Technical Review of Stocks Update –– 3 October 2016 CIO Wealth Management Research Peter Lee, Chief Technical Analyst, [email protected], +1-212-713-8888, ext.01 This report provides technical analysis on stocks that, we believe, are of a wide interest. This list is not a template for the construction of your personal portfolio. You should discuss investment decisions with your Financial Advisor. For more information about this report, see Description and Methodology in the Appendix. We would like to thank Praveen Dodda, an employee of Cognizant Group, for his assistance in preparing this research report. Cognizant staff provides research support services to UBS. ab This report has been prepared by UBS Financial Services Inc. (UBS FS). Analyst certification and required disclosures begin on page 32. UBS does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.
Transcript
Technical Review of Stocks
Update –– 3 October 2016 CIO Wealth Management Research
Peter Lee, Chief Technical Analyst, [email protected], +1-212-713-8888, ext.01
This report provides technical analysis on stocks that, we believe, are of a wide interest. This list is not a template for the construction of your personal portfolio. You should discuss investment decisions with your Financial Advisor. For more information about this report, see Description and Methodology in the Appendix. We would like to thank Praveen Dodda, an employee of Cognizant Group, for his assistance in preparing this research report. Cognizant staff provides research support services to UBS.
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This report has been prepared by UBS Financial Services Inc. (UBS FS). Analyst certification and required disclosuresbegin on page 32. UBS does and seeks to do business with companies covered in its research reports. As a result,investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.Investors should consider this report as only a single factor in making their investment decision.
Table of Contents Ticker Name Page Ticker Name Page AAPL APPLE 4 KO COCA-COLA CO 16 ABBV ABBVIE INC 4 MCD MCDONALD'S CORP 17 ABT ABBOTT LABORATORIES 5 MDLZ MONDELEZ INTERNATIONAL INC 17 ACN ACCENTURE 5 MDT MEDTRONIC INC 18 AMGN AMGEN INC 6 MMM 3M CO 18 AMZN AMAZON.COM INC 6 MO ALTRIA GROUP INC 19 BA BOEING 7 MRK MERCK & CO 19 BAC BANK OF AMERICA 7 MSFT MICROSOFT INC 20 BMY BRISTOL-MYERS SQUIBB CO 8 NKE NIKE INC 20 BRK.B BERKSHIRE HATHAWAY - CLASS B 8 OXY OCCIDENTAL PETROLEUM CORP 21 CELG CELGENE CORP 9 PEP PEPSICO INC 21 CPB CAMPBELL SOUP CO 9 PFE PFIZER INC 22 CSCO CISCO SYSTEMS INC 10 PG PROCTER & GAMBLE CO 22 CVS CVS CAREMARK CORP 10 PM PHILIP MORRIS INTERNATIONAL 23 CVX CHEVRON CORP 11 SBUX STARBUCKS 23 DIS THE WALT DISNEY COMPANY 11 SLB SCHLUMBERGER LTD 24 FB FACEBOOK INC 12 T AT&T INC 24 GE GENERAL ELECTRIC CO 12 TXN TEXAS INSTRUMENTS INC 25 GOOGL ALPHABET INC 13 UPS UNITED PARCEL SERVICE 25 HD HOME DEPOT INC 13 UTX UNITED TECHNOLOGIES CORP 26 HON HONEYWELL INTERNATIONAL INC 14 V VISA INC-CLASS A 26 IBM INTL BUSINESS MACHINES CORP 14 VZ VERIZON COMMUNICATIONS INC 27 INTC INTEL CORP 15 WFC WELLS FARGO AND CO 27 JNJ JOHNSON & JOHNSON 15 XOM EXXON MOBIL CORP 28 JPM JPMORGAN CHASE & CO 16 The last update on these stocks was published on 29 August 2016. Going forward, our previously published rating for these stocks should not be relied upon.
Technical Review of Stocks
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Changes since last report Additions
Ticker Name
Deletions
Ticker Name EMC EMC CORP
Technical Rating Changes
Name Ticker Old New
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Apple Inc (AAPL)
2012 2013 2014 2015 2016
5050
6060
7070
8080
9090
100100
110110
120120
130130
Price 10-Week Moving Average 30-Week Moving Average
Source: FactSet, UBS, as of 29 September 2016 Support levels Resistance levels
Rationale: After suffering a 33.5% fall over the past 1-plus year this important technology name found key support at 89.47 during May '16 along the extension of its 2011/2012 triangle breakout (90), the 2009 uptrend (88.5) and the 61.8% retracement (85.73) from its 2013-2015 rally. The recent early Aug '16 falling wedge breakout above 104.5coupled with the positive outside (9/16/16) signal the start of a recovery to 117-120 or the 61.8% retracement from 2015-2016 decline and Dec '16 highs. Above this renders upside to 124 and 133-134.5. Initial support is 107-110/102.
