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Technical Review of Stocks

CIO Wealth Management Research –– 17 February 2016

Peter Lee, Chief Technical Analyst

[email protected]

+1-212-713-8888, ext.01

Broader list

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.

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


UBS CIO WM Research 17 February 2016 2

Changes since last report Additions

Name Ticker

Technical Rating Changes

Name Ticker Old New

Amazon.com, Inc. AMZN Bullish Neutral

Apache Corp APA Neutral Bearish

American Express AXP Neutral Bearish

Citigroup Inc. C Neutral Bearish

Celgene Corp. CELG Bullish Neutral

Walt Disney Company DIS Bullish Neutral

Ford Motor Company F Neutral Bearish

Honeywell International Inc. HON Neutral Bullish

Johnson & Johnson JNJ Neutral Bullish

Coco-Cola Company KO Neutral Bullish

Nestle S.A. ADR NSRGY Neutral Bullish

Procter & Gamble Co. PG Neutral Bullish

Philip Morris International PM Neutral Bullish

AT&T Inc. T Neutral Bullish

Verizon Communications VZ Neutral Bullish

Wells Fargo & Co. WFC Bullish Neutral

GILEAD SCIENCES INC (GILD) will be reviewed in the next edition of Technical Review of Stocks. The last update on these stocks was published on 26 January 2016. Going forward, our previously published ratings for all these stocks should not be relied upon.



Amgen Inc. (AMGN)

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Price 10-Week Moving Average 30-Week Moving Average

Source: FactSet, UBS as of 11 February 2016 Support levels Resistance levels

First Second Third First Second Third

127.67-130.09 114-115 105-108 160 +/- 2 /165 173-175 181.81

Technical rating Bullish

Sector HealthCare

Last Sale Price $141.46

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-170s. In the near-term, a negative outside week on 1/26/16 can lead to further consolidation. Key support is at 127-130 or near the Oct '14/Sep '15 lows.

Amazon.com Inc. (AMZN)

2012 2013 2014 2015 2016

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474/440-450 400-410 365-370 550 +/- 5 590-600 635-640

Technical rating Neutral

Sector C. Discretionary


Rationale: We recommend moving to a Neutral technical outlook on this Consumer Discretionary name. The primarytrend starting from 2001 lows remains up. Although a breakout of multi-year accumulation pattern above the low-100s in 2010 and superior relative performance of the stock versus S&P 500 Index still supports longer-term higher prices continued market volatility and selling in momentum growth names can lead to further downside risks to 474 and below this to 440-450. A trading range scenario is likely to develop between the mid-400s and high 500s.



Apache Corp (APA)

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33.23 32.12-32.2 27-28.5/21.5 38/41-42 46-47 50-51.5/56.31

Technical rating Bearish

Sector Energy


Rationale: We recommend downgrading to a Bearish technical outlook on Apache Corp. Despite declining 69.21% from Jul '14 high (104.57), the stock paints a weak picture both on absolute and relative (versus S&P 500) charts. In the process, multiple supports were breached. A move below mid-70s or 6+ year symmetrical triangle in 3Q of 2014, an-other breakdown below low-50s or the 2008-09 lows and continued relative underperformance (vs SPX) warn of fur-ther selling. Key initial support lies at 33.23 (Feb '16 low) and then 32.12-32.2 or Jan '16 lows and 2003 breakout.

American Express (AXP)

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50-53 41-43 36-37 58-59 60-62.5/68-69 71-72.5


Sector Financials


Rationale: Violation of the mid-80s earlier in 2015 paints a weak intermediate term trend outlook and hence down-grade to Bearish view. A secondary breakdown below the high-70s 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 70-71.5 warned of a decline to low-50s or the bottom of the 2011 broadening wedge pattern. Initial support lies at 50-53. Violation of the low-50s suggests next downside risk to 42.76 or the 61.8% retracement from 2009-2014 rally.



AstraZeneca PLC ADS (AZN)

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27-28 24-25 21-22 32.5-33.5 34.9 36.69-38.28


Sector HealthCare


Rationale: We maintain a cautiously optimistic Bullish technical stance on AZN but recognize that a well-defined downtrend channel remains between the low-to-mid 30s and the high-20s. More recently, multiple gap downs below low-30s in Feb '16 and 2/5/16 negative outside week pattern warn of a retest of key initial support at 27-28 or the bot-tom of the 2014 downtrend channel, late 2014 breakout and the 50% retracement from 2009-2014 rally. The ability to find support here coupled with 2/10/16 gap up can trigger another rally to key supply near 32.5-33.5 and then 35.

Franklin Resources Inc. (BEN)

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30-30.50 29.24 28/26 34-34.50 37.5-38.5 41-42/45-45.5


Sector Financials


Rationale: We maintain a cautious Neutral stance on BEN. The Dec '14 negative outside month pattern coupled with a move below low-50s or the bottom of the 2012 uptrend channel warned of an intermediate term weakness in the stock. This diversified financials name has now declined 47.84% from its Dec '14 high (59.43) as multiple key supports have been broken. The Dec '15 negative outside month pattern and a series of lower-highs and lower-lows suggest a return to the 2010-2011 lows at 28-30. Key resistance is at 37.50-38.50 or the Dec '15 month reaction highs.



Bristol-Myers Squibb Co (BMY)

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56.32-57 51.82 47.55 65-67 70.5-71.5/75.5 79-80


Sector HealthCare

Last Sale Price 59.52

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 50s. A successful test of support has ignited another rally. Having said that, a negative outside week on 12/18/15 followed by the Jan '16 gap down led to an -18.24% decline from Dec '15 high (70.87). Key support lies at 51.82 or the Aug '15 low and the top of 2011 uptrend channel (shown above).

BP PLC ADS (BP)

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26.75-27 25 +/- 0.5 23.1/21.2 31.5-33.5 35.5-37.5 43.5-44/47-48


Sector Energy


Rationale: This Energy name has fallen 49.50% from its Jun '14 highs (53.48). In the process BP has violated its 2010/11 uptrend channel (44-45) in Sep '14 confirming a top. Although an oversold condition and a positive outside week (10/2/15) has developed, failure to clear above key resistance along 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.



Berkshire Hathaway Inc. – Class B stock (BRK.B)

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122.72 116-119 108-110/100 135 141-144.5 151.63-152.94


Sector Financials


Citigroup Inc. (C)

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34-34.52 33.5/24.5-25 21.5-23 40/44-45 49-50.5/54-55 60.95


Sector Financials


Rationale: We recommend moving to a defensive Bearish technical stance due to recent actions. Last July's breakout above 59-61 may have been a bull trap as many of the S&P 500 Financial names have quickly succumbed to strong selling soon after the Dec '15 FED FOMC rate hike. C has also reversed direction as it has broken the bottom of a well-defined 3-year trading range trend between the mid-40s and the high-50s. More recently, another breakdown below a 5-year uptrend (40) solidifies a top and suggest downside risks to 33.5-34.5 and below this to as low as the mid-20s.

