 89-90 -82-72 99-103-104.5 108-111 Sector Technology Last Sale Price $97.01 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. A breakout above the Jul '15 record high (99.3) and above the top of its 2013 uptrend channel (104-105) led to a new all-time high of 110.65 (Nov '15). However, a Jan '16 gap down hints of a consolidation between 89-90 and 108-111. Gilead Sciences Inc. (GILD) 20 20 86-87 77-78.5 63. -101/105 109-111 113-117/123.4 Sector HealthCare Last Sale Price $90.61 Rationale: GILD rallied 94.28% from its Apr '14 low (63.5) recording a record high of 123.37 on Jun '15. An overbought condition has led a consolidation between the mid-s or the Dec '14/Aug '15/Jan '16 lows and 117-123 or the Oct '14/Jun '15 highs. Similar to many Biotechnology names a large broadening top as well as a head/shoulders top have developed. Failure to maintain key support at 86-87 confirms neckline breakdown and would force a technical downgrade. Key initial resistance is -105 or the Jan '16 gap down, 2015 downtrend and 10-wk/30-wk ma. UBS CIO WM Research 26 January 2016 17
General Mills Inc. (GIS) 55 55 45 45 35 35 53.5-54 51-51.5 47-48/41-41.5-61 65-66 69-71 Sector Cons. Staples Last Sale Price $54. 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 53.5-54 or the 2012 uptrend and the Jun/Jul '15/Jan '16 lows. The bottom of the 2013 channel at 51-51.5 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. GlaxoSmithKline PLC ADS (GSK) 55 55 45 45 35 35 37.24 36/34 32.15 41-42 43.5-45.5 48- Technical rating Bearish Sector HealthCare Last Sale Price $39.68 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 37.24 (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 36-37.24. UBS CIO WM Research 26 January 2016 18
Halliburton (HAL) 30 30 26.28-27.64 24.27 21.10 35-37.5-41/44-45 47.5-48/-51 Technical rating Bearish Sector Energy Last Sale Price $29.2 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 35-37.5 (10/30-wk ma) and above this to -41 (top of wedge). Home Depot (HD) 1 1 20 20 111-113.59 104-107.5 96/90 130-135 143-144 149-1/156 Sector C. Discretionary Last Sale Price $121.71 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 130-135 and above this to 143-144 HD may be vulnerable for a correction to initial support at 112-113.59 or Oct '15/Jan '16 lows and below this to 104-107.5 or the 2011 uptrend and % retracement from 2011-2015 rally. Key initial resistance is at 130-135 or the 10-wk ma and prior Nov '15 highs. UBS CIO WM Research 26 January 2016 19
Honeywell International Inc. (HON) 110 90 110 90 89-91.5 87/82-83 74-76 107-110 116-118.5 129-131 Sector Industrials Last Sale Price $96.48 Rationale: A 13-year breakout at 63/69 during the late-2012/early-2013 (not shown) renders targets to 102-103 and then to 118.5. HON has achieved the first of the two targets (102-103) during last summer's rally to 107.41 and is now consolidating its gains between the high-s and the low-s. The Aug '15 negative outside month warns of a potential head/shoulders top pattern. Key neckline support is at 89-91.5 or the Oct '14 uptrend. Violation here confirms a major technical breakdown and signals a deeper correction. Initial supply is at 107-110 or near its 2015 highs. International Business Machines Corp (IBM) 220 210 200 190 1 1 1 1 1 220 210 200 190 1 1 1 1 1 130 116-118 104 97-99.5 132-135 141-145 153/1-179 130 Sector Technology Last Sale Price $122.08 Rationale: The strong selling has again resumed as IBM has now fallen 45% 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 122.5-125.5. 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 97-99.5 offer additional support. An oversold condition can trigger a technical rally to key initial resistance at 132-135/141-145 (10/30-wk ma). UBS CIO WM Research 26 January 2016 20