AbbVie Inc (ABBV)
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 Apr '16 Jul '163030
3535
4040
4545
5050
5555
6060
6565
7070
Price 10-Week Moving Average 30-Week Moving AverageSource: FactSet, UBS, as of 29 September 2016
Rationale: The Aug '15 uptrend breakdown at 59.5 (Sep '15) coupled with a weekly death cross sell (late-Sep '15) led to a 36.5% sell-off. This Healthcare soon found key support at 45.45 (Oct '15) or near its pivotal 61.8% retracement (47.44) from its 2013-2015 rally. A strong oversold rally is now encountering formidable resistance near 66-69 (exten-sion of the 2013 uptrend and the Aug '2015 gap down). A breakout here warrants a technical upgrade of the trend as this suggests a retest of its all-time highs (70.76-71.60). However, violation of key support at 60-62 warns of selling.
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Abbott Laboratories (ABT)
2012 2013 2014 2015 2016
2525
3030
3535
4040
4545
5050
Source: FactSet, UBS, as of 29 September 2016 Support levels Resistance levels
First Second Third First Second Third
39.5-40.5 36-37 33-34 46-47 51-52 54-55
Technical rating Neutral
Sector Health Care
Last Sale Price $41.44
Rationale: A negative outside week on 8/14/15, coupled with a large gap down on 8/24/15 and a weekly death cross sell signal led to a sharp 30.42% correction from its Jul '15 high (51.74) to its Jan '16 low (36). A deeply oversold con-dition soon triggered a technical oversold rally that has failed to clear above key medium-term resistance near its prior 1/4/16 gap down breakdown (44.05-44.90), extension of the 2011 uptrend channel (46) and the 50-61.8% retrace-ments from its 2015-2016 decline (43.87-45.73). Key support remains at 36-37 or Jan/Feb/May/Jun/Jul '16 lows.
Accenture PLC (ACN)
2012 2013 2014 2015 2016
5050
6060
7070
8080
9090
100100
110110
120120
Price 10-Week Moving Average 30-Week Moving Average
Source: FactSet, UBS, as of 29 September 2016 Support levels Resistance levels
Rationale: Failure to surge above key resistance at 118-121 or the top of its 2009 uptrend channel coupled with a negative outside month (Jun '16) and two negative outside weeks (6/10/16 and 6/24/16) led to a correction. Since the primary trend remains up, a breakout above 116.5 still suggests upside to the low-130s and above this to the low-140s, over time. The ability to maintain above key initial support at 108.5-109.5 or Jul/Sep '16 lows, Mar '16 breakout and the 38.2% retracement of its recent 2016 rally may contain the selling and allow for the resumption of uptrend.
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Amgen Inc. (AMGN)
2012 2013 2014 2015 20164040
6060
8080
100100
120120
140140
160160
180180
Price 10-Week Moving Average 30-Week Moving Average
Source: FactSet, UBS, as of 29 September 2016 Support levels Resistance levels
Rationale: After consolidating for the past 2-years a positive outside week during 7/1/16 as well as a technical breakout above key resistances at mid-160s (Oct/Nov/Dec 2016 and Apr/Jul '16 highs) and above mid-170s (Dec 2014/Mar/Apr 2015 highs) hint of the resumption of the primary uptrend. Next resistance is visible at 176.64-176.85 (Aug/Sep '16 highs) and then 181.81 (Aug 2016 all-time highs). A breakout renders upside targets to 185-187, (near-term) and then to 200-210, (medium term). Key initial support is 160-166 (Jul '16 breakout/30-wk ma/ Sep '16 lows).