Rationale. We maintain a Neutral stance on this Financial name 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 or the Aug '14 lows. Although the longer-term trend is still favourable and relative strength against SPX is positive, a convincing violation of 122.72 would confirm a top and warn of a deeper setback towards 116-119 and below this to 108-110. Initial supply lies at 135 or the 30-wk ma and the 2012 uptrend.



Caterpillar Inc. (CAT)

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60-60.5/56-57 49-51 44-45 69-71 76-77.5 80-81


Sector Industrials


Rationale: The violation of the pivotal 2010/11 uptrend (89-91) as well as key neckline support (79) confirmed a top. The 49.43% decline from the Jul '14 high has created a steeper downtrend channel between the low-50s and the low-70s. CAT appears to have found key support near the 61.8% retracement (58) from 2009-2012 rally. While we remain defensive on CAT we cannot rule out short-term technical rallies to the high-60s to the low-70s. Key initial support is at 60-60.5 (Feb '16 lows) and then towards 56.36 or the Jan '16 low. Key supply lies at 69-71 or the top of downtrend.

Celgene Corp. (CELG)

2012 2013 2014 2015 2016

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93-94 83-84 78-80 108-111 115-117/123 127-129.5/141


Sector HealthCare


Rationale: We recommend moving to a Neutral technical stance on CELG as the recent breakdown below the low-100s or the 2012 uptrend warns of a waning bull trend. A large head and shoulders top pattern has developed with key neckline support at 93-94 or the 2015/2016 lows. Also note that 38.2% retracement from 2009-2015 rally is at 94 providing pivotal support. A weekly death cross sell signal and a negative outside week (1/29/16) further hint of a top. Key initial resistance is at 108-111 or the 10-wk ma and 38.2% retracement from Jul-Aug '15 decline and 115-117.



ConocoPhillips (COP)

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29.44 28.60 26.01 34.5-35 40 +/- 1 45-46/50-51


Sector Energy


Rationale: The S&P 500 Energy sector suffered a major sell-off of -47.3% from its 2014 high (737). COP also declined 64.35% from its Jul '14 high 87.09. A 2-year head and shoulder top breakdown below at 59-61 led to a sharp decline to its 87.5% retracement (33.65) from its 2009-14 rally. Failure to find support here can lead to retest of its 2009 bot-tom (26), over time. Nonetheless, a deeply oversold condition and ability to find support near the bottom of its 2-year downtrend channel may trigger a technical rally to the low-40s. Initial supply is at 34.5-35 or the Feb '16 gap down.

Costco Wholesale Corp. (COST)

2012 2013 2014 2015 2016

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140-142 135 120-125 154-158 164/169.73 174-176


Sector Cons. Staples


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-160s. A surge above 159-160 would confirm a breakout rendering an upside target closer to the mid-180s, over time. However, the 12/11/15 neg-ative outside week pattern and the recent broad market setback may temporarily delay the rally resulting in a retest of key support near the summer 2015 lows and the bottom of its uptrend channel at low-140s. Key resistance is at 154-158.



Campbell Soup Co. (CPB)

2012 2013 2014 2015 2016

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50-52/47-48 44-45 41-42/38-39 60.21 64-65 70




Rationale: An ascending triangle breakout during 2013 (above the high-30s) and a subsequent breakout above two and half year accumulation pattern above high-40s in mid-2015 substantiate our Bullish technical outlook on this Food Beverage and Tobacco name. However, a moderately overbought condition has led to a near-term pull back to its prior breakout. Nonetheless, 11/20/15 positive outside week, gap up on 11/24/15 and a positive outside month pattern in Nov '15 and again in Jan '16 keep us optimistic. Initial support lies at 50-52/47-48 (Nov '15/Jan '16 lows).

CSX Corp. (CSX)

2012 2013 2014 2015 2016

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21.3-22.3 20/18.88 17.69 26-27 30.53 31.9/33-34


Sector Industrials


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 bottom of the 2011 ascending triangle at low-20s. That said, a positive outside week on 2/5/16 hints us of a bounce back from the Jan/Feb '16 lows (21.3-22.3).



CenturyLink Inc. (CTL)

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25/21-22 20.45 19.10/17 29 +/- 1 33.5-34 36.5-37/40


Sector Comm. Services


Rationale: We recommend developing a Bullish stance on this Integrated Telecom name. A breakdown below the bot-tom of its 5-year downtrend channel along the mid-20s could have been a bear trap. A weekly death cross sell signal earlier in 2015 led to a -52% decline from its 2014 highs. However, a deeply oversold condition coupled with the de-fensive nature of the stock helped outperform the broader benchmark in Jan '16. The Oct '15 positive outside month, a solid bounce back from Jan '16 low (21.94) and 2/12/16 positive outside week suggests accumulation of stock.

Chevron Corp (CVX)

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75 69.58/66.83 60-61 95-97 100-102 109-112


Sector Energy


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 98-100 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 70.55 (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 70-75 and 95-100.



Dominion Resources Inc. (D)

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64.54 60-62 54-56 74-76.5 80-81 86-87


Sector Utilities


Rationale: Although the longer-term trend still remains up, failure to surpass key resistance at 80-81 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-60s. Breeching support solidifies a top and renders downsides to the low-60s. However, the recent market weakness has triggered a flight to safety as classic defensives names like D outperformed SPX. In addition, 12/18/15, 1/8/16 and 1/22/16 positive outside week patterns bodes well for a rally.

E.I. DuPont de Nemours & Co. (DD)

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51-54.5 47-49.5 40 +/- 2 65-67/72 69-71 75.72-76.61


Sector Materials


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 over-sold condition and 10/02/15 positive outside week pattern has triggered a sharp rally. However, the Dec '15 negative outside month and the M&A speculations hints of a volatile trading range between the low-50s and the mid-60s.



Deere and Co (DE)

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70-71 69.51/60-62 53-54 80-82 86.39-90.37 97-98


Sector Industrials


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% re-tracement (81.93) from the Jul to Oct '15 decline. Failure to breakout above low-80s triggered a decline to 70.16 (Jan '16). 1/22/16 A positive outside week (1/22/16) hints of near-term trading between the low-70s and the low-80s.

Diageo PLC ADS (DEO)

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100 98.50 93.12/87.5 110-112 118-122 127-130




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 (100.59), the broader market weakness coupled with the inability of the stock breakout led to a new low of 100.12 by Jan '16. Also, 2/5/16 negative outside week hints of further consolidation.



