Update 1 March 2018 CIO Wealth Management Research 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 Praveen Dodda, 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 32. 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 AAPL APPLE 4 KO COCA-COLA CO 16 ABBV ABBVIE INC 4 MCD MCDONALD'S CORP 17 ABT ABBOTT LABORATORIES 5 MDLZ MONDELEZ INTERNATIONAL INC 17 ACN ACCENTURE 5 MDT MEDTRONIC INC 18 AMGN AMGEN INC 6 MMM 3M CO 18 AMZN AMAZON.COM INC 6 MO ALTRIA GROUP INC 19 BA BOEING 7 MRK MERCK & CO 19 BAC BANK OF AMERICA 7 MSFT MICROSOFT INC 20 BMY BRISTOL-MYERS SQUIBB CO 8 NKE NIKE INC 20 BRK.B BERKSHIRE HATHAWAY - CLASS B 8 OXY OCCIDENTAL PETROLEUM CORP 21 CELG CELGENE CORP 9 PEP PEPSICO INC 21 CPB CAMPBELL SOUP CO 9 PFE PFIZER INC 22 CSCO CISCO SYSTEMS INC 10 PG PROCTER & GAMBLE CO 22 CVS CVS CAREMARK CORP 10 PM PHILIP MORRIS INTERNATIONAL 23 CVX CHEVRON CORP 11 SBUX STARBUCKS 23 DIS THE WALT DISNEY COMPANY 11 SLB SCHLUMBERGER LTD 24 FB FACEBOOK INC 12 T AT&T INC 24 GE GENERAL ELECTRIC CO 12 TXN TEXAS INSTRUMENTS INC 25 GOOGL ALPHABET INC 13 UPS UNITED PARCEL SERVICE 25 HD HOME DEPOT INC 13 UTX UNITED TECHNOLOGIES CORP 26 HON HONEYWELL INTERNATIONAL INC 14 V VISA INC-CLASS A 26 IBM INTL BUSINESS MACHINES CORP 14 VZ VERIZON COMMUNICATIONS INC 27 INTC INTEL CORP 15 WFC WELLS FARGO AND CO 27 JNJ JOHNSON & JOHNSON 15 XOM EXXON MOBIL CORP 28 JPM JPMORGAN CHASE & CO 16 The last update on these stocks was published on 1 February 2018. Going forward, our previously published rating for these stocks should not be relied upon. UBS Chief Investment Office Americas, Wealth Management 1 March 2018 2
Changes since last report Additions Ticker Name Technical Rating Changes Name Ticker Old New CELGENE CORP CELG Neutral Bearish JOHNSON & JOHNSON JNJ Bullish Neutral Deletions Ticker Name UBS Chief Investment Office Americas, Wealth Management 1 March 2018 3
Apple Inc (AAPL) 1 1 1 1 40 169-171.5/165-166.5/150-154 142-145.5/135 1.10/189-191/203-205 209-211 40 Sector Technology Last Sale Price $175.50 Rationale: The Feb '17 breakout above 134.54 quickly achieved its measured technical target at 1 (near-term). Although higher prices to 189-191 (medium-term), and then to 203-205/209-211 (intermediate-term) are possible overtime, an overbought condition coupled with a negative outside month (Jan'18) may lead to a consolidation on failed attempts to breakout above 1.10. Initial support moves up to 169-171.5 (10-wk ma and 2/15/18 gap up). Secondary support also rises to 165-166.5 (30-wk ma and Oct '17 breakout). The Feb '18 lows at 150-154 remain pivotal intermediate-term support. AbbVie Inc (ABBV) 40 40 110-111/101-103/96-98 85-87/72-76 125.86/130-131/136-137 144-145 Sector Healthcare Last Sale Price $118.75 Rationale: We retain a Bullish technical outlook on this name based on the continuation of the intermediate-to-longer-term uptrend. Higher prices to 130-131 and above this to 136-137 are possible, over time. However, an overbought condition has developed into the sharp 177% rally from the Oct'15 lows (45.45), prompting a near-term consolidation. Key initial support resides along 110-111 (10-wk ma) and then near 101-103 (Feb '18 lows). Secondary support is also available at 96-98 or the 30-wk ma and the Jan '18 breakout. A breakout above 125.86 signals the next major rally toward 130-131 and136-137. UBS Chief Investment Office Americas, Wealth Management 1 March 2018 4
Abbott Laboratories (ABT) 65 55 50 45 40 35 65 55 50 45 40 35 30 54-56/50-51 47-48/44-45 37-39 -61/64. 67-68 73-74 30 Sector Health Care Last Sale Price $59.71 Rationale: Technical breakouts including the Jun '17 ascending triangle breakout above 46-47 and a subsequent Sep '17 breakout above its 2015 highs (51-52) have quickly achieved a few of its medium term targets along the low-to-mid s (Jan '18). Although higher prices to 67-68 are still possible based on its measured technical target as well as the top of its 2013/2014 channel repeated failures to clear above the low-to-mid s can lead to a trading range between 54-56 (30-wk ma/feb '18 lows) and the low-to-mid s (prior Jan/Feb '18 highs). The Sep '17 breakout at 50-51 remains major support. Accenture PLC (ACN) 1 1 1-162.5/149-151/145-146.5/-141 166-167 175-167 1-181 Sector Technology Last Sale Price $162.95 Rationale: ACN has recently emerged from its well-defined uptrend channel dating back to 2008/2009 timeframe via a breakout above 136-137. In the process, three negative outside weeks (i.e., 6/24/16, 3/24/17 and 6/23/17) have been negated, as ACN transitions toward an accelerated move to -143 (near-term, achieved), 154-158 (medium-term, achieved), 166-167 (intermediate-term), and 175-177/1-181 (longer-term). Initial support is visible at 1-162.5 (10-wk ma/feb '18 breakout) and below this to 149-151 (Feb '18 lows/jun '17 uptrend). 145-146.5 (30-wk ma) remains medium-term support., UBS Chief Investment Office Americas, Wealth Management 1 March 2018 5
