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Report prepared by:
Ryan Lewenza, CFA, CMT
North American Equity Strategist
Inside
Technical Commentary ......................... 2
Relative Strength ................................ 10
Technical Trading Ideas ...................... 14
Sentiment Indicators ........................... 19
Overbought/Oversold Stocks .............. 20
Market Statistics .................................. 21
This Document is for distribution to Canadian
clients only.
Please refer to Appendix A in this report for
important information.
Volume 15 Highlights
The S&P/TSX Composite Index (S&P/TSX) has traded in a narrow
range between 14,200 and 14,400 for nearly one month now. In our
opinion, the S&P/TSX is in this holding pattern because it is: 1)
digesting an impressive 4.8% year-to-date (YTD) gain; and 2
trading at its horizontal price resistance. We continue to believe that
the S&P/TSX will head modestly lower in the short term, possibly
declining to between 13,850 and 14,000.
The S&P 500 Index (S&P 500) remains in a long-term upwardchannel, as it continues to make higher highs and higher lows. It istrading above its 50-week simple moving average (MA) and its 65week exponential MA. Finally, the NYSE Advance/Decline (A/D) linecontinues to trend higher, showing no signs of a divergence withS&P 500 price action. Given these bullish technical trends, wemaintain our constructive long-term outlook for U.S. equities.
The technical outlook for the U.S. financials sector remains bullishwith the sector in a long-term uptrend, and above its rising 50- and200-day MAs. Its relative trend, however, had been trending lowesince August 2012, but this reversed last week, ending its seven-month relative downtrend.
In this weeks report, we highlight Constellation Software Inc(CSU-T), Precision Drilling Corp. (PD-T), Bank of America Corp(BAC-N), and Comerica Inc. (CMA-N) as attractive buy candidatesand recommend investors trim/sell Canadian Imperial Bank ofCommerce (CM-T).
Chart of the Week The 2-year Treasury yield surged 10 basispoints following the Federal Reserve (Fed) meeting on March 19We believe this could signal the beginning of the normalization ofU.S. Fed monetary policy.
March 31, 2014
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Technical Commentary
S&P/TSX Composite Index
This week we are looking at the long-term chart of the S&P/TSX to help explain why the index has been stallingaround the 14,300 level.
The S&P/TSX has traded in a very narrow trading range between 14,200 and 14,400 for nearly one month now. In
our opinion, the S&P/TSX is in this holding pattern because it is: 1) digesting its impressive 4.8% YTD gain; and 2)
trading at its horizontal price resistance, which dates back to the 2007 and 2011 highs (red arrows).
Unlike the U.S. equity markets (excluding the Nasdaq Composite Index), which are trading at new all-time highs
the S&P/TSX remains below its all-time highs, and will continue to encounter stiff technical resistance as it moves
higher. We see 14,330, 14,645, and 15,150 as important resistance levels for the S&P/TSX.
We continue to believe that the S&P/TSX will head modestly lower in the short term, possibly declining to between
13,850 and 14,000, which is the convergence of the 50-day MA and its lower channel line.
If correct in our call for a short-term pull back, we would use the opportunity to increase equity exposure, as the
long-term technical profile for the S&P/TSX remains constructive.
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Canadian Sector Highlights
Last Trend of Trend of RSI Market
Name Price 50 DMA 50 DMA 200 DMA 200 DMA 14 Day Condition Current 2 3 4 5 6
S&P/TSX CONS STAPLES IDX 2739.43 2648.23 Uptrend 2544.05 Uptrend 63.83 Neutral 1 9 6 4 4 7
S&P/TSX ENERGY INDEX 3102.72 2987.22 Uptrend 2836.08 Uptrend 74.30 Overbought 2 7 2 6 7 5
S&P/TSX TELECOM SERV IDX 1169.47 1163.21 Uptrend 1117.45 Uptrend 48.84 Neutral 3 10 9 5 5 10
S&P/TSX CONS DISCRET IDX 1531.20 1 503.40 Uptrend 1418.35 Uptrend 53.97 Neutral 4 8 1 1 10 11
S&P/TSX FINANCIALS INDEX 2124.77 2077.55 Uptrend 1973.56 Uptrend 64.44 Neutral 5 4 8 7 8 2
S&P/TSX INFO TECH INDEX 155.65 154.84 Uptrend 140.35 Uptrend 50.67 Neutral 6 11 4 3 3 6
S&P/TSX COMPOSITE INDEX 14215.60 14027.66 Uptrend 13180.22 Uptrend 58.97 Neutral 7 5 7 8 6 4
S&P/TSX INDUSTRIALS IDX 2031.23 2019.82 Uptrend 1861.77 Uptrend 50.43 Neutral 8 6 10 2 9 9
S&P/TSX UTILITIES INDEX 1857.56 1831.80 Uptrend 1789.62 Uptrend 52.96 Neutral 9 2 3 9 11 8
S&P/TSX HEALTH CARE IDX 1722.79 1864.71 Downtrend 1516.28 Uptrend 37.90 Neutral 10 3 11 11 1 3
S&P/TSX MATERIALS INDEX 2269.07 2 345.45 Downtrend 2173.81 Uptrend 41.34 Neutral 11 1 5 10 2 1
Ranking of Weekly Momentum
Source: Bloomberg Finance L.P. March 25, 2014.