Amazon.com Inc. (AMZN)
2012 2013 2014 2015 2016
200200
300300
400400
500500
600600
700700
800800
Price 10-Week Moving Average 30-Week Moving Average
Source: FactSet, UBS, as of 29 September 2016 Support levels Resistance levels
Rationale: We retain a Bullish technical outlook on this momentum name as the early-May '16 breakout above its pri-or Jan 2016 all-time high (696/44) renders technical targets to 870-885, near-term and above this to 925-935, medi-um-term. Based on the sharp rally in the past 2-years an overbought condition will likely develop in the future prompt-ing a consolidation. Key initial supports moves up to 750-775 coinciding with the 10-wk ma and the Aug/Sep '16 lows. Secondary support also rises to 680-705 or to the May '16 gap up breakout, the Jun '16 lows and the 30-wk ma.
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Boeing (BA)
2012 2013 2014 2015 2016
6060
8080
100100
120120
140140
160160
Price 10-Week Moving Average 30-Week Moving Average
Source: FactSet, UBS, as of 29 September 2016 Support levels Resistance levels
Rationale: Although the longer-term trend remains favourable and higher prices are possible, over the time, a 447% rally over the past 7 years has created an overbought condition prompting a 2-year consolidation. However, this con-solidation has created a complex 2-year head/shoulders top pattern. In addition, a negative outside week (6/24/16) and failure to surpass its key resistance at 138-145 or the left/right shoulders and the 2015 downtrend solidifies a distribu-tion top and warns of further volatility. Key initial support is 122-125 and then to 110-115 or pivotal neckline support.
Bank of America Corp (BAC)
2012 2013 2014 2015 201644
66
88
1010
1212
1414
1616
1818
2020
Price 10-Week Moving Average 30-Week Moving Average
Source: FactSet, UBS, as of 29 September 2016 Support levels Resistance levels
Rationale: Violation of its 5-year uptrend channel (16-16.5) and a subsequent early-2016 breach of a 2-year trading range (14.5-15) has weakened the intermediate-term trend. However, the Aug '15 to Feb '16 correction of 40.53% led to a deeply oversold condition prompting the recent technical oversold from the Feb '16 lows (10.99).The ability to maintain above its prior breakdown (15-15.5) hints of a recovery. Next key challenge is to clear 16.5-17 or the 2015 downtrend, 76.4% retracement from 2015-2016 decline and Jan '16 gap down. Key supports: 14-14.5 and 12.5-13.
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Bristol-Myers Squibb Co (BMY)
2012 2013 2014 2015 2016
3030
4040
5050
6060
7070
8080
Price 10-Week Moving Average 30-Week Moving Average
Source: FactSet, UBS, as of 29 September 2016 Support levels Resistance levels
Rationale: After rallying 382% from its Oct '08 bottom (16) to its Jun '16 high (77.12) BMY abruptly peaked near its all-time highs of 75-79 (1999/2000). A negative outside week (7/29/16) and a large gap down (8/5/16) led to sharp 24.69% decline. In the process it has violated its 10-wk/30-wk ma (60/67), 10-mo/30-mo ma (66/61) and 2012/2015 uptrends (63/65). Although the strong selling may have subsided near the mid-50s and technical oversold rallies are possible a technical base is needed to confirm a bottom. Key initial resistance is 57.5-58, 60-60.25 and 63.5-64.75.
Berkshire Hathaway Inc. – Class B stock (BRK.B)
2012 2013 2014 2015 20166060
7070
8080
9090
100100
110110
120120
130130
140140
150150
Price 10-Week Moving Average 30-Week Moving Average
Source: FactSet, UBS, as of 29 September 2016 Support levels Resistance levels
Rationale: The 1-year correction (-19.22%) from its Dec '14 high (152.94) ended via an early-Mar '16 technical breakout above 138-141 corresponding to the Oct/Nov '15 highs, the 50-61.8% retracement from its 2014-2016 de-cline and the pivotal Dec '14 downtrend. In addition, the Aug '16 breakout above 147-148 hints of the resumption of its primary uptrend and suggests upside targets to 152.94 (all-time high on Dec '14) and above this to 158-160 (medi-um-term) and then to the low-to-mid 180s. Initial support: 143-145 (Aug '16 lows /Feb '16 uptrend) and 137-139.
Technical Review of Stocks
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Celgene Corp. (CELG)
2012 2013 2014 2015 20162020
4040
6060
8080
100100
120120
140140
Price 10-Week Moving Average 30-Week Moving Average
Source: FactSet, UBS, as of 29 September 2016 Support levels Resistance levels
Rationale: Although the biotechnology sector (BTK) and this biotechnology name may have found respective bottoms at 2,575.58/92.98 (Feb '16 lows), a negative outside on 8/26/16 coupled with a weak relative strength reading (vs SPX) and poor price momentum (MACD) suggest a technical base is still needed to repair the technical damages incurred during the 33.88% decline during 2015-2016 timeframe. The ability of CELG to maintain above its 2015-2016 lows (93-95) hints of an extensive technical basing effort between 93-95 and 115-118 over the near-to-medium term.