The Walt Disney Co (DIS)

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85-86.25 78.54 69.85 97-98 103.5105 107-109


Sector Cons. Disc.


Rationale: We recommend moving to a Neutral technical outlook on this Consumer Discretionary name as a gap down in Jan '16, a death cross signal and the violation of its 2011 uptrend near 98 warn of a medium term top. DIS has also violated its Aug '15 lows at 90-91 setting into motion a lower low as it fell to next key support at 86.21 or the 38.2% retracement from 2011-2015 rally. The ability to find support here can trigger a technical rally to 97-98 or the 10-wk ma and its prior breakdown. The 30-wk ma and Jan '16 gap down at 103.5-105 remains secondary resistance.

Dow Chemical Co. (DOW)

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Source: FactSet, UBS CIO WMR as of 11 February 2016 Support levels Resistance levels


42.5-43 40-41/35.11 30-32 48-50 53-55 57-59


Sector Materials


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-40s triggered a recovery back to its 2014/2015 highs. However, failure to breakout and the Dec '15 nega-tive outside month and the Jan '16 gap down hints of wide trading range between mid-30s and mid-to-high 50s.



Duke Energy Corp. (DUK)

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72-74 64-65.5/62.5 58.5-59.63/56 79-81 84-85 89.87


Sector Utilities


Rationale: We retain a Neutral outlook on this Utility name. Earlier, the failure of DUK to breakout above the top of its uptrend channel (high-80s) 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-70 coinciding with the Mar/May '15 lows, 2009 uptrend, and the Oct '14 breakout reaffirm a top. However, a solid bounce back from Dec '15 low (65.50); the subsequent positive outside month coupled with the defensive nature of this Utility name suggests investors may continue to favor this area.

Ford Motor Co (F)

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10.44-11 9.71 8.82 12.36/13-13.5 14.5-15/16.74 18.02-18.12




Rationale: We recommend taking a Bearish stance on the Consumer Discretionary name as further selling is now like-ly. 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. In addition, the continued relative underperformance of F to SPX coupled with the Jan '16 break down now suggest another test of the bottom of the channel and Aug '15 low (10.44). A move below 10.44 could lead to a retest of 2012 lows near 8.82. Key initial supply lies at 12.5-13.5.



Facebook Inc. (FB)

Jul '12 Oct '12 Jan '13 Apr '13 Jul '13 Oct '13 Jan '14 Apr '14 Jul '14 Oct '14 Jan '15 Apr '15 Jul '15 Oct '15 Jan '16

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94-95 89-90/80-82 70-72 105 +/- 2 110-112 117-118


Sector Technology


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-100s. The 27.5% correction from its Jul '15 high (99.3) to its Aug '15 low (72) has set the stage for the next rally. In due course, a breakout above the Nov '15 record high (110.65) and above the top of its 2013 uptrend channel led to a new all-time high of 117.59 (Feb '16). In addition, the Jan '16 positive outside month pattern keeps us optimistic.

General Mills Inc. (GIS)

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53.53 51-51.5 47-48/41-41.5 60-61 65-66 69-71




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 (60-61) in Aug '15 coupled with an overbought condition suggests a con-solidation is now likely. Near-term support is 53.5-54 or the 2012 uptrend and the Jun/Jul '15/Jan '16 lows. The bot-tom 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)

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37.24 36/34 32.15 42.30 43.5-45.5 48-50


Sector HealthCare


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-40s suggests GSK may be vulnerable for a retest of the bottom of its wedge pattern and its Oct '15 lows near 36-37.24.

Halliburton (HAL)

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26.28-27.64 24.27 21.10 33.49/37.5 40-41/44-45 47.5-48/50-51


Sector Energy


Rationale: The 62.81% decline from Jul '14 high has weakened both the absolute and relative (vs SPX) charts. How-ever, the Oct '15 positive outside month signalled a recovery from deeply oversold levels. Nonetheless, a falling wedge remains intact between 27 and 40. Recent failure to convincing surge above its 30-wk ma, above its Nov '14 down-trend, 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 33.49 (10-wk ma) and above this to 37.5 (30-wk ma).



Home Depot (HD)

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140140




109.62 104-107 96/90 127.1/130-135 143-144 149-150/156




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 70). Although higher prices are still possible back to its prior 2015 highs at 130-135, HD may be vulnerable for a correction (considering 2/5/16 negative outside week) to 109.62 or the Feb '16 low and below this to 104-107.5 or the 2011 uptrend and 50% re-tracement from 2011-2015 rally. Key resistance is at 130-135 or the 10-wk ma and prior Nov/Dec '15 highs.

Honeywell International Inc. (HON)

2012 2013 2014 2015 2016

4040

5050

6060

7070

8080

9090

100100

110110




91.5-93.71 87-89/82-83 72-74 107.10 116-118.5 129-131


Sector Industrials


Rationale: We recommend moving to a Bullish technical outlook on this Industrials name. A 13-year breakout at 63/69 during the late-2012/early-2013 (not shown) renders targets to 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 80-85 and 105-107. An ascending triangle breakout above 107.1 renders upside to 129-131. Initial support is 91.5-93.71 or the 23.6% retracement from 2011-2015 rally and the Jan '16 lows. Key resistance is at 107.10 (2015 highs).



International Business Machines Corp (IBM)

2012 2013 2014 2015 2016

120120

140140

160160

180180

200200

220220




116/104 97-99.5 88-90 132-135 141-145 153/170-179


Sector Technology


Rationale: The strong selling has again resumed as IBM has now fallen 45.85% from its 2013 highs (215.90) and has broken below the bottom of a 3-year downtrend channel (138-140) 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).

Illinois Tool Works Inc. (ITW)

Source: FactSet, UBS as of 11 February 2016

Support levels Resistance levels


84-85 78.79-79.15 76.25/71-72 95-97 100-102 108-109


Sector Industrials


Rationale: A breakout of multi-year accumulation pattern above 59-60 in late-2012 (not shown) renders upside target to 93.5. ITW has surpassed this target as it traded to a high of 100.14 (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, the stock experienced volatility during Jan '16 in sympathy with broad market weakness. A solid recovery from Jan '16 low coupled with relative outperformance (vs SPX) support our bullish view.



Johnson and Johnson (JNJ)




94-95 90-91/85.5-86 80-82/73-75 105.49/109.49 116-120 126-127


Sector Healthcare


Rationale: We recommend upgrading to a Bullish technical outlook. A large multi-year technical base breakout above the low-to-mid 70s achieved one of our medium term technical targets of the low-110s during Nov ’14 (109.49). An overbought condition coupled with a weekly death cross sell signal promptly lead to a correction. After declining 25.3% to 81.79 (Aug '15) JNJ quickly generated a strong recovery that is now challenging its key initial resistance at 104.5 and above this to its prior all-time highs (109.5). A breakout here confirms the start of the next major rally.