Weekly Momentum:
The energy sector climbed to the second spot last week in our sector rankings, continuing its trend of improved
performance. See additional comments on the following page.
The materials sector declined to the last spot in our sector rankings, driven largely by weakness in gold miners
Following a strong January/February period, the sector weakened in March, as it worked off its overbought technica
condition, and spot gold prices retraced some of their recent gains.
The health care sector has also been weak in recent weeks, largely driven by weakness in Valeant Pharmaceuticals
Inc. (VRX-T). VRX is approaching an oversold technical condition, which could set up a short-term bounce in the
stock. However, VRX has declined through its 50-day MA, and if the stock is unable to reclaim this important MA,
we would become more cautious on the stock.
Market Condition:
Following its strong gains, the energy sector is now technically overbought and could result in some short-term
backing and filling. All other sectors are neutrally ranked.
Other:
The health care and materials sectors have declined through their 50-day MAs on recent weakness.
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S&P/TSX Capped Energy Index
In the October 7, 2013 edition of The Technical Take, we highlighted the improving technical profile of the S&P/TSX
Capped Energy Index, stating that given the sectors recent price breakout and continued improving relative t rends
we are growing more bullish on the sector .
In recent days, the sector has broken above its long-term relative downtrend (lower panel), with the sector
beginning to outperform the broader market.
With the sector exhibiting positive price and relative technical trends, we have become more constructive on the
sector, and see it potentially outperforming the broader market in the months ahead.
In the short term, the sector is overbought and could encounter some profit taking. We would use any weakness to
increase exposure in the sector. Stocks we like technically include: 1)Canadian Natural Resources Ltd. (CNQ-T)
and2)Enerplus Corp. (ERF-T).
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S&P 500 Index
Many investors often focus on short-term trends and miss seeing the proverbial forest for the trees. Looking at the long-term weekly chart of the S&P 500, we note that it remains in a long-term upward channel
continuously making higher highs and higher lows. Additionally, it is trading above its rising 50-week simple MA and its 65-week exponential MA, which we use to help
define the long-term trend. Finally, the NYSE Advance/Decline line continues to trend higher (lower panel), making new highs, and showing no
signs of a divergence with S&P 500 price action. Given these bullish technical trends, we maintain our constructive long-term outlook for U.S. equities.
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U.S. Sector Highlights
Last Trend of Trend of RSI Market
Name Price 50 DMA 50 DMA 200 DMA 200 DMA 14 Day Condition Current 2 3 4 5 6
S&P 500 TELECOM SERV IDX 153.20 148.14 Uptrend 153.25 Downtrend 66.27 Neutral 1 3 8 10 5 8
S&P 500 FINANCIALS INDEX 300.06 292.00 Uptrend 280.30 Uptrend 62.59 Neutral 2 10 1 7 11 11
S&P 500 INFO TECH INDEX 594.68 586.46 Uptrend 544.12 Uptrend 57.61 Neutral 3 8 7 9 9 4
S&P 500 MATERIALS INDEX 295.62 289.83 Uptrend 272.22 Uptrend 57.25 Neutral 4 6 3 2 4 3
S&P 500 INDEX 1861.37 1832.99 Uptrend 1745.58 Uptrend 55.08 Neutral 5 7 4 5 7 5
S&P 500 ENERGY INDEX 640.74 628.34 Uptrend 617.95 Uptrend 58.11 Neutral 6 4 9 4 3 6
S&P 500 INDUSTRIALS IDX 445.80 442.01 Uptrend 415.14 Uptrend 53.76 Neutral 7 11 2 6 8 9
S&P 500 CONS STAPLES IDX 439.29 429.87 Uptrend 426.76 Uptrend 60.63 Neutral 8 2 6 3 10 7
S&P 500 HEALTH CARE IDX 675.24 669.01 Uptrend 615.44 Uptrend 45.53 Neutral 9 5 10 8 1 2
S&P 500 CONS DISCRET IDX 510.70 516.12 Downtrend 492.28 Uptrend 39.05 Neutral 10 9 5 1 6 10
S&P 500 UTILITIES INDEX 206.62 200.46 Uptrend 194.85 Uptrend 62.45 Neutral 11 1 11 11 2 1
Ranking of Weekly Momentum
Source: Bloomberg Finance L.P. As of March 25, 2014.
Weekly Momentum:
The telecom sector jumped to the top spot in our sector rankings last week, mostly driven by gains in AT&T Inc. (T
N), which rallied roughly 5%.
The financials sector also improved last week, likely on the heels of the Fed signalling that they could increase
interest rates sooner than expected, which would help net interest margins for U.S. financial institutions.
The information technology sector also performed well last week, driven by large-cap tech giants like Microsoft
Corp. (MSFT-Q), Qualcomm Inc. (QCOM-Q), and Hewlett-Packard Co. (HPQ-N).
The consumer discretionary sector continues to lag the broader market, hovering near the bottom of our sector
rankings during three of the last six weeks.
The utilities sector fell to the last spot in our sector rankings, likely as a result of increasing U.S. government bond
yields.