Amgen Inc. (AMGN) 200 200 1 1 1 1 178-179/166-168/155-1 150-152 191/196-197 201.23/210-212/216-218 Sector HealthCare Last Sale Price $186.67 Rationale: A breakout above 182-184 (Sep/Oct '17) still hints of the emergence from a 3-year technical basing effort between 130- (key support) and 182-184 (key resistance). The ability to maintain above the Sep '17 rally high (191) suggests technical targets to 196-197/201 (near-term, achieved) and 210-212 (medium-term). However, failure to follow through with the breakout, coupled with a negative outside week (2/2/18) warns of a consolidation to initial support at 168-169 (Nov '17 and Feb '18 lows) and below this to 166.5 (Aug '17 lows). Key resistances remain visible at 191.10 and then 197-201.23. Amazon.com Inc. (AMZN) 1,0 1,400 1,200 1,000 0 0 400 200 1,0 1,400 1,200 1,000 0 0 400 200 0/1363 1266/1215-1225/1155 1530-1540 1575-15 1730-1740 Sector C. Discretionary Last Sale Price $1,500.00 Rationale: The two-year uptrend channel breakout in Nov '17 above the top of its channel (1,150-1,1) coupled with the recent breakout above the late-nov '17 highs (1,213.41) are technically significant as this signals the next major rally to 1,390-1,400 (nearterm, achieved), 1,4-1,470 (medium-term, achieved), 1,530-1,540/1,575-1,5 (intermediate-term), and 1,730-1,740 (longterm). The trend has steepened sharply in recent months suggesting the 50-day ma now rising at 1,363 may be the closest key near-term support. The Feb '18 lows at 1,265.93 and the top of uptrend channels at 1,215-1,225 provide key secondary support. UBS Chief Investment Office Americas, Wealth Management 1 March 2018 6
Boeing (BA) 350 350 300 300 250 250 200 200 150 150 50 312-328/300 290-295/277-279/262 361.45 400-410 400-410 50 Sector Industrials Last Sale Price $356.66 Rationale: This leadership Industrial name continues to record all-time highs as the relative strength (vs SPX) and the price momentum (MACD) indicators show no signs of slowing. The recent breakout above 361.45 hints of a rally to 400-410. Although higher prices are still possible, the 262% rally from Feb'16 lows (102.1) places this stock at overbought levels, suggesting a consolidation phase. However, it needs to violate its 10-wk ma (338) to trigger a correction to 317-320 (top of 1-year channel and 10-wk ma) and below this to 286-297 (bottom of channel and 30-wk ma). Bank of America Corp (BAC) 30 30 25 25 20 20 15 15 10 10 30.5-31/28-29/27-27.5 25/22-22.5 32-33/35 37/38.5-39.5 41-42.5 Sector Financials Last Sale Price $32.03 Rationale: A recent triangle breakout above the mid-20 (25) has triggered a strong rally that achieved many of our technical targets. Although an overbought condition is developing into this rally, higher prices are still possible to 35-37 (mediumterm), and then to 38.5-39.5/41-42.5 (longer-term). On a near-term basis, failure to sustain above 32-33 (top of its Aug/Sep '17 uptrend channel), negative outside day (2/2/18), and a prior 2008 breakdown level warns of a consolidation to key initial support at 30.5-31 (10-wk ma/bottom of Aug '17 uptrend). Key secondary support is 28-29 (Feb '18 lows/30-wk ma). UBS Chief Investment Office Americas, Wealth Management 1 March 2018 7
Bristol-Myers Squibb Co (BMY) 75 70 65 55 50 45 40 35 75 70 65 55 50 45 40 35 62-63/58-59 51.5-52.5 49/46-47 69-71 75-77 79.25-81 Technical rating Neutral Sector HealthCare Last Sale Price $67.95 Rationale: The 40.34% setback from Jul '16 to Jan '17 has led to an important bottom near 46.91 (Jan '17). A subsequent triangle breakout above 58 (Aug'17) led to a rally that temporarily stalled near 66.10 (Oct '17). This sets the stage for the recent 1-year uptrend channel between 58-59 (key support) and 69-71 (key resistance). On a near-term basis, a positive outside month (Feb '18), improving RSI, coupled with a breakout above 71 would warrant a technical upgrade. A confirmed breakout renders technical targets to 75-77/79-81. Key supports: 62-63/58-59 (10/30-wk ma). Berkshire Hathaway Inc. Class B stock (BRK.B) 220 200 1 1 220 200 1 1 203-206/189-192/176-181 161-167 217.62/227-230/234-236 246-248 Sector Financials Last Sale Price $202.76 Rationale: This leadership financial name has broken out of an 18-year internal trend line above 168 (Mar '17). This breakout and a subsequent 2-plus year accelerated channel breakout above 203 (Jan '18) render next technical targets toward 217-220 (near-term), 227-230 (medium-term), 234-236 (intermediate), and 246-248 (long-term). The 76% rally from the Feb '16 lows (123.55) has led to an overbought condition. Failing to surpass the top of the 2013 uptrend at 225-227 coupled with a negative outside week (2/2/18) warns of a consolidation to 203-206 (10-wk ma) and then 189-192 (Feb '18 lows/30-wk ma). UBS Chief Investment Office Americas, Wealth Management 1 March 2018 8
Celgene Corp. (CELG) 1 1 40 40 88.32/83-84 74-75/66-67 59-61/57-102/111-114/118-119 125-127/133 Technical rating Bearish Sector HealthCare Last Sale Price $95.61 Rationale: The Sep '17 breakout above.72 (Jul '15 highs) abruptly stalled at 147.17 as a negative outside week (10/6/17), negative outside month (Oct '17), and gap downs (10/20/17 and 10/26/17) confirm a false breakout. Although the magnitude of the current 4-month -40% decline resembles the -34% setback during Aug '15 the duration and the onset of a negative outside month (Oct '17) are disconcerting. Violation of 93-95 validates of a top and forces a technical downgrade to Bearish. Below 88.32(2/9/18 low) renders downside to 74-75 (68.2% retracement from 2012-2017 rally) and then 66-67/57-61. Campbell Soup Co. (CPB) 70 65 55 50 45 40 35 70 65 55 50 45 40 35 Technical rating Neutral Sector Cons. Staples 43-44 41/38.3 35-36/30-31 48/50-51 54-56/58-59 63-64 Last Sale Price $44.12 Rationale: The 37% decline since Jul '16 highs (67.89) has created an oversold condition. This decline is nearing a critical stage as the 2009/2011 uptrends are residing near 43-44. The ability to maintain above this key support can trigger an oversold rally to key initial resistance at 48/51 or the Feb '17 downtrend, Feb '18 highs, and the 30-wk ma. A breakout here is required to solidify a bottom allowing for a recovery to the low-to-mid 50s. However, a convincing close below 43-44 confirms a major trend reversal (to the downside) opening the door for the next decline toward the mid-to-high 30s and then 30-31. UBS Chief Investment Office Americas, Wealth Management 1 March 2018 9