Campbell Soup Co. (CPB)
2012 2013 2014 2015 2016
3030
3535
4040
4545
5050
5555
6060
6565
7070
Price 10-Week Moving Average 30-Week Moving Average
Source: FactSet, UBS, as of 29 September 2016 Support levels Resistance levels
First Second Third First Second Third
50-53 45-46 40-41 59-61 67.89/70-71 74-76
Technical rating Neutral
Sector Cons. Staples
Last Sale Price $54.38
Rationale: An ascending triangle breakout (above high-30s in 2013), a breakout above a two and half year accumula-tion pattern (above high-40s to low-50s in 2015) and the 2001 channel breakout (above 52 in late-2015) renders up-side technical targets to the mid-70s, longer-term. However, the recent sharp rally to 66.75-67.89 (May/Jul '16) led to a negative outside month (May '16). This action coupled with a violation of key initial support near 60 suggests a correc-tion to 50-53 or to its prior 2015 breakout, 2012 uptrend and the 50-61.8% retracement from 2013-206 rally.
Technical Review of Stocks
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Cisco Systems Inc (CSCO)
2012 2013 2014 2015 20161414
1616
1818
2020
2222
2424
2626
2828
3030
3232
Price 10-Week Moving Average 30-Week Moving Average
Source: FactSet, UBS, as of 29 September 2016 Support levels Resistance levels
Rationale: A triangle and/or head/shoulders bottom pattern has developed over the past 2-years. A recent surge above 29-29.5 confirms a key technical breakout and renders upside targets to 34-34.24 (medium-term), 36.34-37 (intermediate term), and then to 44.5-45/54 (long-term). Initial support rises to 29.25-30 coinciding with the recent Jun/Jul '16 breakout and the 30-wk ma. Secondary support also moves up to 27-28 or the Jul '16 lows, 30-mo ma and extension breakout. The late-2014/2015/2016 lows and the bottom of its 2011/2012 uptrend near 23-24 is key intermediate-term support.
CVS Caremark Corp. (CVS)
2012 2013 2014 2015 2016
3030
4040
5050
6060
7070
8080
9090
100100
110110
Price 10-Week Moving Average 30-Week Moving Average
Source: FactSet, UBS, as of 29 September 2016 Support levels Resistance levels
Rationale: After achieving its all-time highs of 113.65 (Aug '15) CVS has fallen 28.4% in 3-weeks, finding key support in the low-80s (81.37–Aug '15 low). The ability to find support here prevented a deeper and more extensive setback. Nonetheless, a1-plus year symmetrical triangle developed between low-90s (91-93) and 103-106. The Sep '16 break-down below 92-93 warns of a retest of its key intermediate-term support at 86-86.5 (Feb '16 lows and 2011 uptrend). Violation here renders downside to 81.37-82.19 or to Aug '15 lows and the 38.2% retracement from 2011-2015 rally.
Technical Review of Stocks
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Chevron Corp (CVX)
2012 2013 2014 2015 2016
7070
8080
9090
100100
110110
120120
130130
Source: FactSet, UBS, as of 29 September 2016 Support levels Resistance levels
Rationale: The ability to find key support at 69.58 (Aug '15) coupled with a higher-low pattern at 75.33 (Jan '16) hints of a bottom. A subsequent breakout above 94.5-98.5 or the 38.2% retracement from 2014-2016 decline and the Nov '15 highs reaffirm an intermediate term recovery. Although upside to 108-111 and above this to 119-120 is possible a 7-year head/shoulders top still warns of further volatility. Failure to convincingly surpass above key initial resistance at 108-111 or the 61.8% retracement from 2014-2015 and Feb/May '16 highs can lead to pullback to 97-98 and below this to 89-93.