Kimberly-Clark Corp. (KMB)




121.5/116-117 108 +/- 2 100-102/87.64 132.4/134-138 144-145 152-155




Rationale: We retain a technical Bullish view on KMB as the primary uptrend channel (101-106 and 128-130) from 2008 remains intact. In addition, superior relative performance (vs SPX) and 1/29/16 positive outside week supports our stance. However, failure to clear above the top of its channel coupled with a recent 2/12/16 negative outside week now hint of consolidation over the near-to-medium term. Key initial support is at 121.5 or the Jan '16 low. Below this, 116-117 or the Nov '15 low and Oct '15 breakout as well as the 30-wk ma. Initial supply is 132.43 or the Feb '16 high.



Coca Cola Co (KO)




40.75-41.5 38-39/35-36 31.50-32/30 44-45 50-51 54-55


Sector Cons Staples


Rationale: We recommend upgrading this consumer staples name to Bullish technical view. Although KO remains con-fined to a 3-plus year trading range between mid-to-high 30s and the mid-40s a recent weekly golden cross buy signal hints of a breakout. A convincing move above 45-46 or Nov '14/Oct-Dec '15 highs and the top of its triangle confirms a breakout. Key initial support is in the low-40s coinciding with the Jan '16 lows and the 30-week ma. Continued rela-tive outperformance (vs SPX) and a recent positive outside week (2/12/16) also bode well for an impending breakout.

L Brands Inc. (LB)



79.93 75.11 64.5-67 93-93.50 100-102 108-110/116.5



Last Sale Price $84

Rationale: The bullish uptrend channel from the 2008/09 lows, and a multi-year breakout in 2010/11 above the low-30s still merit a longer-term technical Bullish outlook. In addition, despite the near-term weakness, superior relative outlook of the stock (vs SPX) keeps us optimistic. However, a negative outside month on Nov '15, flattening key mov-ing averages and a large negative outside week on 2/5/16 warn of a consolidation between mid-70s and low-100s over the near-to-medium term. Key support lies at 75.11 or the Aug '15 low. Key supply lies at 101.11 or the Nov '15 high.



McDonald’s Corp (MCD)




104.25-108.38 100-102/95.78 87.5-90/83.31 124-126 132-133 140




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 124-126 (near-term), 132-133 (intermediate), and 140 (longer-term). Having said that, a negative outside week on 2/5/16 and a potential Feb '16 negative outside month hints of consolidation in the near-term. Initial support lies at 104.25-108.38 or the 10/22/15 gap up, the prior major breakout, 30-wk ma and the Nov '15 lows.

McGraw Hill Financial Inc. (MHFI)




72-75.5 68-70 63-65 92-95 100-102 107-110


Sector Financials


Rationale: We retain a cautiously optimistic Bullish outlook on MHFI considering its constructive relative outlook (vs SPX). Trading above 72.50 during Oct '13 confirmed a major technical breakout. A 48% rally from Oct '14 low (73.96) to Mar '15 high (109.13) led to an overbought condition resulting in the Aug/Sep '15 correction to the mid-80s. How-ever, increased volatility in Jan '16 after a gap down at 93-93.5 warns of another correction to major support at 72-75.5 or the Oct '13 breakout. That said 2/5/16 positive outside week pattern keeps bulls optimistic on a recovery.



3M Co (MMM)




146/140 +/- 1 131-134 119.5-123.61 160.09 170.50 175/179/185


Sector Industrials


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 170.5 (Mar '15). Soon after, a weekly death cross sell signal (May '15) led to a 21.4% decline to its Aug '15 low of 134. A gap up (10/5/15) and a positive outside week (10/23/15) led to a rally towards key resistance at 160. However, failure to breakout coupled with a potential head/shoulders top led to a retest of neckline support (134.64) before witnessing a bounce back. Superior relative performance (vs SPX) keeps investors optimistic.

Altria Group Inc. (MO)




56/52-52.5 47.31-47.41 44 +/- 0.5 /40 60-62 65-67 70-72


Sector Cons Staples


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 the Jan '16 positive outside month hint of higher prices. The recent breakout renders upside targets to the low-60s (near-term), mid-60s (medium term) and then to the low-70s (long-term). Key initial support is 56 or near the Nov '15/Dec '15/Jan '16 lows and 30-week ma.



Merck & Co (MRK)




45.69 40-41 36-37 55 +/- 1 60-61.7 63-64/71-72


Sector Healthcare


Rationale: The breakout of the 2000/2007 downtrend (not shown) above low-40s signals a longer-term recovery. However, the recent 2011 uptrend channel breakdown (mid-50s) weakens the medium-term technical outlook. Nega-tive outside months (Jun/Aug '15) and rolling of key moving averages led to a sell-off. The 10/16/15 positive outside week pattern helped to stabilize the selling but a negative outside week pattern (12/4/15) and failure to break above mid-50s suggest a retest of key support at 45.69 or the Aug '15 low, 2009 uptrend. 55 +/- 1 is initial supply.

NextEra Energy Inc. (NEE)




104-106 93.74-96.31 90 +/- 0.5 115.95 119-120 135/132


Sector Utilities


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 warned of a maturing trend. The stock sud-denly reversed direction after making a high of 112.64 on Jan '15. Soon after, a gap down during Aug '15 and a nega-tive outside month have broken the bottom of its 2011 uptrend channel. However, the Dec '15 positive outside month, the recent 1/8/16, 1/22/16 positive outside weeks resumed primary trend and led to a new all-time high of 115.95.



Nestle S.A. ADS (NSRGY)




68.80 63.38-65.79/63 60-61/55 79-81 84-86 88-90/94-95




Rationale: After rallying to all-time highs at 80.65 (Jun '14) a triangle pattern has developed between the mid-60s and the high-70s. A breakout above 79-81 renders upside to the mid-to-high 80s and then mid-90s, over time. On the down-side, recent violation of 2009 uptrend (not shown) in the low-70s and the Jan '15 lows as well as a Jan '16 gap down led to a successful test of key initial support at 68.80 or the 23.6% retracement from 2009-2014 rally. We believe a relative strength breakout (vs SPX) and a surge above 73-74 or 10/30-wk ma and the prior breakdown merit an upgrade.

Novartis AG (NVS)




70-72.5 64-65 60-62 80 +/- 2 86.84/88.49-91 95-96/98-101


Sector HealthCare


Rationale: A breakout above a multi-year basing pattern in the mid-60s 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 tech-nical Neutral stance. NVS has fallen 33% from Jul '15 highs and is now testing its key support at 70-72.5 (61.8/50% retracements from 2012-2015 and 2009-2015 rallies). Initial supply lies at 80 +/- 2 or 1/27 gap down and 10-wk ma.