Market Condition:
All sectors are neutrally ranked, with RSI levels between 30 and 70.
Other:
As a result of recent weakness, the consumer discretionary sector is now trading below its 50-day MA. All othe
sectors are above their respective 50-day MAs.
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S&P 500 Financials Sector Index
The technical outlook for the U.S. financials sector remains bullish with the sector in a long-term uptrend, and aboveits rising 50- and 200-day MAs.
Its relative trend, however, had been trending lower since August 2012, but this reversed last week (lower panel)ending its seven-month relative downtrend.
With the sector in a long-term price uptrend and improving relative trends, we recommend investors overweight thesector in portfolios.
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Intermarket Picture
Euro/U.S. Dollar Four little words is all it took to turn the floundering euro around. In July 2012, with the European
equity markets and the euro under extreme selling pressure, the European Central Bank (ECB) President, Mario Draghi,
stated that they would do whatever it takes to preserve the euro. Apparently, investors took him seriously; the euro
bottomed following the announcement and rallied roughly 15% versus the U.S. dollar since then. However, with inflation
near 1%, some ECB officials are signalling a potential implementation of their own version of Quantitative Easing (QE). If
they do implement QE, we believe it could lead to a weaker euro and possibly end its 19-month bull run. A break below
1.35/US$1, concurrent with a round of QE, would likely turn us bearish on the euro.
U.S. 2-Year Treasury Yield The U.S. 2-year Treasury yield broke out of a triangle formation following the Federa
Reserves March meeting, where the Chair, Janet Yellan, signalled that the Fed could begin to increase interest rates six
months after the unwinding of QE3, or roughly in the spring of 2015. This potential date is earlier than the market had
priced in, resulting in U.S. Treasury yields moving higher on the news. We continue to believe Treasury yields will grind
higher in the months ahead, with this announcement be ing the beginning of the Feds normalization of U.S. monetary
policy.
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Copper Copper prices remain under pressure, and recently broke through an important support level. We believe the
recent weakness in copper prices can in part be explained by the continued weakness in the Chinese economy and stock
market. In the lower panel, we illustrate the high, positive correlation between copper prices and the performance of
Chinese equities. While correlation ebbs and flows over time, it is generally very positive, and therefore, we believe
copper prices will remain weak until we see a definitive stabilization in Chinese equities.
Gold As expected, gold prices have pulled back recently as a result of the precious metal becoming technically
overbought and trading at an important resistance level around of US$1,360/oz. Gold spot price is now at an importan
support level around US$1,300/oz., which is the convergence of the 50- and 200-day MAs (green arrow). This price
should it hold, would be bullish for the precious metal. Stepping back, we believe the gold price will remain range-bound
between US$1,180/oz. and US$1,430/oz. in the months ahead.
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Relative Strength Analysis
S&P 500
0.30
0.32
0.33
Sep 13 Oct 13 Nov 13 Dec 13 Jan 14 Feb 14 Mar 14
S&P 500 INFO TECH INDEX Relative to S&P 500
0.232
0.264
0.297
Mar 11 Sep 11 Mar 12 Sep 12 Mar 13 Sep 13 Mar 14
S&P 500 CONS DISCRET IDX Relative to S&P 500
0.274
0.284
0.294
Sep 13 Oct 13 Nov 13 Dec 13 Jan 14 Feb 14 Mar 14
S&P 500 CONS DISCRET IDX Relative to S&P 500
0.30
0.33
0.37
Mar 11 Sep 11 Mar 12 Sep 12 Mar 13 Sep 13 Mar 14
S&P 500 INFO TECH INDEX Relative to S&P 500
0.24
0.24
0.25
Sep 13 Oct 13 Nov 13 Dec 13 Jan 14 Feb 14 Mar 14
S&P 500 INDUSTRIALS IDX Relative to S&P 500
0.22
0.24
0.25
Mar 11 Sep 11 Mar 12 Sep 12 Mar 13 Sep 13 Mar 14
S&P 500 INDUSTRIALS IDX Relative to S&P 500
0.15
0.17
0.20
Mar 11 Sep 11 Mar 12 Sep 12 Mar 13 Sep 13 Mar 14
S&P 500 MATERIALS INDEX Relative to S&P 500
0.15
0.16
0.16
Sep 13 Oct 13 Nov 13 Dec 13 Jan 14 Feb 14 Mar 14
S&P 500 MATERIALS INDEX Relative to S&P 500
0.34
0.35
0.37
Sep 13 Oct 13 Nov 13 Dec 13 Jan 14 Feb 14 Mar 14
S&P 500 ENERGY INDEX Relative to S&P 500
0.34
0.40
0.46
Mar 11 Sep 11 Mar 12 Sep 12 Mar 13 Sep 13 Mar 14
S&P 500 ENERGY INDEX Relative to S&P 500
Cyclicals
28SEP13 - 28MAR1428MAR11 - 28MAR14
Source: Bloomberg Finance L.P. As at March 27, 2014
The long- and short
term relat ive trend f
the informat ion
technology sector
remains bul l ish.
The industr ia ls
sectors short-term
trend remains w eak
The consu mer
discret ionary secto
long-term uptrend i
under pressure. I ts
sho rt-term relat ive
t rend is negat ive.