Cisco Systems Inc (CSCO) 45 45 40 40 35 35 30 30 25 25 20 20 40-41/35-37 30-31/29.12 26-27/22.5-23 45-47 50/54-55 58.5-59/64.5 Sector Technology Last Sale Price $44.00 Rationale: The Nov '17 surge above major resistance at 35-36 is technically significant as this confirms a 1-year ascending triangle as well as a 7-year channel breakout. This breakout suggests upside technical targets to 43 (near-term, achieved), 45-47/50 (medium-term), and then to 54-55/58.5-59 (intermediate-term). This tech name continues to record new highs on the backdrop of favorable relative strength (vs SPX) and price momentum. Key initial support moves up to as high as 40-41 (10-wk ma/nov '17 uptrend). Key secondary support is visible along 35-37 (30-wk ma and the Nov '17 ascending triangle breakout). CVS Caremark Corp. (CVS) 110 90 70 50 110 90 70 50 66.45-67.31 58-45-47/43 75-76/84-86 91-93/97-99 104-107 Technical rating Neutral Sector Cons. Staples Last Sale Price $68.16 Rationale: Technical damages occurred during the 41.53% decline from Aug '15 to Nov '17 (113.65 to 66.45). The ability to find support near its 50% retracement from the 2008-2015 rally (68.42) coupled with a positive outside week on 11/10/17, prompted a sharp oversold rally. However, this technical rally failed to clear key resistance at 84-86 (2017 highs and 50% retracement from its 2016-2017 decline). An ensuing negative outside week (2/2/18) now warns of another test of the Nov '17/Feb '18 lows (66.45/67.31). A breakdown here suggests a decline to the high-50s to the low-s. UBS Chief Investment Office Americas, Wealth Management 1 March 2018 10
Chevron Corp (CVX) 130 110 90 70 130 110 90 70 Technical rating Neutral Sector Energy 108-109 101.75-103 98-99/94 118/124 134/138-141 147-150 Last Sale Price $112.59 Rationale: After declining 48.5% from 2014-2015, this energy name have found key support at 69.58 (Aug '15) prompting a strong oversold rally that has cleared several key resistances. However, it failed to clear key supply residing in the mid-to-high 130s or near the Jul '14 all-time highs as well as the convergences of a previous rising wedge. An island reversal (Jan'18), weakening RSI and failing to clear this supply led to a sharp decline toward 108 (extension of the Sep'15 uptrend). Failure to maintain this support suggests a decline to the low-s (50% retracement from its 2015-2018 rally and Aug'15 uptrend). The Walt Disney Co (DIS) 110 90 70 50 110 90 70 50-102/96-98 90-90.5/86.25 75-78.54/64-66 109/113-116 -122/132-135/149-152 Technical rating Neutral Sector Cons. Disc. Last Sale Price $107.25 Rationale: A large 3-year symmetrical triangle continues to take shape between 96-98 and 113-116. A negative outside month (Aug '17) and negative outside weeks during 10/13/17 and 3/2/18 warn of further sideways trading before a technical breakout and occur over the near-to-medium term. Nonetheless, a convincing breakout above 113-116 renders technical targets to - 122 (2015 all-time highs) and above this to 132-135/149-152. However, a convincing violation of the bottom of the triangle at 96-98 confirms a top and opens the door for downside risks toward the low-90s and below this to the mid-s (2016 lows). UBS Chief Investment Office Americas, Wealth Management 1 March 2018 11
Facebook Inc. (FB) 200 1 1 40 20 200 1 1 40 20 171-172/167 161.56/155-157/143-146 184-186/192-195/199-203 210-213 Sector Technology Last Sale Price $183.29 Rationale: A triangle breakout in Jul '13 above the low-to-mid 30s led to a steeper uptrend channel between 145 and 166. A subsequent Apr '17 breakout above 146 confirms a 3-plus year uptrend channel breakout and the start of a potential new channel between 172-173 and 192-195. Although higher prices are possible to 192-195 (near-term), 199-203 (medium-term) and 210-213 (intermediate-term), the 21% rally from its Sep'17 lows (161.56) has created a moderately overbought condition. Initial support is 171-172. Secondary support is 167.18 (Feb '18 lows) and 161.56 (Sep '17 lows). General Electric Co (GE) 30 30 25 25 20 20 15 15 14.02-14.23 13.75/12.16 11.6/10.5/5.73 15.23/15.8-16 17-17.5/18.5 19-20/21.25 Technical rating Bearish Sector Industrials Last Sale Price $14.49 Rationale: The breakdown below 28-29.5 (2009 uptrend) confirmed a major top and suggests the start of a bear trend. Deteriorating relative strength (vs SPX) and weak price momentum (MACD) led to violations of the Nov/Dec '17 lows (17.25-17.46). Nonetheless, a deeply oversold condition triggered a technical rally to key resistance at 19.5 or to the prior Aug '15 reaction low. However, a negative outside month (Jan '18) triggered another sharp sell-off a low of 13.95 (Feb '18). A negative outside week (3/2/18) warns of downside to 13.75-12.16 (Jul '10 lows and 76.4% retracement from 2009-2016 rally). UBS Chief Investment Office Americas, Wealth Management 1 March 2018 12