The Walt Disney Co (DIS)
2012 2013 2014 2015 20162020
4040
6060
8080
100100
120120
Price 10-Week Moving Average 30-Week Moving Average
Source: FactSet, UBS, as of 29 September 2016 Support levels Resistance levels
Rationale: The long-term structural trend remains up, however, the intermediate-term trend for this Consumer Discre-tionary name has weakened dramatically soon after a negative outside month (Aug '15), gap downs (Dec '15/Jan '16), and negative outside weeks (8/7/15, 12/18/15, 5/13/16 and 6/24/16). Violation of the 2011 uptrend (98) and short-term 5-month head/shoulders top breakdown below its neckline support at 94-95 confirms a medium-term top and renders downside to 90-91 (Feb/Aug '15 lows) and below this to 86.25 (Feb '16 low) and possibly as low as 78.5-80.
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Facebook Inc. (FB)
Jul '12 Jan '13 Jul '13 Jan '14 Jul '14 Jan '15 Jul '15 Jan '16 Jul '16
2020
4040
6060
8080
100100
120120
140140
Price 10-Week Moving Average 30-Week Moving Average
Source: FactSet, UBS, as of 29 September 2016 Support levels Resistance levels
Rationale: A breakout during Jul '13 above the mid-30s soon led to a steeper uptrend channel as defined by the low-100s and the low-130s. It appears that since the 4/29/16 positive outside week and the late-Jul '16 surge to new highs FB is close to breaking out of the top of its 3-year uptrend channel (132-133). A breakout here is important as this ren-ders next upside targets to 136-138 (near-term), 147-149 (medium term) and then to 162-165 (long-term). Key initial support is at 118-120 (30-wk ma), 106-108 (2014 uptrend and Apr/Jul '16 lows) and 103-105 (2013 uptrend).
General Electric Co (GE)
2012 2013 2014 2015 2016
1515
2020
2525
3030
Price 10-Week Moving Average 30-Week Moving Average
Source: FactSet, UBS, as of 29 September 2016 Support levels Resistance levels
Rationale: The ability of GE to retain its 7-year uptrend channel between 27-28 and 33-34 suggests higher prices, over time. However, failure to clear the top of its channel in Jul '16 coupled with a negative outside week (7/22/16) warns of a consolidation. The May/Jul '16 lows and the Oct '15 breakout at 28-29 is now key initial support. Additional sup-port is also available near 27 coinciding with the bottom of its 2009/2011 uptrend channel. Violation here opens the door for a deeper correction to test its Oct '15 gap up (25.49-26.22). Key resistance is at the top of its channel (33-34).
Technical Review of Stocks
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Alphabet Inc (GOOGL)
2012 2013 2014 2015 2016
300300
400400
500500
600600
700700
800800
Price 10-Week Moving Average 30-Week Moving Average
Source: FactSet, UBS, as of 29 September 2016 Support levels Resistance levels
Rationale: GOOGL has appreciated 561%/65.79 from its respective 2008/2015 lows (123.77/490.91). Failure to clear above the top of its uptrend channel (810-820) during 2/5/16 coupled with a negative outside month (Feb '16), a neg-ative outside week (2/5/16) and another negative outside month (Apr '16) led to a 4-month 17% correction to 672.66 (6/27/16). An island reversal on 6/28/16 (683-685) and a positive outside month in Sep '16, if confirmed, hint of the next rally to 810-820 (near-term), 838-856 (medium) and 940-950 (long-term). Supports: 769-785/740-757/673-705.
Home Depot (HD)
2012 2013 2014 2015 20162020
4040
6060
8080
100100
120120
140140
Price 10-Week Moving Average 30-Week Moving Average
Source: FactSet, UBS, as of 29 September 2016 Support levels Resistance levels
Rationale: Despite the choppiness, this year an uptrend channel from 2011 still remains intact between 116-120 and 150. The rally since 2008 (+715%) is similar to the prior 1995-2000 rally of +757%. Nonetheless, two negative outside weeks (8/5/16 and 8/19/16) has developed soon after HD recorded all-time highs of 139 (8/2/16). The recent correction is nearing key supports at 124-125 (Jul/Sep '16 lows) and the bottom of its uptrend channel at 116-121. The ability to find support can lead to another rally back to 139-140 (prior Jul '16 highs) and above this to 149-151 (top of channel).