The materials
sectors long-term
downt rend was
bro ken in Q1/14.
The sectors shor t -
term trend remains
bul l ish.
The energy sectorremains in a long-
term relat ive
downtrend.
We prefer the
Canadian energy
sector over th e U.S
counterpart .
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0.23
0.26
0.28
Mar 11 Sep 11 Mar 12 Sep 12 Mar 13 Sep 13 Mar 14
S&P 500 CONS STAPLES IDX Relative to S&P 500
0.14
0.15
0.17
Mar 11 Sep 11 Mar 12 Sep 12 Mar 13 Sep 13 Mar 14
S&P 500 FINANCIALS INDEX Relative to S&P 500
0.29
0.34
0.38
Mar 11 Sep 11 Mar 12 Sep 12 Mar 13 Sep 13 Mar 14
S&P 500 HEALTH CARE IDX Relative to S&P 500
0.08
0.10
0.12
Mar 11 Sep 11 Mar 12 Sep 12 Mar 13 Sep 13 Mar 14
S&P 500 TELECOM SERV IDX Relative to S&P 500
0.10
0.13
0.16
Mar 11 Sep 11 Mar 12 Sep 12 Mar 13 Sep 13 Mar 14
S&P 500 UTILITIES INDEX Relative to S&P 500
0.23
0.24
0.26
Sep 13 Oct 13 Nov 13 Dec 13 Jan 14 Feb 14 Mar 14
S&P 500 CONS STAPLES IDX Relative to S&P 500
0.16
0.16
0.17
Sep 13 Oct 13 Nov 13 Dec 13 Jan 14 Feb 14 Mar 14
S&P 500 FINANCIALS INDEX Relative to S&P 500
0.35
0.36
0.38
Sep 13 Oct 13 Nov 13 Dec 13 Jan 14 Feb 14 Mar 14
S&P 500 HEALTH CARE IDX Relative to S&P 500
0.08
0.09
0.09
Sep 13 Oct 13 Nov 13 Dec 13 Jan 14 Feb 14 Mar 14
S&P 500 TELECOM SERV IDX Relative to S&P 500
0.10
0.11
0.12
Sep 13 Oct 13 Nov 13 Dec 13 Jan 14 Feb 14 Mar 14
S&P 500 UTILITIES INDEX Relative to S&P 500
28MAR11 - 28MAR14 28SEP13 - 28MAR14
Defensives
Source: Bloomberg Finance L.P. As at March 27, 2014
The consu mer
staples sector is
t rading in a long- a
short - term relativedowntrend.
The f inancials
sectors long-term
trend has improve
See page 7 for
addit ional comm e
The health care
sector remains in
long-term uptrend
Weakness in the
biotech sector has
led to weakness in
the sh ort - term tren
The telecom secto
t rading in a long-t
relative do wntrend
The sectors short
term trend has
improv ed. Watchin
for fol low through
The ut i l i t ies secto
remains in a long-
term relat ive
downtrend.
On a sho rt - term
basis, the sector h
show n strength.
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S&P/TSX Composite
0.01
0.01
0.01
Sep 13 Oct 13 Nov 13 Dec 13 Jan 14 Feb 14 Mar 14
S&P/TSX INFO TECH INDEX Relative to S&P/TSX Comp
0.071
0.093
0.114
Mar 11 Sep 11 Mar 12 Sep 12 Mar 13 Sep 13 Mar 14
S&P/TSX CONS DISCRET IDX Relative to S&P/TSX Comp
0.104
0.108
0.113
Sep 13 Oct 13 Nov 13 Dec 13 Jan 14 Feb 14 Mar 14
S&P/TSX CONS DISCRET IDX Relative to S&P/TSX Comp
0.01
0.01
0.02
Mar 11 Sep 11 Mar 12 Sep 12 Mar 13 Sep 13 Mar 14
S&P/TSX INFO TECH INDEX Relative to S&P/TSX Comp
0.14
0.14
0.15
Sep 13 Oct 13 Nov 13 Dec 13 Jan 14 Feb 14 Mar 14
S&P/TSX INDUSTRIALS IDX Relative to S&P/TSX Comp
0.10
0.13
0.16
Mar 11 Sep 11 Mar 12 Sep 12 Mar 13 Sep 13 Mar 14
S&P/TSX INDUSTRIALS IDX Relative to S&P/TSX Comp
0.15
0.24
0.34
Mar 11 Sep 11 Mar 12 Sep 12 Mar 13 Sep 13 Mar 14
S&P/TSX MATERIALS INDEX Relative to S&P/TSX Comp
0.15
0.16
0.18
Sep 13 Oct 13 Nov 13 Dec 13 Jan 14 Feb 14 Mar 14
S&P/TSX MATERIALS INDEX Relative to S&P/TSX Comp
0.21
0.22
0.22
Sep 13 Oct 13 Nov 13 Dec 13 Jan 14 Feb 14 Mar 14
S&P/TSX ENERGY INDEX Relative to S&P/TSX Comp
0.21
0.23
0.25
Mar 11 Sep 11 Mar 12 Sep 12 Mar 13 Sep 13 Mar 14
S&P/TSX ENERGY INDEX Relative to S&P/TSX Comp
Cyclicals
28SEP13 - 28MAR1428MAR11 - 28MAR14
Source: Bloomberg Finance L.P. As at March 27, 2014
The consumer
discret ionary sec
remains in a long
term relat ive uptre
I ts short - term tren
neutral.