Alphabet Inc (GOOGL) 1,200 1, 1,000 900 0 700 0 500 400 1,200 1, 1,000 900 0 700 0 500 400 300 0-1037/978 935-945/915-925/873-875 1169-1198 1275 1345 300 Sector Technology Last Sale Price $1,128.09 Rationale: This leadership technology name continues to outperform its peers as evidenced by the 5-year uptrend channel. A breakout above 1,085 (Dec '17) still renders technical targets to 1,198 (near-term-achieved), 1,275 (medium), and then to 1,345 (intermediate). However, a negative outside week (2/2/18) warns of a near-term consolidation before the resumption of its primary uptrend. This trading range alleviates an oversold condition and helps to establish the technical base for the next sustainable rally. The trading range is 1,000-1,037 (2016 uptrend/30-wk ma) and 1,169-1,198 (2/1/18 gap down/jan '18 all-time highs). Home Depot (HD) 220 200 1 1 220 200 1 1 175-179/168-170/159-162/144-147 193-195/207.6 210-212 227/239-240 Sector C. Discretionary Last Sale Price $188.35 Rationale: The channel breakout above 172 (Nov '17) and the breakout above 191 (Dec '17) still renders technical targets to 208-212 (near-term, achieved), 227 (medium-term) and then to 239-240 (longer-term). However, on a near-term basis, an overbought condition coupled with a negative outside week (2/2/18) warns of a consolidation to key support along 175-179 (Jul '17 uptrend, top of 2015 uptrend channel and 30-wk ma). The ability to find support here signals a near-term technical rally toward its key initial resistance at 193-195 (10-wk ma) and above this to its all-time highs at 207.61 (Feb '18). UBS Chief Investment Office Americas, Wealth Management 1 March 2018 13
Honeywell International Inc. (HON) 1 1 1 1 148-150/139-144/135/127-128/119-122 158-1/165.1 170-175 179-1 Sector Industrials Last Sale Price $155.12 Rationale: The breakouts on Feb '17 (119-), on Apr '17 (129-130), and on Oct '17 (143) still render technical targets to 147-153 (2009 uptrend channel breakout target-achieved), and then 164-166 (recent Oct '17 channel breakout targetachieved). However, an overbought condition, negative outside week (2/2/18) coupled with recent violation of Nov '16 uptrend (155-157) warn of a consolidation to key initial support at 148-150 (30-wk ma/bottom of 2016 uptrend channel). Violation here warns of a deeper correction to 139-144 (38.2% from 2016-2018 rally and top of the 2014 uptrend chan- International Business Machines Corp (IBM) 220 220 200 200 1 1 1 1 144.4/139- /131-132 123/117-159-163/170-174/179-182 193-196 Technical rating Neutral Sector Technology Last Sale Price $155.52 Rationale: A gap down (4/19/17), rising wedge breakdown (169-170), weekly death cross sell signal (May '17) and a triangle breakdown (Jul '17) have triggered a 24% correction during 2017. The ability to find support near 139-142 (61.8% retracement from its 2016-2017 rally) coupled with a gap up (10/18/17) hints of a recovery to key resistance along 170-174 or to the top of its Apr '17 gap down (170). A flat relative strength (vs SPX) and a flat MACD trend support the basis for the continuation of a trading range between 139- and 170-174 over the near-to-medium term. Below 139 (Aug'17 lows) suggests 131-132/117-123. UBS Chief Investment Office Americas, Wealth Management 1 March 2018 14
Intel Corp (INTC) 42-43 38-39/36.3 34.5-35/33.23 50.85-51.5 59-61/72.5-73.75/75.81 Sector Technology Last Sale Price $47.73 Rationale: This semiconductor name has confirmed a major 16-year technical base breakout as well as a bullish 3-year ascending triangle pattern on a surge above key resistance at 38-39. A subsequent large gap up during 10/30/17 (41.58-43.10) renders upside 46-47 (near-term-achieved), 51.5 (medium-term), 59-61 (intermediate-term), and 72.69-73.75/75.81 (longer-term). On a near-term, an overbought condition coupled with failure to surpass 51.5 may led to a pullback to 42-43 (30-wk ma and Dec '17/Jan '18 lows). Violation of support here extends the decline to 38-39 (Oct '17 major breakout). Johnson and Johnson (JNJ) 123-122 115/109-110 106/96/94.28 137-139/144 148.32/152-154/167-169 Technical rating Neutral Sector Healthcare Last Sale Price $132.02 Rationale: This leading healthcare name has confirmed a rising wedge pattern via breakdown below 136-137. This has led to a sharp correction of 17.6% from its Jan '18 high (148.32) to Feb '18 low (122.15) and forces a technical downgrade to a Neutral intermediate-term outlook. Although the longer-term trend is still bullish, a negative outside month (Jan '18), weakening relative strength (vs SPX) and deteriorating price momentum now suggest a trading range is likely between 123-125 (2015 uptrend and the 38.2% retracement from 2015-2018 rally) and 137-139 (10-wk/30-wk ma and the recent breakdown). UBS Chief Investment Office Americas, Wealth Management 1 March 2018 15