Technical Review of Stocks
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Honeywell International Inc. (HON)
2012 2013 2014 2015 2016
4040
5050
6060
7070
8080
9090
100100
110110
120120
Price 10-Week Moving Average 30-Week Moving Average
Source: FactSet, UBS, as of 29 September 2016 Support levels Resistance levels
Rationale: We maintain a cautiously Bullish technical stance as a large 13-year breakout at 63/69 during the late-2012/early-2013 (not shown) renders upside targets to 103 and then to 118.5. A recent ascending triangle breakouton Feb '16 above 107 also suggests upside targets to 120-121 and then to 128-131. After achieving 120.02 in Jul '16 an overbought condition and a large gap down on 7/22/16 warns of a consolidation to initial support at 110-113(May/Jul/Sep '16 lows). Secondary support is also visible at 106-107.5 (Feb '16 breakout and the Aug '15 uptrend).
International Business Machines Corp (IBM)
2012 2013 2014 2015 2016
120120
140140
160160
180180
200200
220220
Price 10-Week Moving Average 30-Week Moving Average
Source: FactSet, UBS, as of 29 September 2016 Support levels Resistance levels
Rationale: A 46% decline from the Mar '13 high (215.82) to the Feb '16 low (116.9) met its downside target coincid-ing with the 2010 breakout (128) and its 61.8% retracement (125) from 2008-2013 rally. The ability to find supporthere coupled with a large gap up on 2/18/16 led to a 41.1% rally. This technical recovery is now encountering key in-termediate term resistance at 165-167 or the 2013 downtrend and the 50% retracement from its 2013-2016 decline. A breakout renders next upside to the 61.8% retracement (178) and May '15 high (176). Support is 153-154/140-143.
Rationale: A 12-year head-and-shoulders bottom breakout (29.5) on Jun '14 still renders upside to the mid-40s. How-ever, the strong rally stalled at 37.9 (Dec '14) as INTC entered into a 2-year consolidation as represented by a triangle pattern between the high-20s/low-30s and the mid-to-high 30s. The Jul '16 breakout above the top of the triangle at 34.5-35.5 signals the resumption of the primary uptrend and upside targets to 36.4-38 (2002/2014 highs and 38.2% retracement from its 2000-2009 decline) and to 43-44 (50% retracement/target). Key initial support is low-to-mid 30s.
Rationale: A large multi-year channel breakout above the mid-to-high 70s during 2013 signaled the start of an out-performance cycle. This leadership Healthcare name has quickly exceeded a number of intermediate-term technical targets including the low-110s and recently the low-120s. Although higher prices to the low-to-high 130s are still pos-sible, an overbought condition warns of a consolidation. Violation of initial support at 115.5-116 (30-wk ma and Aug '15 uptrend) hints of the start of a correction to 109-111 (Jun '16 breakout/ 38.2% retracement from 2015-2016 rally).
Rationale: The longer-term trend is still Bullish as evidenced by the multi-year breakout above 53.29 during May '13. This breakout renders an upside target to 67.17 (prior 2000 highs) and above this to the mid-80s and then the low-90s, longer-term. In addition, the Feb'16 island reversal as well as the recent Aug '16 triangle breakout above the mid-60s signals the resumption of its primary uptrend. The rally from the breakout is now testing key supply at 69.03/70.61 (Nov'15/ July'15 highs).We expect a pullback to 65.50-63(10-wk/30-wk ma and Aug'16 low) before resuming uptrend. Next key resistance is 69.03 and above this to mid-70's.
Rationale: Although the longer-term trend remains favourable this consumer staples name is currently undergoing a near-to-medium term correction. KO needs to maintain above the prior breakout above 44.5 during Mar '16 as viola-tion of this support signals a false breakout. In addition, weekly death cross signal (Aug'16) led to breach the bottom of the triangle pattern (43.10) and the Apr/May/Jun/Jul lows of 43-44 trigger a retest of Jan'16 low (40.75). However, violation of Jan'16 low warns of a correction towards the high-30s or to the bottom of its 4-plus year trading range.
Rationale: The Oct '15 gap breakout above 105-107 completes a 5-year ascending triangle. This breakout as well as a subsequent late 1990s internal channel breakout above 118-119 (not shown) during late-Dec '15 render upside targets to 131.96 (May '16 highs) and above this to 137-138/141-143 (top of channel). Higher prices are possible if MCD sustains above 120, however, a negative outside month (May '16), a head/shoulders top breakdown below 116-118 and weekly death cross technical sell signal warns of a correction to 112.7-113 (Jan/Feb'16 lows) and 109.6 (Nov'15 low).