Illinois Tool Works Inc. (ITW) 78.79-79.15 76.25/71-72 63/59-/ 89-90 93-95 -105 Sector Industrials Last Sale Price $81.05 Rationale: A breakout of multi-year accumulation pattern above 59- in late-2012 (not shown) renders upside target to 93.5. 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 76.25-79.06 prevented a deeper correction. However, this may have created a large head/shoulders top pattern. Key neckline support resides near the mid-to-high s and key resistance is 89.5/95 or the left/right shoulders (Jun '14/Dec '15 highs). Johnson and Johnson (JNJ) 94-95 90-91/85.5-86 -82/73-75 -102.5 104.5-105.5 109/116- Sector Healthcare Last Sale Price $96. Rationale: A large multi-year technical base breakout above the low-to-mid s achieved our technical target of the low-110s during Nov 14 (109.49). Soon after, an overbought condition coupled with a weekly death cross sell signal and a descending triangle breakdown warned of a correction. After declining 24% to 81.79 (Aug '15) a strong technical rally attempted to retest its prior all-time high. However, the Jan '16 gap down now warns of another consolidation to initial support at 94-95. Violation here renders downside to the low-90s/mid-s. Key supply is -102.5/105. UBS CIO WM Research 26 January 2016 21
Kimberly-Clark Corp. (KMB) 116-119 108 +/- 2-102/87.64 130/134-138 144-145 152-155 Sector Cons. Staples Last Sale Price $122.69 Rationale: We retain a technical Bullish view on KMB as the primary uptrend channel (101-106 and 128-130) from 2008 remains intact. However, failure to clear above the top of its channel coupled with a recent 1/8/16 negative outside week now hint of consolidation over the near-to-medium term. Key initial support is at 116-119 or the Oct '15 breakout as well as the 30-week ma. Secondary support resides along 108 +/- 2 and then -102 or the bottom its uptrend channel. A breakout its prior high at 130 renders upside to the mid-130s and then the mid-1s. Coca Cola Co (KO) 39-41 35-36 31.-32/30 45-46 -51 54-55 Sector Cons Staples Last Sale Price $42.16 Rationale: We retain a Neutral outlook as this important consumer staples name remains confined to a wellestablished 3-plus year trading range between mid-to-high 30s on the downside and mid-s on the upside. A recent weekly golden cross buy signal is positive. However, a convincing move above 45-46 or Nov '14/Oct-Dec '15 highs and top of the channel confirm a breakout and warrant an upgrade. Key support is at 39- or the Aug/Dec '14, Mar/Jun/Jul '15 and Jan '16 lows and the 30-week ma. The mid-30s or the bottom of channel remains major support. UBS CIO WM Research 26 January 2016 22
L Brands Inc. (LB) 88.43-88.48 86-87.11/81.93 75.11/64.5-67 -102 108-110 116-116. Sector C. Discretionary Last Sale Price $95.27 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 medium to long-term technical Bullish outlook. However, a negative outside month on Apr '15 and a subsequent negative outside week on 10/23/15 warn of a consolidation over the near-term. Despite the 21.6% setback from its Apr '15 highs the ensuing rally from its Aug '15 low of 75.11 not only recouped all of its prior losses but established new record highs of 101.11 in Nov '15. A convincing move above 101.11 signals the next rally. McDonald s Corp (MCD) 104.25-108.38-102/95.78 87.5-90/83.31 125-126 132-133 1 Sector C. Discretionary Last Sale Price $119.20 Rationale: We retain a technical Bullish rating on this Restaurant name. A convincing surge above 105-107 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 125-126 (near-term), 132-133 (intermediate-term), and then 1 (longer-term term). More recently, a positive outside week on 12/4/15 and 12/18/15 suggest higher prices. Initial support moves up to as high as 104.25-108.38 or the 10/22/15 gap up, the prior major breakout, 30-week ma and the Nov '15 lows. UBS CIO WM Research 26 January 2016 23