JPMorgan Chase & Co (JPM) 110-113/102-104/94-96 88-89/82-83 119.33 122-124 133-135 Sector Financials Last Sale Price $117.31 Rationale: This leading financials name has broken out above key resistances including the top of its 2012/2013 uptrend channel (low-s), above 94-95 (Mar/Jul '17 highs) and 106-107 (top of its 2015/2017 channel). These breakouts render upside targets to 115-116 (near-term, achieved), 119.33 (achieved), 122-124 (medium-term), and then 133-135 (long-term). A moderately overbought condition coupled with failure to clear convincingly above 119-124 may lead to a pullback to 110-113 (10-wk ma) and below this to 102-104 (30-wk ma Feb '18 lows) and then to 94-96 (Nov'17 lows/sep '17 breakout). Coca Cola Co (KO) 42-43 39-40 36-37 46-47/49-50 53-54 57-59 Sector Cons Staples Last Sale Price $44.04 Rationale: The rally from the Dec'16 lows (39.88) has surpassed key resistances at 46-46.5 (Jun'16 /Jul'17 highs), 47.13 (Apr'16 highs) but abruptly stalled in Jan '18 at 48.62, coinciding with the extension of the 2013/2016 uptrend (49-50). The ability to clear this supply would reinforce the rally to mid-to-high-50s (medium-term). Violation below 42-43 (Feb '18 lows/2015 uptrend) warns of a deeper correction to 39-40 (2017 lows) and below this to 36-37 (2013/2014/2015 lows and 38.2% retracement from 2009-2018 rally). Key resistances remains at 46-47 (10-wk/30-wk ma/ 2016/2017 highs) and 49-50. UBS Chief Investment Office Americas, Wealth Management 1 March 2018 16
McDonald s Corp (MCD) 156/153.9-154 148/144.5 136.5/126.5 166-168 179-1/186 193-195 Sector C. Discretionary Last Sale Price $163.06 Rationale: The breakout above May '16 high at 131.96 in Apr '17 quickly met its targets at 164-165 (medium-term, achieved) and 169-170 (intermediate-term, achieved). Failing to clear above the top of its 2015-2016 uptrend channel coupled with violations of its 10-wk/30-wk ma (168/166), negative outside month (Jan'18), and negative outside week (2/2/18) warn of a correction to key support at 152.5-154, coinciding with Sep'17 lows and 38.2% retracement from its 2016-2018 rally. Breakdown here suggests downside to 144.5/136.5 (50-61.8% retracement from 2016-2018 rally). Mondelez International Inc (MDLZ) 41.82-42/39.19 36-37/33.97 31.83-32 46.54 47.23-47.42/49 55-59 Sector Cons. Staples Last Sale Price $43.75 Rationale: A major base breakout in Mar 13 above 28.76 confirms a long-term bullish trend. Since then MDLZ has progressed higher until recording a new all-time high during Jul '14 (39.54) and again during Aug '15 (48.58). A positive outside month (Jan '18) and a weekly golden cross buy signal hint of a potential breakout above 48.58 (2015 highs). However, recent failure to breakout now warns of a pullback to the low-40s (30-wk ma and late-2016/2017 lows). A flat relative strength (vs SPX), a flat price momentum (MACD) and a Neutral sector suggest another trading range is likely between the low-40s and the high-40s. UBS Chief Investment Office Americas, Wealth Management 1 March 2018 17
Medtronic Inc. (MDT) /76.5-77.5 70-71 69.35/65.50 84/89.72-90 93-95/97 102-103/110 Technical rating Neutral Sector HealthCare Last Sale Price $.39 Rationale: Although the longer-term trend is still favorable the rally from the Jan '17 lows has stalled near 89.72 coinciding with the Jul '16 highs. Deteriorating relative strength (vs SPX) and negative outside week (2/2/18) led to an 11.8% correction from Jan'18 highs (87.93) to its Feb'18 lows (77.56). Over the medium term, we can expect a neutral trading range between the midto-high 70s and the high-s/low-90s. A breakout above 90 renders upside targets to 95-97 (top of its 2015/2016 uptrend channel). On the other hand, violation below 76.52 (Oct '17 lows) warns of risks to high-s to low-70s (Jan '17/ Dec '16 lows). 3M Co (MMM) 218-220/213-215/197-200 181-182 240-245/259-2/266-267 2-283 Sector Industrials Last Sale Price $237.02 Rationale: This Industrials leader has trended higher on the backdrop of strong relative strength (vs SPX) and price momentum (MACD). The breakout above its Jun '17 high (214.57) renders technical targets to 250-2 (medium-term, achieved), 266-267 (intermediate-term), 2-283/297-298 (long-term). An overbought condition, coupled with failure to clear above the top of its uptrend channel and violation of its 10-wk ma (240) warns of a consolidation to 218-220/227 (Oct '17 breakout and 30-wk ma). The bottom of 2015/2016 uptrend channel at 213-215 is also key support. UBS Chief Investment Office Americas, Wealth Management 1 March 2018 18
Altria Group Inc. (MO) 63/59-53-55/51 46-48 66-68/70-74 76.5-77.8 84-86 Technical rating Neutral Sector Cons Staples Last Sale Price $64.59 Rationale: The rally from the Oct'16 lows has stalled near 77.79 corresponding to the top of its 2-plus year uptrend channel. A subsequent island reversal (12/19/17) and a recent negative outside week (1/26/18) triggered a decline to Oct '17 lows (63). A breakdown below 59- (Jul/Sep '17 lows) confirms a 2-year head/shoulders top pattern and suggests downside risks to 53-55 (Feb '15 highs and 38.2% retracement from its 2009-2017 rally) and below this to 51 (2011 uptrend) and 46-48 (2009 uptrend, 50% retracement and 2015 lows). Key initial resistance is 66-68 (10-wk/30-wk ma) and 70-74 (left/right shoulders). Merck & Co (MRK) 53.63-53.36 50-51 46-48 57-59/63.8-64 64.5-65 66-67/70 Technical rating Neutral Sector Healthcare Last Sale Price $54.87 Rationale: Two large gap downs during Oct '17 led to a test of its key intermediate-term support at 54-55, coinciding with the extension of its 2009/2011/2015/2016 uptrend and the 61.8% retracement from 2015-2017 rally. The oversold technical rally failed to clear above key resistance in the mid-s (Sep '17 highs) resulting in another decline to retest its Nov '17 lows (53.6). The ability to hold onto this support may led to a trading range between the mid- 50s and the low-to-mid s. However, violation of 53.36 is bearish as this confirms a top and opens the door for a decline to the low-50s (extension of the 2014/2015 downtrend). UBS Chief Investment Office Americas, Wealth Management 1 March 2018 19