Oracle Corp. (ORCL)




33.13 29.5-30.25 25-26 37-38/40-41 43-44.37 46.71/50-52


Sector Technology


Rationale: Although the longer term trend remains favorable, a Neutral defensive stance is recommended on a near-to-intermediate term basis. Recent failure to clear above the top of its 2013 uptrend channel as well as above its Aug '00 record high (46.41) and a negative outside month during Jun '15 led to a move below its prior breakout levels (36.50) and top of 2011 ascending triangle pattern. A head/shoulders top pattern in both absolute and relative charts (vs SPX) as well as the Jan '16 gap down warns of further consolidation. Initial support is 33.13 or the Jan '16 low.

Occidental Petroleum Corp. (OXY)




56-58.24 50-52 45-46/38-39 70.49 74-75/77-78 82.5-83.75


Sector Energy


Rationale: A breakdown from two symmetrical triangles below 90 in Sep/Oct '14 and again below the low-80s 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-50s triggered a technical oversold rally to key initial resistance at 70.49 or the Feb '16 high and 30-wk ma. Secondary supply lies at 74-75 or the 38.2% retracement from 2014-2016 decline.



Pepsico Inc. (PEP)




93.25/90-92 85-87.5/78-80 75-76 100.5-103.5 107-108 111-112/116


Sector Cons Staples


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 34.32% rally from Feb '14 lows resulted in a record high of 103.44 (Oct '15) prompting an overbought condition and the current consolidation between low-90s and low-100s. Despite the near-term consolidation, the resiliency of the stock in withstanding the recent market weakness and rela-tive outperformance (vs SPX) kept investors optimistic. Key supports lie at 93.25 (Jan '16 low) and 90-92 (Sep '15 low).

Pfizer Inc. (PFE)




27.12-28.25 24.5-25 23.5/22 32-33/36-36.5 39-40 42-44/48-50


Sector Healthcare


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 22.5% decline from its Jul '15 high has created a potential head/shoulders top pattern. Key neckline support is visible at 27.12-28.25. A decisive breakdown confirms a top and warns of a decline to the low-to-mid 20s. Key resistance lies near 32-33 or the left shoulder and the 10-/30- wk ma.



Procter & Gamble Co (PG)




72-74 65-67.33 60-62/54-55 82.5-83 86-87 93.89/100




Rationale: We recommend moving to a Bullish outlook on this important Consumer Staples name. Earlier, failure to sustain above the top of its 15-plus year uptrend channel (not shown) in the low-90s signalled a correction. A subse-quent death cross sell signal during Mar '15 and the Jul '15 negative outside month led to a 30.75% decline from the Dec '14 highs. However, the stock found support near the bottom of the 2010/11 uptrend channel near 65-67prompting the recovery. A positive outside month (Jan '16) and golden cross buy signal merits a sustainable recovery.

Philip Morris International (PM)




84-85 80-81/75-76 70-72 90-92 95-97 100-102


Sector Cons Staples


Rationale: This Consumer Staples name is showing technical signs of emerging from its 3-year consolidation. The 4/19/15 gap up, Apr '15 positive outside month and the ability to maintain above key support along the mid-70s not only prevented a deeper correction but signals the start of an outperformance cycle. More recently, 12/18/15 positive outside week and triangle breakout above the mid-80s hint of a retest of 96.7 or its (2013) all-time highs. Despite the challenging market outlook, the above actions as well as improving relative strength (vs SPX) merit a technical upgrade.



Royal Dutch Shell PLC ADS Cl A (RDSA)




35.50-36 30-32 23-24 45-47/50.5-51 54-55/59-61 65.25-67.38


Sector Energy


Rationale: RDSA has also declined in sympathy with its energy peers falling 57.08% from its Jul'14 highs. The recent break below the 2003 and 2009 lows at 37/38 has established new lower-lows (35.5 on Jan '16) or to levels last wit-nessed 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) led a technical rally to 45-47 (10-wk ma and the 23.6% retracement from 2014 decline). Above this key supply lies at 50.5/54 (30-wk ma/38.2% retracement).

Starbucks Corp. (SBUX)




50-52 45-46 40-42 61.79 64/70 76-77




Rationale: We retain a cautiously Bullish technical outlook on SBUX due to favorable primary trend starting from 2008/09 lows. Although SBUX has corrected 17.77% from its Oct '15 highs (64) the ability to maintain above key sup-port in the mid-50s coupled with superior relative performance (vs SPX) keeps us optimistic. Nonetheless, the stock is likely to consolidate further as the 2/5/16 negative outside week and a potential Feb '16 negative outside month pat-tern warn of further volatility. Key initial supply is at 61.79 or the Feb '16 highs and then the prior all-time high of 64.



St. Jude Medical Inc. (STJ)




45-46 41-42 37.5-38/30-33 53.63/57-59 63-64/66-68 70-71/75-77


Sector HealthCare


Rationale: The Oct '13 10-year breakout above the mid-50s and the Apr '15 breakout above 69 render an upside tar-get to 85, longer-term. The rally to new all-time highs on Jul '15 (80.84) 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 com-plex head and shoulders top breakdown below 53.63 confirm a top. Next support resides near the mid- 40s and then the low-40s. Initial resistance is near the recent breakdown (53.63) and above this to the high-50s.

AT&T Inc. (T)


Support Levels Resistance levels


33-34.5 30-31 27.5-28.5/24-25 36-37 39-40/42-43 47.5-49




Rationale: We recommend upgrading to a technical Bullish stance as the stock has recently broken out of a 3-year downtrend channel dating back to 2012 at 35-36. This breakout signals the start of a sustainable intermediate term rally. In addition, the close proximity to its 10-wk ma (33.5) and the 30-wk ma (34.5) suggest a favourable risk/reward profile. Recent breakout above the mid-30s renders an upside target to the low-40s on an intermediate term basis. A slightly overbought condition may lead to a pullback towards initial support along 33-34.5.