The informat ion
technology secto
longer- term trend
cont inu es to impr
The industr ia l
sectors long-term
trend is con struct
but is stal l ing on
short - term basis.
The mater ia ls sec
broke above its lo
term downtrend.
The sectors shor
term trend is wea
lower gold min ers
The energy secto
broke its long-ter
downtrend.
The sectors shor
term relat ive tren
are strong for the
sector.
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0.12
0.17
0.21
Mar 11 Sep 11 Mar 12 Sep 12 Mar 13 Sep 13 Mar 14
S&P/TSX CONS STAPLES IDX Relative to S&P/TSX Comp
0.12
0.14
0.16
Mar 11 Sep 11 Mar 12 Sep 12 Mar 13 Sep 13 Mar 14
S&P/TSX FINANCIALS INDEX Relative to S&P/TSX Comp
0.05
0.10
0.14
Mar 11 Sep 11 Mar 12 Sep 12 Mar 13 Sep 13 Mar 14
S&P/TSX HEALTH CARE IDX Relative to S&P/TSX Comp
0.06
0.08
0.10
Mar 11 Sep 11 Mar 12 Sep 12 Mar 13 Sep 13 Mar 14
S&P/TSX TELECOM SERV IDX Relative to S&P/TSX Comp
0.13
0.15
0.18
Mar 11 Sep 11 Mar 12 Sep 12 Mar 13 Sep 13 Mar 14
S&P/TSX UTILITIES INDEX Relative to S&P/TSX Comp
0.19
0.19
0.20
Sep 13 Oct 13 Nov 13 Dec 13 Jan 14 Feb 14 Mar 14
S&P/TSX CONS STAPLES IDX Relative to S&P/TSX Comp
0.15
0.15
0.16
Sep 13 Oct 13 Nov 13 Dec 13 Jan 14 Feb 14 Mar 14
S&P/TSX FINANCIALS INDEX Relative to S&P/TSX Comp
0.10
0.12
0.14
Sep 13 Oct 13 Nov 13 Dec 13 Jan 14 Feb 14 Mar 14
S&P/TSX HEALTH CARE IDX Relative to S&P/TSX Comp
0.08
0.09
0.09
Sep 13 Oct 13 Nov 13 Dec 13 Jan 14 Feb 14 Mar 14
S&P/TSX TELECOM SERV IDX Relative to S&P/TSX Comp
0.13
0.13
0.14
Sep 13 Oct 13 Nov 13 Dec 13 Jan 14 Feb 14 Mar 14
S&P/TSX UTILITIES INDEX Relative to S&P/TSX Comp
28MAR11 - 28MAR14 28SEP13 - 28MAR14
Defensives
Source: Bloomberg Finance L.P. As at March 27, 2014
The consumer
staples sectors loand sho rt - term
relat ive trends are
under p ressure.
The ut i l i t ies secto
cont inu es to mak
new relat ive lows
The health care
sector remains in
long-term uptrend
The sectors shor
term trend is unde
pressure.
The telecom secto
long-term relat ive
t rend is neutral .
The sector is in a
short - term relativ
downtrend.
The f inancial sect
remains in a long
term relat ive uptre
The sector appea
be basing in the s
term, fol lowing
weakness in ear ly
January.
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Technical Trading Ideas
Constellation Software Inc. (CSU-T)Published March 14, 2014
We are highlighting the technical breakout of Constellation Software Inc. from our breakout/breakdown model*. CSU is trading in a well-defined uptrend, and is above its rising 50- and 200-day MAs. The 50-day MA in particula
has been providing strong technical support on short-term pull backs. Additionally, CSUs relative strength is veryimpressive, as the stock continues to outperform the broader market.
Despite the strong gains in CSU, the technicals remain very bullish for the stock, and with the breakout to new highswe believe the stock can continue to trend higher.
We would employ a stop loss of $219, which is just below the stocks February low and 50 -day MA.
NOTE*: Our technical breakout/breakdown model is based on a weekly screen of the S&P 500 and S&P/TSX Composite for
stocks making a new high/low over the last 90 days on volume greater than +1 standard deviation from the 90-day average
volume.
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Precision Drilling Corp. (PD-T) Published March 17, 2014
Precision Drilling Corp. has pulled back in recent days, which has helped to work off its overbought technicacondition.
PD is trading in a long-term upward channel as it continues to make higher highs and higher lows. The stock istrading above its rising 50- and 200-day MAs. PD broke above technical resistance at $11 in February, and with therecent pull back is approaching that level, which could now provide possible technical support. Additionally, it isapproaching its 50-day MA, which also could provide support.
We would look to buy PD on this weakness with the stock in a solid uptrend and approaching good technical supportWe would employ a stop loss at $10, which is just below its uptrend and its 200-day MA.
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Bank of America Corp. (BAC-N) Published March 19, 2014
We highlighted Bank of America Corp.s (BAC-N) attractive technical profile on September 9, 2013, and the stockhas advanced 20% since then. We are reiterating our bullish stance on the stock based on its strong technicalprofile.