McGraw Hill Financial Inc. (MHFI) 84.572.5-75.5 68-63-65 93-93.5 96.5-98.5 101/107-109 Sector Financials Last Sale Price $83.8 Rationale: Trading 72. during Oct '13 confirmed a major technical breakout rendering upside target to 127-128. 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. A positive outside week on 11/06/15 triggered a rally that stalled near -101. Two gap downs in Jan '16 at 96.5-98.5 and 93-93.5 (key resistances) warn of another correction to major support at 72.5-75.5 or the Oct '13 breakout, 38.3% retracement from 2009-2015 and % retracement from 2013-2015 rally. 3M Co (MMM) 131-134 119.5-123.61 107.5/97-97.5 143-143.5 148.5-1.5 153-154/161 Sector Industrials Last Sale Price $137.57 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) have led to a rally towards key resistance at 1. However, failure to breakout coupled with a potential head/shoulders top as well as 3 gap downs in Dec '16/Jan '16 (low-1s to mid-1s) warn of a major test of neckline support at 131-134. UBS CIO WM Research 26 January 2016 24
Altria Group Inc. (MO) 55-56/52-52.5 47.31-47.41 44 +/- 0.5 / -62 65-67 -72 Sector Cons Staples Last Sale Price $58. 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 56-56.5 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 a potential positive outside month (Jan '16) hint of higher price. 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 55-56 or the prior breakout as well as the 10-mo and /30-wk ma. Merck & Co (MRK) 45.5-47 -41 36-37 55 +/- 1-61.7 63-64/71-72 Sector Healthcare Last Sale Price $.92 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 warn of selling. The 10/16/15 positive outside week pattern helped to stabilize the selling but a negative outside week pattern (12/4/15) and failure at mid-s suggest a test of key support at 45.5-47 or the Aug '15 low, 2009 uptrend and 38.2% retracement of 2009-2015 rally. UBS CIO WM Research 26 January 2016 25
NextEra Energy Inc. (NEE) 93.74-96.31 90 +/- 0.5 82.5-84/74 105.87-106.79 113/118-119 122/128 Sector Utilities Last Sale Price $106.42 Rationale: We retain a Bullish technical outlook on NEE as evident by a breakout of multi-year accumulation pattern above 73.75 or the 2008 highs. However, a 4-year broadening top pattern warns of a maturing trend. The stock suddenly reversed direction after making a high of 112.64 on Jan '15. Soon after, a gap down during Aug '15 as well as a negative outside month has broken the bottom of its 2011 uptrend channel. However, the Dec '15 positive outside month and the recent 1/8/16 positive outside week suggest a major test of support at 94-96 (Dec '14/Sep '15 lows). Nestle S.A. ADS (NSRGY) 68.5 63.38-65.79/63-61/55 73-74/79-84-86 88-90 Sector Cons. Staples Last Sale Price $71.28 Rationale: After rallying to all-time highs at 79.93-79.99 (June '14/Apr '15) a triangle pattern has developed between the mid-s and the high-s. A breakout above 79-81 still renders upside to the mid-to-high, over time. On the downside, recent violation of key support near the low-s (2009 uptrend) and the Jan '15/Jan '16 lows as well as a Jan '16 gap down warn of a correction to 68.5 or the 23.6% retracement from 2009-2014 rally and below this to the Jun/Sep '13 and the Oct '14 lows (63.38-65.79). Additional support is at.97 or the 38.2% retracement. UBS CIO WM Research 26 January 2016 26
Novartis AG (NVS) 78-79/-72.5 64-65 -62 86.84/88.49-91 95-96/98-101 103.5/106.84 Sector HealthCare Last Sale Price $81.62 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 106.84 (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 98-101 warn of a top/trend reversal and hence our technical Neutral stance. NVS has fallen 26.3% in the past 26 weeks and is now testing next key support at 78-79 (% and 38.2% retracements from 2012-2015 and 2009-2015 rallies) and below this to -72.5 (61.8/% retracements). Oracle Corp. (ORCL) 33-34 29.5-30.25 25-26 37-38/-41 43-44.37 46.71/-52 Sector Technology Last Sale Price $34.34 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 test of its prior breakout levels (36.) and top of 2011 ascending triangle pattern. A gap up on 10/5/15 triggered a technical rally to the low-s solidifying a head/shoulders top. The Jan '16 gap down warns of a decline to 33-34 and below this to 30. 37-38 is key initial supply. UBS CIO WM Research 26 January 2016 27