Microsoft Inc. (MSFT) 90-91/83-84 -81/75-77 68.4/65-66 96/-101 105-106 115-116 Sector Technology Last Sale Price $94.06 Rationale: This leading technology name has outperformed SPX over the past year as evidenced by strong relative strength (vs SPX) and price momentum (MACD). The technical breakout above its Jan/Aug '16 highs at 57-59 have met its technical targets at 74-75 (near term, achieved), low-to-mid s (medium term, achieved) and then 90-91 (intermediate, achieved). Although higher targets to -101, 105-106 and then 115-116 are possible over time, an overbought condition and negative outside day on 2/27/18 warns of a consolidation to 90-91 (10-wk ma) and below this to 83-84 (30-wk/Feb '18 lows). Nike Inc. Cl B (NKE) 65-66/62/59- /55-57/53 50-51/45-46 68-70/72-73 76-77 -83 Sector C. Discretionary Last Sale Price $68.16 Rationale: After a 2-plus year consolidation, this leading Consumer Discretionary name has broken out above its 2015 downtrend in the high-50s. This breakout reverses the downtrend and signals a rally to mid-to-high s (achieved), coinciding with the extension of the 2013 uptrend and 2015 highs (achieved). A breakout above 68-70 renders upside technical targets to 72-73 (near-term), 76-77 (medium-term), -83 (intermediate-term) and 87-89 (longer-term). Initial support rises to 64-65 (10-wk ma/dec'17 high). Secondary support is visible near 59- (30-wk ma, Aug '16 high and Dec '17 breakout). UBS Chief Investment Office Americas, Wealth Management 1 March 2018 20
Occidental Petroleum Corp. (OXY) 63-65 57.2-58/54-54.5/48-49 68-70/73-74 78-78.5/85-87 91-93 Technical rating Neutral Sector Energy Last Sale Price $68.32 Rationale: This energy name has managed to find support along the high-50s or near its 76.4% retracement (57.20) from its 2008-2011 rally and the 2016/2017 lows. A large fan breakout at 63-65, coupled with a weekly golden cross buy signal triggered a rally to key resistance at 73.5 (Dec '16 highs/76.4% retracement) and 75.6-78.5 (Oct '16/Sep '16 highs). Failure to breakout here has triggered a consolidation back to key initial support at 63-65 (extension of 2014 downtrend breakout and 2015 lows). The ability to find support here suggests a trading range between the low-to-mid s and the mid-to-high 70s. Pepsico Inc. (PEP) 105-106/98.5- /92-93.25 90.4/ 86.75 115-116/122.5 125-127/135-136/139- Sector Cons Staples Last Sale Price $109.68 Rationale: This consumer staples name retains its 8-plus-year uptrend channel and hence our favorable technical outlook. However, failure to surpass 123-124 (extension of its 2014/2016 uptrend channel) in Aug '17 and again in Jan '18 warn of another consolidation back to the bottom of its uptrend channel (106-108). The ability to find support here can lead to another rally to key initial resistance along the convergence of the 10-wk/30-wk ma (116/115) and above this to -122.5 (2017/2018 highs). Violation of key support at 106-108 (bottom of its uptrend channel) confirms a top and warns of UBS Chief Investment Office Americas, Wealth Management 1 March 2018 21
Pfizer Inc. (PFE) 33.2/31.7-32/29.83-30 27.25-28 37.4/39.43 45/49-50 53 Sector Healthcare Last Sale Price $36.26 Rationale: A weekly golden cross buy signal (09/22/17) coupled with a breakout from the triangle pattern (34) triggered a technical rally to 37-39. Although higher prices to 43-44 (near-term) or the top of the uptrend channel and above this to 49-50 (medium-term) and then 53 (longer-term) are possible, a moderately overbought condition has developed resulting in a consolidation to key support at 33-34 (trend lines) and below this to 31.7-32 (Jun'17 lows and the Feb '16 uptrend). The ability to maintain above 31.74 may contain the selling and lead to another rally toward the high-30s. Procter & Gamble Co (PG) 78-/74-75 71-72 67.3/65.02 85-87/89-90/93-95 97-99 Technical rating Neutral Sector Cons. Staples Last Sale Price $81.05 Rationale: An uptrend channel between the low-to-mid s and the mid-90s has developed over the past two years. The ability to maintain above the mid-s during Nov '17 setback has prompted a rally back to key resistance along 94-95 (Dec '14/Sep '17 highs). A negative outside week (01/26/18) and a weekly death cross sell signal (1/26/18) have led to a violation of key support in the mid-to-high s. This technical action confirms a top and warns of the start of a deeper correction to 78- and below this to the low-to-mid 70s (61.8-76.4% retracement from 2015-2017 rally). UBS Chief Investment Office Americas, Wealth Management 1 March 2018 22