BAC is trading in a well-defined upward channel, and above its rising 50- and 200-day MAs. It is adhering well to its50-day MA, which continues to provide technical support, and is a sign of technical strength. BACs relative trendsremain positive, as the stock continues to outperform the broader market. Finally, volume continues to expand withBACs rising price trend, as captured by its rising On Balance Volume indicator.
Despite BACs recent strength, we believe the stock can advance further, and are targeting the $19 to $20 rangeWe would employ a stop loss of $14.90, which is just below its 200-day MA and its December 2013 lows.
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Comerica Inc. (CMA-N) Published March 21, 2014
We are highlighting the technical breakout of U.S. bank Comerica Inc. from our breakout/breakdown model*. CMA has been in an uptrend for the past year and a half. It is trading above its rising 50- and 200-day MAs, and is
showing strong relative strength, as it continues to outperform the broader market (lower panel). CMA made a newprice high this week, with the breakout being on heavy trading volume, which is a bullish technical confirmation.
With the recent breakout, the stock is technically overbought in the short term with a Relative Strength Index readingof 74.55. As such, it could encounter some backing and filling, but we would use any weakness to accumulate thestock, given its bullish technical profile. A stop loss of $45 should be employed.
NOTE*: Our technical breakout/breakdown model is based on a weekly screen of the S&P 500 and S&P/TSX Composite for
stocks making a new high/low over the last 90 days on volume greater than +1 standard deviation from the 90-day average
volume.
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Canadian Imperial Bank of Commerce (CM-T) Published March 26, 2014
The Canadian financials sector remains one of our preferred sectors for 2014. However, some financial stocks aretechnically overbought and susceptible to short-term weakness. Canadian Imperial Bank of Commerce stands out onthis front, and we see the potential for stock to pull back 5-6% in the coming weeks.
CM has rallied 13% since its February lows and has become technically overbought with a Relative Strength Index(RSI) reading of 74.64 (over 70 indicates overbought). Additionally, we note that momentum looks to be weakeningwith the MACD indicator possibly registering a sell signal, while the RSI is exhibiting a momentum divergence, withthe RSI indicator trending lower.
We believe CM could pull back in the short term, possibly to $90.80, which is the intersection of the uptrend and 50day MA. Short-term traders may want to consider selling in advance of this expected pull back.
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Sentiment Indicators
Level 1 M Ago 3 M Ago Level 1 M Ago 3 M Ago13.78 14.00 12.46 0.90 0.81 0.67
Level 1 M Ago 3 M Ago Level 1 M Ago 3 M Ago
Bulls 31.16 39.69 55.06 Bulls 54.70 53.50 59.60
Bears 28.61 21.13 18.54 Bears 17.50 17.20 14.10 Bulls - Bears 2.55 18.56 36.52 37.20 36.30 45.50
VIX CBOE Put/Call
Bulls - Bears
-40
-30
-20
-10
0
10
20
30
40
50
60
Jan-10 Oct-10 Jul-11 Apr-12 Jan-13 Oct-13
Individual Investor Sentiment:Bulls Minus Bears
-30
-20
-10
0
10
20
30
40
50
60
Jan-10 Oct-10 Jul-11 Apr-12 Jan-13 Oct-13
Advisor Sentiment:Bulls Minus Bears
5
10
15
20
25
30
Jan-12 Jul-12 Jan-13 Jul-13 Jan-14
Volatility (VIX) Index
0.6
0.7
0.8
0.9
1.0
1.1
1.2
1.3
1.4
1.5
Jan-12 Jul-12 Jan-13 Jul-13 Jan-14
CBOE Total Put/Call Ratio 5-Day MA
Source: Bloomberg Finance L.P. As of March 27, 2014.
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Overbought/Oversold Stocks
S&P 500
Most Overbought Most OversoldName RSI (14D) Name RSI (14D)
TYSON FOODS INC-CL A 76.87 NETFLIX INC 22.33
NRG ENERGY INC 75.18 FAMILY DOLLAR STORES 23.20
AT&T INC 74.72 TIFFANY & CO 27.32
FRONTIER COMMUNICATIONS CORP 74.65 INTL GAME TECHNOLOGY 28.37
EXELON CORP 74.64 AMERISOURCEBERGEN CORP 28.46
BAXTER INTERNATIONAL INC 73.35 GOOGLE INC-CL A 29.54
QUEST DIAGNOSTICS INC 72.99 MICRON TECHNOLOGY INC 30.14
NEWFIELD EXPLORATION CO 72.31 AMAZON.COM INC 30.17
MCCORMICK & CO-NON VTG SHRS 72.00 CA INC 30.34
ALLEGHENY TECHNOLOGIES INC 71.32 MCGRAW HILL FINANCIAL INC 30.41
CENTURYLINK INC 71.26 STAPLES INC 30.68
BEAM INC 71.12 PRICELINE.COM INC 31.05
CORNING INC 70.97 GILEAD SCIENCES INC 31.24FIRSTENERGY CORP 70.54 PLUM CREEK TIMBER CO 31.62
SCHLUMBERGER LTD 70.26 WYNN RESORTS LTD 31.74
Source: Bloomberg Finance L.P. As of March 27, 2014.