Occidental Petroleum Corp. (OXY) 56-58 -52 45-46/38-39 68-74-75/77-78 82.5-83.75 Technical rating Bearish Sector Energy Last Sale Price $61.79 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 can trigger a technical oversold rally to key initial resistance at 68- or the 10-wk/30-wk ma and above this to 74-75 or the top of wedge and 38.2% retracement from 2014-2016 decline. Pepsico Inc. (PEP) 90-92 85-87.5/78-75-76.5-103.5 107-108 111-112/116 Sector Cons Staples Last Sale Price $95.94 Rationale: A surge above 79.79 during Apr '13 confirms a multi-year breakout and renders upside targets to as highs as 135-136, longer-term. On a medium term basis, the 31% rally from Feb '14 lows resulted in a record high of.7 (Nov '14) prompting an overbought condition and the current consolidation between low-90s and low-s. Although the Aug '15 negative outside month hints of another technical base, two gap ups during Oct '15 set marginally new highs at 103.44. Nonetheless, a 12/11/15 negative outside week and Jan '16 gap suggests a test of support at 90-92. UBS CIO WM Research 26 January 2016 28
Pfizer Inc. (PFE) 27.12-28.47 24.5-25 23.5/22 33/36-36.5 39-42-44/48- Sector Healthcare Last Sale Price $30.56 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 1999-2009 decline. Although the Jul '15 positive outside month pattern is constructive, a 21.9% decline from its Jul '15 high has created a potential head/shoulders top pattern. Key neckline support is visible at 27.12-28.47. A decisive breakdown confirms a top and warns of a decline to the low-to-mid 20s. Key resistance is at 33 or the Mar '14 high (left shoulder) and the 30-wk ma. Procter & Gamble Co (PG) 72-74 65-67.33-62/54-55 79.5-81 82.5-83 86-87/93.89 Sector Cons. Staples Last Sale Price $75.85 Rationale: A failure to sustain a breakout above the top of its 15-plus year uptrend channel (not shown) in the low- 90s and deteriorating relative strength (SPX) signal a correction. A subsequent death cross sell signal during Mar '15 and the Jul '15 negative outside month led to a 31% decline from the Dec '14 highs. However, the stock found support near the bottom of the 2010/11 uptrend channel near key support at 65-67 and is attempting to form a base. A Jan '16 gap down suggests a trading range is between 72-74 and 81-83, near-term. Above 83 confirms a recovery. UBS CIO WM Research 26 January 2016 29
Philip Morris International (PM) 83-85 81-81.5/75-78 -72 90-92 95-97 -102 Sector Cons Staples Last Sale Price $88.68 Rationale: This Consumer Staples name retains its longer term bullish uptrend dating back to 2008/09. Although the 04/19/15 gap up and the Apr '15 positive outside month are encouraging, the increased volatility during Aug/Sep '15 sends a mixed technical signal. The ability to maintain key support in the mid-s prevented a deeper correction. More recently, 12/18/15 positive outside week pattern and triangle breakout above the mid-s can lead to a retest of 96.73 or its (2013) all-time highs. Trading above prior 2013 highs signal the resumption of its primary long-term uptrend. Royal Dutch Shell PLC ADS Cl A (RDSA) 38.43-39.72 35.5-35.98 30-32/23-24 45-47/.5-51 54-55/59-61 65.25-67.38 Technical rating Bearish Sector Energy Last Sale Price $39.51 Rationale: RDSA has also declined in sympathy with its energy peers falling 57.44% 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 1996. 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) suggests a technical rally to 45-47 (10-wk ma and the 23.6% retracement from 2014 decline) and above this to.5-54 (30-wk ma and the 38.2% retracement). UBS CIO WM Research 26 January 2016 30