Teva Pharmaceutical Industries Ltd. ADS (TEVA)




54-55/50-51 46-48 42-43/39-40 62-63 66-67/71-72 76-76.5


Sector HealthCare


Rationale: We remain optimistic on TEVA based on a longer-term basis due to its breakout of a large symmetrical tri-angle dating back to 2011. This breakout led to a new all-time high at 71.65 during Jul ’15. However, the stock soon generated an island reversal the following month (Aug '15) prompting a 25.1% decline to the mid-50s (Oct '15). The ability to maintain this key support can trigger a consolidation to key initial resistance at 66-67 and above this back to its record high 72.31. A breakdown below 54-55 warns of a top and a deeper correction to the low-50s. high

Target Corp (TGT)




66-67.5 62-63 59-60 74-75 78.70-80.17 85.81/91-92




Rationale: A major technical breakout in late-2014 above its prior 2007/2013 all-time highs at 70.67-73.5 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 correction from Jun '15 highs has deepen soon after a negative outside week (1/8/16) and a negative outside month (Jan '16) warn of a poten-tial top. Key initial support is visible at 66-67.5. Violation here opens the door for the next downturn to 62-63.



Total S.A. ADS (TOT)




39-40 37.50/35-35.50 28.58-30 45-47 50-52.5/55-56 60.5-62.5


Sector Energy


Rationale: We maintain a defensive technical stance on this Energy name but a deeply oversold condition can produce a sharp but unsustainable technical induced rally. Since 2007-2008 a large head/shoulders top pattern still warns of longer-term technical weakness. The ability to find support near 40 +/- 1 or the 2009/2011/2015 lows may lead to a technical bounce towards 45-47 or the 30-wk ma and above this to as high as the low-to-mid 50s (right shoulders). Below neckline support (39) confirms a major distribution top and suggests the next decline to 35-37.5 and 28.5-30.

Travelers (TRV)




99-100 95.21-97.18 88.81-90.83 110.5-113 116.5/125-126 132-135


Sector Financials


Rationale: A breakout of a multi-year basing pattern above 57 (2011) and subsequent breakouts above mid-80s in early 2013 and 100-102 in 2014 reaffirm a Bullish technical view. However, the Aug '15 negative outside month and a large Jan '16 gap down hint of a consolidation. Initial support is evident along 99-100 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 to develop between 97 and 113.



United Parcel Service (UPS)




92-94/87.30 84-85/79-81 76-77 99-102 105-107 114.4


Sector Industrials


Rationale: Although this Air Freight name has recovered from its strong selling in recent weeks a large 2-year head/shoulders top pattern, monthly death cross sell signal and breaking of its 2009 uptrend channel in the mid-to-high 90s warn of an intermediate term top. This breakdown renders a downside target to 84-85 or the 38.2% re-tracement 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 50% retracement and 2012 breakout. Key initial resistance is near the high-90s to low-100s.

US Bancorp (USB)




37-38 35-36/31-32 27.5-28.5 40.5-41.5 43-44 46-47


Sector Financials


Rationale: Although this Financial stock has recovered all of its losses from the global financial crisis as evident by the progression of the 5+ years uptrend channel failure to clear above the top of its 2014/205 highs (45-47) warn of a ma-turing uptrend. In addition, multiple gap downs during Aug '15 as a negative outside month (Dec '15), rolling over of weekly ma, 2011 uptrend breakdown and two subsequent gap downs during Jan '16 on 1/4/16 at 41.82-42.65 and on 1/7/16 at 40.78-40.81 confirm a top. Violation of 37-38 renders downside risks to the low-to-mid 30s.



Visa Inc Cl A (V)




65-67/60-61 54-56 48-49/42-42.5 74-76/77.5 80-81 90-91


Sector Technology


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-80s. In addition, 12/11/15 negative outside week, Jan '16 gap down and the weekly death cross sell signal hint of a consolidation to initial support at 65-67 (Apr/Jun/Sep '15 lows). A breakdown here suggests downside risks towards the low-60s. The mid-to-high 70s continues to provide key initial resistance.

Vodafone Group PLC ADS (VOD)




27-28 24-25 20-21.5 31.5-33 34-35 38-39/41-42




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 is now challenging the bottom of its triangle near 27-28. Violation here confirms a breakdown and signals a de-cline to the low-to-mid 20s. Key initial resistance is now evident near 31.5-33 and then to 34-35.



Verizon Communications Inc. (VZ)




43-45/41-42 36.8-38.06 34/32.28 51-52 54-55 64-65




Rationale: A multi-year breakout above 2007 highs (43.01) in late-2012 suggests an upside target to 64-65, longer-term. However, the stock has stalled over the past couple of years as an extensive consolidation between the low-to-mid 40s and the low-to-mid 50s. The Oct '15 positive outside month and the 11/20/15, 12/4/15, 12/18/15 and 1/22/16 positive outside weeks offer technical signs of higher prices. A recent breakout above high-40s now confirms the next major rally and hence our technical upgrades to a Bullish view with next technical targets to mid-50s and then mid-60s.

Walgreen Co. (WBA)




75-77/70-71 65-67.5 55.5-57.5 80-81/84-85 95.74-97.3 105




Rationale: A breakout of a multi-year accumulation pattern above 51.60 in 2013 renders a target to 81-82. This target was achieved on Jul/Aug '15 at a high of 97.30. A broadening wedge formation over the past three years as well as negative outside weeks (8/7/15, 10/30/15 and 12/11/15), daily gap downs (12/31/15 and 1/4/16) and a weekly death cross sell signal (Oct '15) now warn of a maturing trend. Failure to maintain above 75-77 confirms a breakdown and suggests a deeper correction to the low-70s and below this to the mid-60s. Key initial supply is the low-to-mid 80s.



Wells Fargo & Co (WFC)




44-45 40-41/37-38 31.5-33 50-51 53-54 56-58


Sector Financials


Rationale: A breakout above 44.69 (Sep '08 highs) ignited a rally as evident by a 4-year uptrend channel between the mid-50s and the mid-60s. However, the Aug-Sep '15 correction led to a violation of the bottom of its 2012 uptrend channel. A subsequent technical oversold late last year also failed to surpass above the extension of 2012 uptrend (mid-50s). The Jan '16 gap down and weakness within the financial sector now warn of a deeper correction. The above development forces a technical downgrade to Neutral trend. Below the mid-40s renders downside to 40-41 and 37-38.

Wal-Mart Stores Inc. (WMT)




62.5-63 60-61 56/46.25 70-72.5 76-78 84-85/90-91




Rationale: A breakout above the low-to-mid 80s in Nov '14 was a bull-trap after it failed to follow through to new all-time highs. A subsequent death cross sell signal, a negative outside month on Oct '15 triggered a sharp decline of nearly 38% to a recent low near 63. The ability to find support near the mid-50s coupled with positive outside weeks on 11/06/15, 12/25/15 and 1/8/16 help to stabilize the selling and allow for the recent technical base. We are encour-aged by the recent 2015 downtrend breakout as this signals a recovery to key resistance near the low-to-mid 70s.