Philip Morris International (PM) -101/95-97/87-89 75-78 108-110/115 119/123.55 129/135-138 Sector Cons Staples Last Sale Price $106.11 Rationale: The 42.4% rally from its Dec '16 lows has created an overbought condition coupled with a weekly death cross sell (09/29/17) led to the decline to 101.6 (61.8% retracement from 2016-2017 rally). The ability to find support along -101 has triggered an oversold rally to key initial resistance at 108-110 (30-wk ma). Failure to breakout warns of a pullback to 95-97 (pivotal 2015 uptrend). Violation here is negative as this signals the next decline to the low-to-mid 90s. A breakout above 110 can strengthen the recovery toward 119.4 (Sep '17 high) and above to 123.55 (Jul '17 high). Starbucks Corp. (SBUX) 55-56/52.5/50-51/46-46.5 41-42 58/61.94-62.5 64-64.87 70-71/74-75 Technical rating Neutral Sector C. Discretionary Last Sale Price $56.14 Rationale: The rally from the low 50s suddenly stalled in Jun '17 near 64.87 coinciding with Oct '15 highs (64) and the top of its uptrend channel (65). A subsequent negative outside month (Jun '17) led to a sharp 18.9% correction from its Jun'17 high (64.87) to its Aug'17 low (52.8). An oversold condition developed near the low-50s triggered a rally to 61.94. However, a negative outside week (01/26/18) and failure to breakout warns of weakness. A breakdown below 55-56 (bottom of its uptrend channel) and below 52.5 (Nov '16/Aug '17 lows) confirms a top and signals a trend reversal to the downside. UBS Chief Investment Office Americas, Wealth Management 1 March 2018 23
Schlumberger Ltd (SLB) 63.37/61.02 59./54-55 51.67-53 71/.35/82 84.3/87.84/90-92/94-95 Technical rating Bearish Sector Energy Last Sale Price $66.50 Rationale: An island reversal (4/17/17), weekly death cross sell signal (Mar'17) led to violate the key support in the mid-70s. The ensuing 30.5% correction from the Jan '17 high (87.84) found support at 61.05, coinciding with its Jan'16 reaction low (59.). The rally after breaking out 67.68(Nov'17 highs) has stalled at.35 (Apr '17 highs) resulted in an island reversal (01/26/18). This action led to breach support of 74 (Sep'16 lows) extending the correction to the low-s and below this to a crucial retest of its Jan'16 reaction low (59.). Key resistance is visible along 71(10-wk ma) and.35 (Jan '18 highs). AT&T Inc. (T) Support Levels 35/33.7 32.5/31 29.95/27.3 39.3-39.8/40-41/43-44 47.5/50-51 Technical rating Neutral Sector Comm.Services Last Sale Price $36.72 Rationale: Negative outside weeks (1/6/17, 3/24/17 and 4/28/17) coupled with an island reversal (6/16/17) led to a 25.8% correction from Jan'17 high (43.03) to its Nov '17 low (32.55). A weekly death cross sell signal (05/19/17) coupled with gap downs (10/06/17 and 10/12/17) triggered a sharp decline to its Nov '17 low (32.55). An oversold condition developed into the lows-30s prompted an oversold rally to high 30s. A flat relative strength (vs SPX) and flat MACD trend suggest another trading range is likely to develop between the low-to-mid 30s and the high-30s to the low-40s, over the medium term. UBS Chief Investment Office Americas, Wealth Management 1 March 2018 24
Texas Instruments Incorporated (TXN) 96-997/94.72 93/91.25 85-86//76 114-119.75/132-133/142-143 Sector Technology Last Sale Price $107.04 Rationale: This semiconductor name has basically recovered all of its 2000-2002 declines, returning to its Mar '00 highs (99.78). The breakout above 99- has achieved a number of targets, including the 103-105 (near-term) and 110-112 (medium-term). However, an overbought condition, a negative outside week (01/26/18) coupled with a large gap down (1/24/18) promptly lead to a consolidation to key support at 96-99 (Dec '17 breakout, 30-wk ma, and Dec '17/Feb '18 lows). The ability to find support suggests a trading range between mid-to-high 90s and 114-119. United Parcel Service (UPS) -102 98.5/93-94 87.3 111/118/121/ 127/135-136 139-143 Sector Industrials Last Sale Price $105.61 Rationale: A negative outside week (12/16/16), coupled with a gap down on 1/31/2017, has pressured the stock to violate its Nov '17 low (111.30) and 2016 uptrend (110). This breakdown now suggests a decline to key support at -102 (2009 uptrend and 2017 lows). The ability to find support here is stabilize the recent strong selling allowing for another rally to key initial resistance at 111/112/117-119 (10-wk/30-wk ma) and above this to 124-125. However, failure to maintain above -102 warns of a deeper and more extensive downturn to 98.5 (76.4% retracement 2016-2018 rally) and then 93-92014/2015 lows). UBS Chief Investment Office Americas, Wealth Management 1 March 2018 25
United Technologies Corp (UTX) 122/117-118 109.1/111 96-98/99.2 134/139.2 141/146-147 153/157 Technical rating Neutral Sector Industrials Last Sale Price $133.15 Rationale: The recent decline to the Sep'17 lows (109.1) successfully tested key support along the late-2016 uptrend. This prevented a deeper correction to the low-s and mid-to-high-90s. The rally from the Sep'17 lows (109.1) managed to surpass its intermediate-term resistance at 123-125 (Mar '15 and Jul/Oct '17 highs) and has achieved its technical targets at 131-132(nearterm) and -141(medium-term). Failure to surpass key resistance at -141 has triggered a pullback to support at 122-123 (30-wk ma and Jan'16 uptrend). Secondary supports are also visible near 117-118 (38.2% retracement) and 109 (Sep '17 lows). Visa Inc Cl A (V) 111/106-107 103/96-97 92-94/88 126-127/130-132/137 142-143 Sector Technology Last Sale Price $122.93 Rationale: A well-defined uptrend from 2008/2009 remains intact, reinforcing still-higher prices, over time. The recent rally from the low-90s has achieved a number of technical targets, including the 101-102 (top of the 2014 uptrend) and the recent accelerated channel breakout targets of /126. However, technical target to 130-132 is still possible, overtime. Nonetheless, an overbought condition coupled with a negative outside week (2/2/18) has prompted a consolidation between 111 and 126 coinciding with the Feb '18 lows and highs. This consolidation can set the stage for the next sustainable rally. UBS Chief Investment Office Americas, Wealth Management 1 March 2018 26