Starbucks Corp. (SBUX) 55-57 -52/45-46 -42 59-61.5 63-64/ 76-77 Sector C. Discretionary Last Sale Price $57.71 Rationale: We retain a Bullish technical outlook on SBUX as long as it maintains above the top of its 2009/2012 uptrend channel (mid-s) and its 10-mo ma (57). Although SBUX has corrected 14.161% from its Oct '15 highs (64) the ability to maintain above key support in the mid-s coupled with a positive outside day (1/22/16) can trigger another technical rally to key initial resistance at 59-61.5 or the 1/4/16 gap down, Oct '15 downtrend, Jul/Aug '15 and Jan '16 highs. A breakout signals a retest of its prior all-time high of 64. Below 54.94 suggests downside to low-s/mid-s. St. Jude Medical Inc. (STJ) 54-55.5 52.17/48-48.5 42-45 59-61/64-65 68-69/71.74 75.73/-81 Sector HealthCare Last Sale Price $54.16 Rationale: The Oct '13 10-year breakout above the mid-s and the Apr '15 breakout above 69 render an upside target to 85. The strong 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 pattern warns of a correction to major support in the mid-s. Violation of 52-55 warns of a deeper correction to mid-to-high s. An oversold condition can lead to a rally back to 59-61 and above this to 64-65. UBS CIO WM Research 26 January 2016 31
AT&T Inc. (T) Support Levels 31-33 27-28 23.-24 35.5-37 39-42.97/47.5 Teva Pharmaceutical Industries Ltd. ADS (TEVA) Sector Comm. Services Last Sale Price $35.00 Rationale: We maintain a technical Neutral stance on AT&T as the stock remains confined to a 3-yeardowntrend channel since 2012 (low-30s and mid-30s) as we as a large symmetrical triangle since 2002-2003 (23-24 and 36-37). Multiple moving averages cross overs confirms the continuation of the downtrend. The ability to find support near low- 30s during Aug-Sep '15 downturn has produced another rally to key resistance at 35.5-37. Above this supply zone confirms a breakout. However, below 31-32 confirms a breakdown and suggests next downside to mid-to-high 20s. -62 54.17-54.59 47.36-48.35 66-67/72.31 76-76. Sector HealthCare Last Sale Price $63.17 Rationale: We remain optimistic on TEVA based on a longer-term basis due to its breakout of a large symmetrical triangle dating back to 2011. A successful move above its previous all-time highs established on March 2010 (above 64.95) extended the rally towards 72.31 (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 above key support in the mid-s now suggests a consolidation to key initial resistance at 66-67 and above this back to its record high 72.31. UBS CIO WM Research 26 January 2016 32
Target Corp (TGT) 68.15 65 58-71-7275-76 78.-.17 85.81/91-92 Sector C. Discretionary Last Sale Price $68.92 Rationale: A major technical breakout in late-2014 above its prior 2007/2013 all-time highs at.67-73.5 ignited a sharp rally to new record highs at 85.81 (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 22.6% correction from Jun '15 highs may deepen as a negative outside week (1/8/16) and a negative outside month (Jan '16) warn of a potential top. We recommend moving to a Neutral outlook as a breakdown below 66.46 can lead to a decline to 61-62. Total S.A. ADS (TOT) 39-37./35-35. 28.58-30 44.64/47-49 52./55-56.5-62.5 Technical rating Bearish Sector Energy Last Sale Price $41.34 Rationale: We maintain a defensive technical stance on this Energy name but believe a deeply oversold condition can lead to a sharp but unsustainable oversold rally. Since the 2007-2008 global financial crisis 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 44.5-47 or the 10-wk/30-wk ma and above this to low-to-mid s (right shoulders). A break below 39- could extend sell-off to 35-37.5 and possibly to 28.5-30 to retest its 2001-2003 lows. UBS CIO WM Research 26 January 2016 33