S&P/TSX Composite
Most Overbought Most Oversold
Name RSI (14D) Name RSI (14D)
VERMILION ENERGY INC 79.58 DUNDEE CORP -CL A 16.24
CANADIAN OIL SANDS LTD 78.30 NIKO RESOURCES LTD 17.13
ADVANTAGE OIL & GAS LTD 76.24 WESTPORT INNOVATIONS INC 23.28
BLACK DIAMOND GROUP LTD 74.13 KINROSS GOLD CORP 23.74
PEMBINA PIPELINE CORP 73.79 SILVERCORP METALS INC 28.16
BIRCHCLIFF ENERGY LTD 73.78 NEW GOLD INC 28.32
MEG ENERGY CORP 72.99 ELDORADO GOLD CORP 28.83
PACIFIC RUBIALES ENERGY CORP 72.36 CANFOR CORP 29.36
CENOVUS ENERGY INC 71.80 MARTINREA INTERNATIONAL INC 30.24
ENCANA CORP 71.62 YAMANA GOLD INC 30.86
PRECISION DRILLING CORP 71.60 NORTHERN PROPERTY REAL ESTAT 30.96
ALTAGAS LTD 71.25 BARRICK GOLD CORP 31.40
NORTHLAND POWER INC 70.93 VALEANT PHARMACEUTICALS INTE 32.21
QUEBECOR INC -CL B 70.50 WAJAX CORP 32.87
LEGACY OIL + GAS INC 70.07 THOMPSON CREEK METALS CO INC 32.91
Source: Bloomberg Finance L.P. As of March 27, 2014.
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Market Statistics
Region Index Last 1 Week 1 Month 3 Month YTD 1 Year 3 Year 5 Year
U.S. S&P 500 1852.56 -1.23 -0.56 0.41 0.04 17.83 12.17 17.78
Dow Jones Industrial Average 16268.99 -0.41 -0.35 -1.30 -1.88 11.56 10.07 15.90
Dow Jones Transportation 7429.54 -1.74 0.86 0.81 0.15 18.48 12.33 21.68Dow Jones Utilities 522.00 1.65 1.37 7.78 7.20 3.44 9.00 9.68
Nasdaq Composite 4173.58 -3.89 -3.64 -0.13 -0.61 27.05 14.98 21.85
Russell 2000 1155.49 -3.96 -2.67 -0.83 -1.05 21.01 11.90 21.83
Russell 1000 Value 937.65 -0.47 0.76 1.26 0.98 17.06 11.91 17.80
Russell 1000 Growth 861.55 -2.29 -2.36 0.01 -0.52 19.69 12.79 18.98
Canada S&P/TSX Composite 14184.10 -1.27 -0.22 4.35 4.09 11.21 0.68 9.96
S&P/TSX 60 811.65 -1.28 -0.20 3.70 3.56 10.98 0.61 8.68
S&P/TSX Smallcap 645.76 -1.69 -1.42 6.40 5.74 10.41 -5.72 12.79
S&P/TSX Venture 985.35 -4.78 -3.90 7.22 5.73 -10.34 -24.41 0.50
International DAX 9451.21 1.89 -1.78 -0.73 -0.16 22.12 11.12 17.76FTSE 100 6588.32 0.50 -3.22 -2.38 -2.28 2.78 3.73 11.07
Nikkei 225 14622.89 3.32 -0.98 -9.17 -9.79 19.13 15.74 11.24
Hang Seng 21834.45 2.93 -3.38 -5.07 -5.32 -1.05 -1.47 9.34
Shanghai 2046.59 -0.29 -0.71 -2.83 -3.51 -8.70 -11.88 -2.97
MSCI World 1654.34 -0.02 -1.33 -0.06 -0.48 15.23 7.75 14.92
MSCI EAFE 1892.99 1.31 -2.22 -0.79 -1.19 13.03 3.81 11.80
MSCI Emerging Markets 968.23 3.21 0.92 -2.23 -2.73 -5.55 -5.02 10.53
S&P 500 Sectors Consumer Discretionary 508.44 -3.51 -4.30 -3.78 -4.53 20.42 18.58 26.08
Comsumer Staples 438.46 0.21 0.90 -0.88 -1.12 6.63 12.63 14.32
Energy 639.49 1.52 1.04 -0.92 -1.02 10.45 3.56 12.81
Financials 298.79 -1.72 1.71 1.07 0.80 21.05 10.63 19.26
Health care 672.05 -2.20 -2.22 4.63 4.50 25.83 21.09 18.81
Industrials 443.49 -0.46 -0.97 -1.70 -2.13 22.36 11.34 21.32
Information Technology 592.33 -2.00 -1.08 1.16 0.55 21.80 12.33 19.33
Materials 294.38 -1.59 -1.12 0.87 0.57 18.50 6.41 16.16
Telecommunications 152.42 1.80 4.54 -0.88 -0.85 -2.41 5.97 7.93
Utilities 206.50 1.80 1.85 8.26 7.71 4.74 9.38 9.72
S&P/TSX Sectors Consumer Discretionary 1529.64 -1.38 1.38 2.47 2.36 27.76 12.78 15.40
Comsumer Staples 2736.02 -0.29 1.73 7.47 6.72 23.17 17.26 14.94
Energy 3099.07 0.84 3.05 7.22 6.95 13.67 -2.39 7.89
Financials 2121.86 -0.57 0.74 1.51 1.09 16.68 5.96 14.79Health care 1733.51 -9.65 -9.26 11.24 9.52 53.24 36.03 46.44
Industrials 2024.47 -2.42 -2.50 -0.29 -0.14 18.52 13.75 19.45
Information Technology 153.89 -3.58 -4.11 5.74 5.90 23.04 -12.76 -5.27
Materials 2249.03 -4.86 -6.18 8.60 8.84 -15.38 -17.10 -1.56
Telecommunications 1167.04 -0.14 0.09 2.02 1.98 -0.21 11.16 12.15
Utilities 1857.82 0.41 2.90 6.75 6.46 -1.99 -0.13 7.25Source: Bloomberg Finance L.P. As of March 27, 2014.