Exxon Mobil Corp (XOM)



76-78/70.5-73 66.5-67.5 60-62 81-82 86-87/90-93.5 97.20-100.43


Sector Energy


Rationale: We retain a technical Neutral stance on XOM as this is a relative strength leader within the battered Energy sector. Violation of 2002 uptrend (low-70s) as well as rising wedge breakdown (mid-90s) and a head and shoulders top breakdown (below 85) still warn of longer-term weakness. Strong selling may have subsided on recent successful test of key support at 66.55 during Aug '15 corresponding to the Aug '11 lows and the 76.4% retracement from 2010-2014 rally. A convincing surge above key initial resistance near the low-to-mid 80s signals a medium term recovery.



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 rat-ings 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 100.

30-Week Moving Average 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.

Adjusted Relative Strength (ARS) 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.

Base 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.

Beta 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.

Blow off stage to a major rally 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 inves-tors/traders try to exit the market/security at the same time.

Breakdown A technical term indicating a downside resolution of a chart pattern. Its significance is determined by the same factors governing a breakout.

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 preced-ed it.



Appendix

Broadening Top Formation 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.

Channel

A chart pattern comprised of two parallel trend lines, which form a trading band. Channels take the form of uptrend, downtrend and horizontal.

Death Cross The opposite of a golden cross, this is a crossover on the chart resulting from a security’s shorter-term moving average falling below its longer-term moving average. Technicians often see this as a bearish technical sign indicating the market has turned negative on the security.

Downtrend Line

A trend line connecting successively lower peaks for a stock (or market). Its technical significance is determined by the same factors governing an uptrend line.

Fan reversal pattern The fan formation is a technical pattern that is based on the use of multiple trend lines to denote a major trend reversal. The fan pattern gets its name as it basically resembles a “fan”. It should have a minimum of three trend lines (uptrends or downtrends). The break out/break down of the third downtrend/uptrend often completes the fan pattern and signals the start of a major trend reversal. The starting point of these trend lines should come from a significant peak or a significant trough.

Fibonacci Retracement Level A technical analysis term used to describe potential areas of support (price stops declining) or re-sistance (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 hori-zontal 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 100%.

FSR Forecast Stock Return is defined as expected percentage price appreciation plus gross dividend yield over the next 12 months.

Gap

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.

Golden Cross 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 tech-nical sign that suggests the market has turned in favor of the security.

Head-and-Shoulders Pattern 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. Head-and-shoulders formation often is comprised of a left shoulder, a head, and a right shoulder, and a line drawn across its shoulders defines its neckline. The breaking of the neckline to the upside con-firms 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, reaf-firming a bearish reversal of lower prices.

Internal Trend Line A single trend line connecting at least several high and low points for a stock (or market) over time.

Linear Regression Band 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.



Appendix

Moving Average (m.a.) This is a technical indicator frequently used in technical analysis to show the average value of a security’s price over a set period of time. This tool is designed to smooth out a stock’s (or market’s) shorter-term fluctuations to provide a better picture of an underlying trend. Moving averages gener-ally 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.

MRA 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).

Neckline Support/Resistance This is a trend line that is drawn across the bottoms or tops of the left shoulder, the head and the right shoulder of a potential head-and-shoulders bottom or top pattern. When prices break through this neckline support level and continue falling after forming the right shoulder, it confirms a head-and-shoulders top formation. Conversely, neckline resistance is a trend line drawn across the tops of the left shoulder, the head and the right shoulder. When prices break above this neckline resistance level and keep on rising, it typically completes the head-and-shoulders bottom pattern.

Overbought A technical condition in which the price of a security has risen to such a degree that the price be-comes overvalued or has reached the upper band of its trading range resulting in a potential pull-back in price.

Oversold Opposite of Overbought. A technical condition that occurs when the price of a security has fallen to such a degree that the price becomes undervalued or has reached the lower band of its trading range prompting a potential rally.

Positive/Negative “Outside” Day

When one day’s range (high and low) exceeds the prior day’s range, and the stock (or market) in question closes near its daily peak, this is referred to as a positive “outside” day. A negative “out-side” day would be recorded if the stock (or index) finished near its daily low after having a wider range than the prior session. The same rule can be applied on a weekly and monthly basis as well.

Relative Strength

Relative strength is a performance comparison between a sector, group, or stock and the S&P 500 Index over a specified time frame. Our time frame is often a one-, three-, and six-month basis but does vary according to investment orientation.

RRD Rating/Return Divergence is automatically appended to the rating when stock price movement has caused the prevailing rating to differ from that which would be assigned according to the rating system and will be removed when there is no longer a divergence, either through market movement or analyst intervention.

Support An area where increased buying interest is likely to develop during a decline. These points, which can take several forms (minor, major, etc.), often provide downside protection for an issue in a pri-mary uptrend, but only temporary relief to an issue in a primary uptrend, during which time many support levels are often broken.

Top A chart pattern marking a period of distribution following an uptrend. The larger the top, the great-er the downside potential following its completion. It, too, can take many forms.

Triangle Patterns There are three different types of Triangle patterns – Symmetrical, Descending and Ascending. Symmetrical Triangle is considered to be a continuation pattern that often signals a period of con-solidation in a trend followed by a resumption of the prior trend. It is formed by the convergence of a descending trend and an ascending trend. An Ascending Triangle is a bullish pattern, which is denoted by two trend lines – a flat trend line and an ascending uptrend line. A Descending Triangle is a bearish pattern. It is the opposite of the Ascending Triangle in that there is a flat trend line and a downward sloping downtrend line.



Appendix

Statement of Risk

Statement of RiskEquities - Stock market returns are difficult to forecast because of fluctuations in the economy, investor psychology,geopolitical conditions and other important variables.

Required Disclosures

Analyst Certification

Each research analyst primarily responsible for the content of this research report, in whole or in part, certifies that withrespect to each security or issuer that the analyst covered in this report: (1) all of the views expressed accurately reflecthis or her personal views about those securities or issuers; and (2) no part of his or her compensation was, is, or will be,directly or indirectly, related to the specific recommendations or views expressed by that research analyst in the researchreport.

CIO Wealth Management Research equity selection systemEquity sector strategists provide three equity selections: Most Preferred (MP), Least Preferred (LP) and Bellwetherdesignation.

Rating definitionsMost Preferred*: The equity sector strategist expects the stock to outperform the relevant benchmark in the next 12months.Least Preferred*: The equity sector strategist expects the stock to underperform the relevant benchmark in the next12 months.Bellwether: Stocks that are of high importance or relevance to the sector and which the equity sector strategist expectsthe stock to perform broadly in line with the sector benchmark in the next 12 months.*A stock cannot be selected as Most Preferred if UBS Investment Research rates it a Sell, while a UBS Investment ResearchBuy rated stock cannot be selected as Least Preferred.