Travelers (TRV) 99-95.21-97.18 88.81-90.83 110.5-113 116.5/125-126 132-135 Sector Financials Last Sale Price $102.08 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 substantiate a technical Bullish view. However, the Aug '15 negative outside month as well as a large Jan '16 gap down hint of a consolidation. Initial support is evident along 99- or the 2014 uptrend and below this to 95-97 or the 2015 lows. Key initial resistance lies at 110.5-113 (Jan gap down). Closing of the Jan gap down allows for a retest of its all-time high (116.48 - Nov '15). Trading range is now likely between 97 and 113. United Parcel Service (UPS) 87.30/84-85 79-81/76-77 67-69 92-96 99-105-107/114.4 Technical rating Bearish Sector Industrials Last Sale Price $89.42 Rationale: We recommend downgrading this Air Freight name to Bearish stance as the violation of a large 2-year head/shoulders top pattern, monthly death cross sell signal and breaking of its 2009 uptrend channel in the low-to-mid 90s warn of an intermediate term top. This breakdown renders a downside target to 84-85 or the 38.2% retracement from 2009-2015 rally and the 2006 highs. Below this support triggers a deeper setback to 79-81 and then to 76-77 or the % retracement and 2012 breakout. Key challenge is to clear above its prior breakdown in the low-to-mid 90s. UBS CIO WM Research 26 January 2016 34
US Bancorp (USB) 37-38 35-36/31-32 27.5-28.5 39-39.5/41-43 41-43 45-46 Sector Financials Last Sale Price $38.29 Rationale: 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. However, an overbought condition developed during late-2014 and into early- 2015. In addition, multiple gap downs during Aug '15 correction warn of a top. 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 41.82-42.65 and on 1/7/16 at.78-.81 confirms a top and we recommend moving to a Neutral technical outlook. Visa Inc Cl A (V) 67-69 -61 54-56 74-76/77.5-81 98- Sector Technology Last Sale Price $71.74 Rationale: The longer-term primary trend starting from 2008-09 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 and the Jan '16 gap down hints of the start of a consolidation to initial support at 67-69 (Sep '15/Jan '16 lows and 2014/2015 uptrend). A breakdown here suggests downside risks to the low-s. The 10-wk/30-wk ma at 75.81/74.41 provides key initial resistance on technical rallies. UBS CIO WM Research 26 January 2016 35
Vodafone Group PLC ADS (VOD) 29.33 28.63/27.49 24.84 31-32/34.5-35 37.5-39.5 41.58-42.14 Sector Comm. Services Last Sale Price $30.99 Rationale: A large ascending triangle pattern (not shown) and a triangle pattern signal a major battle between the bulls and bears. A breakout above 38-39 can lead to major test of resistance coinciding with the 2007/2014 highs (41.58-42.14). A weekly death cross sell signal coupled with Aug '15 negative outside month has triggered a correction that violated the bottom of its triangle at 31-32 confirming a breakdown. Nonetheless, a deeply oversold condition coupled with an island reversal (1/22/16) suggests a technical rally to the low-to-mid 30s before another downturn. Verizon Communications Inc. (VZ) 43-45/41-42 36.8-38.06 34/32.28 47.23-48..86-51.73 53.66-54.31 Sector Comm. Services Last Sale Price $47.03 Rationale: A multi-year breakout above 2007 highs (43.01) in late-2012 suggests an upside target to 64-65, longerterm. However, the stock rallied only to 43.31 in 2013 before entering into an extensive consolidation between the low-to-mid s and the mid-s for the past 2-plus years. The Oct '15 positive outside month and the 11/20/15, 12/4/15, 12/18/15 and 1/22/16 positive outside weeks now offer technical signs of higher prices. A breakout above 47.23-48.5 can ignite a rally. Failure to maintain thelow-s may trigger a deeper correction to the mid-to-high 30s. UBS CIO WM Research 26 January 2016 36