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Appendix A Important Disclosures
General Research Disclosure
The statements and statistics contained herein are based on material believed to be reliable, but are not guaranteed to be accurate or
complete. This report is for informational purposes only and is not an offer or solicitation with respect to the purchase or sale of any
investment fund, security or other product. Particular investment, trading, or tax strategies should be evaluated relative to each
individuals objectives. Graphs and charts are used for illustrative purposes only and do not reflect future values or future performance.This document does not provide individual financial, legal, investment or tax advice. Please consult your own legal, investment and tax
advisor. All opinions and other information in this document are subject to change without notice. The Toronto-Dominion Bank and its
affiliates and related entities are not liable for any errors or omissions in the information or for any loss or damage suffered.
TD Waterhouse Canada Inc. and/or its affiliated persons or companies may hold a position in the securities mentioned, including
options, futures and other derivative instruments thereon, and may, as principal or agent, buy or sell such securities. Affiliated persons
or companies may also make a market in and participate in an underwriting of such securities.
Full disclosures for all companies covered by TD Securities Inc. can be viewed at
https://www.tdsresearch.com/equities/welcome.important.disclosure.action
Company Ticker Disclosures
Constellation Software Inc. CSU-T N/A
Precision Drilling Corp. PD-T 2,4,9
Bank of America Corp. BAC-N N/A
Comerica Inc. CMA-N N/A
Canadian Imperial Bank of
CommerceCM-T 9,10
1. TD Securities Inc., TD Securities (USA) LLC or an affiliated company has managed or co-managed a public offering of securities
within the last 12 months with respect to the subject company.
2. TD Securities Inc., TD Securities (USA) LLC or an affiliated company has received compensation for investment banking services
within the last 12 months with respect to the subject company.
3. TD Securities Inc., TD Securities (USA) LLC or an affiliated company expects to receive compensation for investment banking
services within the next three months with respect to the subject company.4. TD Securities Inc. or TD Securities (USA) LLC has provided investment banking services within the last 12 months with respect to
the subject company.
5. A long position in the securities of the subject company is held by the research analyst, by a member of the research anal ysts
household, or in an account over which the research analyst has discretion or control.
6. A short position in the securities of the subject company is held by the research analyst, by a member of the research ana lysts
household, or in an account over which the research analyst has discretion or control.
7. A long position in the derivative securities of the subject company is held by the research analyst, by a member of the research
analysts household, or in an account over which the research analyst has discretion or control.
8. A short position in the derivative securities of the subject company is held by the research analyst, by a member of the research
analysts household, or in an account over which the research analyst has discretion or control.
9. TD Securities Inc. and/or an affiliated company is a market maker, or is associated with the specialist that makes a market, in the
securities of the subject company.
10. TD Securities Inc. and/or affiliated companies own 1% or more of the equity securities of the subject company.11. A partner, director or officer of TD Securities Inc. or TD Securities (USA) LLC, or a research analyst involved in the preparation of
this report has, during the preceding 12 months, provided services to the subject company for remuneration.
12. Subordinate voting shares.
13. Restricted voting shares.
14. Non-voting shares.
15. Common/variable voting shares.
16. Limited voting shares.
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Technical Research Disclosure
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research can be obtained through your TD Wealth advisor or on the Markets and Research site within WebBroker.
The technical research opinions contained in this report are based on historical technical data and expectations of the most likely
direction of a market or security. No guarantee of that outcome is ever implied.
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technical opinions expressed in the research report accurately reflect the personal views of the analyst(s) about any and all of the
securities or issuers discussed herein, and (ii) no part of the research analysts compensation was, is, or will be, directly or indirectly,
related to the provision of specific recommendations or views expressed by the research analyst in the research report.
Conflicts of Interest
The Portfolio Advice & Investment Research analyst(s) responsible for this report may own securities of the issuer(s) discussed in this
report. As with most other employees, the analyst(s) who prepared this report are compensated based upon (among other factors) theoverall profitability of TD Waterhouse Canada Inc. and its affiliates, which includes the overall profitability of investment banking
services, however TD Waterhouse Canada Inc. does not compensate its analysts based on specific investment banking transactions.
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