Verizon Communications Inc. (VZ) Source: FactSet, UBS as of 23 February 2018 45-46 42.8-43.97 42.8-42.2/38 51-52/55 56.95/59 62.31 Technical rating Neutral Sector Comm. Services Last Sale Price $48.29 Rationale: This telecom name found major support along 42.8 (Jul '17 lows). Positive outside months (Jul '17 and Sep '17), coupled with the ability to maintain above its pivotal 2008 uptrend (43.5) as well as its 2012 breakout (43) has prompted an oversold rally to 54.5-55, corresponding to Jan'17 high. Failure to clear this formidable resistance prompted another pullback to 48-49 (30-wk ma). Violation here now opens the door for a correction to 43-45 (Jul '17 and Nov '17 reaction lows). Key initial resistance is now at 51-52 (10-wk ma) and above this to 55 (Jan '17 and Jan '18 highs). Wells Fargo & Co (WFC) 55-57 50-52.5 48.4/43.5-45 61-63 66.3/70-71 74-76 Sector Financials Last Sale Price $59.17 Rationale: The rally from the Oct '16 low (43.55) managed to surpass the resistance at 58.77-59.99 or the 2015/2017 highs. This breakout renders targets to 63-64 (near-term, achieved), 70-71 (medium-term) and then to 74-76 (long-term). However, a large gap down on 2/5/18 led to a breach of its prior breakout at 59- and warns of a correction to 55-57 (30-wk ma and Dec '17 breakout) and below this to 50-52.5. A moderately oversold condition may prompt a rally back to 61-63 (2/5/18 gap-down and 10-wk ma) and above this to the mid-s to retest its all-time highs. UBS Chief Investment Office Americas, Wealth Management 1 March 2018 27
Exxon Mobil Corp (XOM) 73.9/71-72 66.5-67 64.4/61.8-62 82-83/87-89 91.4-93.22 95.55-96.6 Technical rating Neutral Sector Energy Last Sale Price $77.53 Rationale: This energy name has corrected 23% from its Jul '16 highs (95.55) to its Feb '18 low (73.90). The ability to find support along the low-70s coupled with an oversold condition may lead to technical oversold rally back to 81.5-82.5 (10- wk/30-wk ma) and above this to 87-89 (61.82% retracement from 2016-2017 decline and Jan/Feb '18 highs). However, a negative outside week (2/2/18) week relative strength (vs SPX) and poor price momentum (MACD) warns of further volatility. In addition, a negative outside month (Feb'18) coupled a violation of 73.90 would confirm a top and the next major sell-off. UBS Chief Investment Office Americas, Wealth Management 1 March 2018 28
Appendix 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 2010. Appendix Term / Abbreviation Description / Definition % +or- Moving Avg (DMA) 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 30-week moving average (see below), and then dividing by the 30-week moving average times. 30-Week Moving Average Adjusted Relative Strength (ARS) Base Beta Blow off stage to a major rally Breakdown Breakout Broadening Top Formation Also known as the 30-week line or 150-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 30 weekly (usually Friday closing) prices and dividing by 30 to arrive at the average. Each week, the most recent week s figure is added to the total, and the price level from 30 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 50% weighting to the 1-month relative strength, 30% to the 3-month, and 20% 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. UBS Chief Investment Office Americas, Wealth Management 1 March 2018 29
Appendix Channel Death Cross Downtrend Line Fan reversal pattern Fibonacci Retracement Level FSR Gap Golden Cross Head-and-Shoulders Pattern Internal Trend Line Linear Regression Band Moving Average (m.a.) MRA 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 shorterterm 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. 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. 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%, 50%, 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 50-day moving average) crossing above its longer-term moving average (such as the 150-day or 200-day moving average). Technicians often interpret this crossing of two moving averages as a bullish technical sign that suggests the market has turned in favor of the security. This technical formation is one of the best known of the reversal patterns. There are two types of head-and-shoulders patterns that 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. Headand-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 favoring higher prices. The violation of neckline to the downside validates a head-and-shoulders top, reaffirming a bearish reversal of lower prices. A single trend line connecting at least several high and low points for a stock (or market) over time. 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 stocks (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). UBS Chief Investment Office Americas, Wealth Management 1 March 2018 30