Restricted: Issuing of research on a company by CIO WMR can be restricted due to legal, regulatory, contractual or bestbusiness practice obligations which are normally caused by UBS Investment Bank’s involvement in an investment bankingtransaction in regard to the concerned company.

Technical Research Rating Definitions

Rating Corresponding Rating Category Definition and criteriaBullish Buy Well-defined, reliable uptrend, an increase in the rate of change

(or strong momentum) and confirming technical indicators.Neutral Hold Trading range trend, a flat rate of change and confirming

technical indicators.Bearish Sell Negative or weakened trend, momentum and confirming

technical indicators.N/A Not enough historical data to make an evaluation.

For a complete set of required disclosures relating to the companies that are the subject of this report, please mail arequest to UBS CIO Wealth Management Research Business Management, 1285 Avenue of the Americas, 20th Floor,Avenue of the Americas, New York, NY 10019.

Disclosures (17 February 2016)3M Co. 1, 3, 4, 5, 7, Altria Group Inc. 1, 4, 5, Amazon.com Inc. 1, 4, 5, American Express 1, 2, 3, 4, 5, 6, 7, 8, 9, AmgenInc. 1, 2, 3, 4, 5, 6, 7, Apache 1, 3, 4, 5, 7, Astrazeneca 1, 3, 4, 5, AT&T Inc. 1, 2, 3, 4, 5, 6, 8, Berkshire Hathaway Inc.1, 3, 11, BP 1, 2, 3, 6, 8, 10, Bristol-Myers Squibb Co. 1, 3, 4, 5, 6, 7, Campbell Soup Co. 1, 3, 4, 5, 7, Caterpillar Inc.1, 3, 4, 5, 9, 11, Celgene Corp. 1, 3, 7, 8, 9, CenturyLink Inc. 1, 2, 3, 9, Chevron 1, 3, 4, 5, 9, Citigroup 1, 2, 3, 4, 5, 6,7, 8, 9, 12, Coca-Cola Co. 1, 3, 4, 5, 7, ConocoPhillips 1, 3, 7, Costco Wholesale Corp. 1, 4, 5, CSX Corp. 1, 2, 4, 5, 6,Deere & Co. 1, 3, 4, 5, 11, Diageo 1, 3, 7, 8, Dominion Resources 1, 2, 3, 4, 5, 6, 7, 9, Dow Chemical Co. 1, 3, 4, 5, 7,



Appendix

9, 11, Duke Energy 1, 2, 3, 4, 5, 6, 7, 8, E.I. DuPont de Nemours & Co. 1, 3, 4, 5, 7, 9, 11, Exxon Mobil 1, 3, 4, 5, 8, 9,Facebook 1, Ford Motor Co 1, 3, Franklin Resources 1, 2, 3, 4, 5, 6, 7, 9, General Mills Inc. 1, 3, 4, 5, 9, GlaxoSmithKlinePlc 1, 3, 8, Halliburton 1, 3, 4, 5, Home Depot Inc. 1, 4, 5, Honeywell International Inc. 1, 3, 4, 5, 9, Illinois Tool WorksInc. 1, Intl Business Machines 1, 3, 4, 5, 7, 8, Johnson and Johnson 1, 3, 4, 5, 6, 9, Kimberly-Clark Corp. 1, 4, 5, L Brands1, McDonald's Corp. 1, 4, 5, 11, McGraw-Hill Cos. 1, 4, 5, Merck and Co Inc 1, 3, 4, 5, 7, 9, 11, Nestle SA/AG 3, 4, 5, 8,11, NextEra Energy Inc. 1, 3, 6, 7, 8, Novartis 1, 2, 3, 6, 8, 11, 13, 14, Occidental Petroleum 1, 3, 8, Oracle Corp. 1, 4, 5,PepsiCo Inc. 1, 2, 3, 4, 5, 6, 7, 8, 9, Pfizer Inc. 1, 3, 4, 5, 9, Philip Morris Intl Inc. 1, 2, 3, 4, 5, 6, Procter & Gamble Co. 1, 2,4, 5, 6, 8, Royal Dutch Shell Plc 1, 3, St. Jude Medical Inc. 1, Starbucks Corp. 1, 3, 7, Target Corp. 1, Teva PharmaceuticalsLtd. 1, 11, Total SA 1, 2, 3, 8, Travelers 1, 3, 4, 5, 9, U.S. Bancorp 1, 2, 3, 4, 5, 6, 8, 9, United Parcel Service Inc. 1, 2, 3,4, 5, 6, 7, 8, 9, Verizon Communications Inc. 1, 3, 4, 5, 6, 8, Vodafone Group 1, 3, 8, 10, 15; Walgreens Boots Alliance1, 3, 6, 8, Wal-Mart Stores Inc. 1, 4, 5, Walt Disney Co. 1, 3, 4, 5, 11, Wells Fargo 1, 2, 3, 4, 5, 6, 7, 8, 9, 11,

1. UBS Securities LLC makes a market in the securities and/or ADRs of this company.2. UBS AG, its affiliates or subsidiaries has acted as manager/co-manager in the underwriting or placement of securitiesof this company/entity or one of its affiliates within the past 12 months.3. Within the past 12 months, UBS Securities LLC and/or its affiliates have received compensation for products andservices other than investment banking services from this company/entity.4. This company/entity is, or within the past 12 months has been, a client of UBS Financial Services Inc, and non-investment banking securities-related services are being, or have been, provided.5. Within the past 12 months, UBS Financial Services Inc has received compensation for products and services otherthan investment banking services from this company.6. This company/entity is, or within the past 12 months has been, a client of UBS Securities LLC, and investmentbanking services are being, or have been, provided.7. This company/entity is, or within the past 12 months has been, a client of UBS Securities LLC, and non-securitiesservices are being, or have been, provided.8. UBS AG, its affiliates or subsidiaries expect to receive or intend to seek compensation for investment banking servicesfrom this company/entity within the next three months.9. This company/entity is, or within the past 12 months has been, a client of UBS Securities LLC, and non-investmentbanking securities-related services are being, or have been, provided.10. UBS Limited acts as broker to this company.11. The equity analyst covering this company, a member of his or her team, or one of their household members has along common stock position in this company.12. The fixed income analyst covering this company, a member of his or her team, or one of their household membershas a long common stock position in this company.13. UBS AG, its affiliates or subsidiaries beneficially owned 1% or more of a class of this company's common equitysecurities as of last month's end (or the prior month's end if this report is dated less than 10 days after the most recentmonth's end).14. UBS AG is acting as agent in regard to Novartis AG's announced share buyback programme.15. UBS Limited is advising Vodafone in connection with the merger of its operating business in the Netherlands withZiggo.



Appendix

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