Rationale: A major base breakout in Mar ‘13 above 28.76 (not shown) confirms a long-term Bullish trend. Since then MDLZ has followed a steady uptrend recording new all-time highs during Jul '14 (39.54) and again during Aug '15 (48.58). The May/Jul '16 breakout above 44.5 renders a retest of its all-time high (48.58) and then the low-50s. How-ever, a negative outside week (07/29/16) hints of a throwback to 41.08 (Jun'16 low). The ability to maintain this sup-port coupled with a breakout above 46.36 (July'16 high) signals the resumption of its primary uptrend.
Rationale: This leadership Healthcare name confirmed a major technical breakout above its 2000/2006 highs (60-62) during Jan/Apr ‘14. This 14-year breakout coupled with a recent 1-plus year technical breakout above 78.5 during Apr '16 suggest upside targets to 87-88.65 (near-term), 93-95 (medium-term) and 100-102 (long-term). MDT is moving in Flag pattern (July'16) that slopes against the previous trend, is a short-term continuation pattern and a break above 88.65 (08/26/16 wk high) signals that the previous uptrend has resumed. Initial support is near 81-82.75.
3M Co (MMM)
Source: FactSet, UBS, as of 29 September 2016
Support levels Resistance levels
First Second Third First Second Third
171-178.5- 169 160 182-184 200 210-215
Technical rating Bullish
Sector Industrials
Last Sale Price $175.37
Rationale: This leadership Industrials continues to trend higher on the backdrop of strong relative strength (vs SPX) and favorable price momentum. The recent Jun '16 breakout above its Mar '15 high of 170.5 renders yet another new record high and suggests next upside targets to 182-184 (near-term), 200 (medium term) and then to 210-215 (longer-term). After achieving the near-term target a near-term consolidation is possible to 171-178.5 (10-wk ma / 30-wk ma) and below this to 169 (Jun '16 breakout).Secondary support is visible near 160 (Nov '15 high and Mar'16 breakout).
Technical Review of Stocks
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Altria Group Inc. (MO)
Source: FactSet, UBS, as of 29 September 2016
Support levels Resistance levels
First Second Third First Second Third
59.48-61.74 54-56 51-52 70-72 78-80 85
Technical rating Bullish
Sector Cons Staples
Last Sale Price $62.82
Rationale: MO has followed steady uptrend recording new highs during Feb'15 (56.69) and again during July'16 (70.14). It appears that after setting record highs and at the top of its rising channel MO tends to consolidate near low 60's to high 50's before resuming its primary uptrend. An overbought condition and recent pullback below its 10-wk ma (65.91) is now signalling a correction to 59.48-61.74 (Apr'16 low/ Oct'15 high). However, breakout above the top of its 2010/2011 channels at 66.5-67 suggest higher prices are possible to the high-70s (medium-term).
Rationale: Breakout from the 1-plus year downtrend channel and a close above the 61.82% retracement from its 2015 decline at 56-57 coupled with a recent surge above 61.62-63.6 indicates a major technical recovery from down-trend to uptrend. A surge above 64 (08/05/16 high price) renders upside targets toward the mid-to-high 70s. Initial support moves up to 62.16-60.74 (10wk-ma and the 08/05/2016 gap up breakout). Secondary support is also available along 57.67-59.95 (30-wk ma and 07/13/2016 high).
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Microsoft Inc. (MSFT)
Source: FactSet, UBS, as of 29 September 2016
Support levels Resistance levels
First Second Third First Second Third
53-55 48-49 44-46/39-40 58.7-60 65-66 70-71
Technical rating Bullish
Sector Technology
Last Sale Price $57.40
Rationale: A breakout of a large 13-plus year head-and-shoulders bottom pattern above neckline resistance at 37-38 (in 2013 – not shown) suggests a 21-point technical base rendering upside targets to 59-60. This also corresponds to the Jan '00 record high (59.97) as well as the technical target based on recent breakout above 49-50. The relative strength has been gaining momentum in each subsequent breakout including above Jan/Apr '16 highs at 56.77-56.85.This suggests next upside to 58.7-60 and above this to the mid-60s/low-70s. Key support is at 53.9 (30-wk ma).
Nike Inc. Cl B (NKE)
Source: FactSet, UBS, as of 29 September 2016
Support levels Resistance levels
First Second Third First Second Third
51-53 50.27-51.5 45-47.25 60-62 64-65.5 68-70/75
Technical rating Bullish
Sector C. Discretionary
Last Sale Price $52.16
Rationale: The 24.5% decline from its Dec '15 high (68.19) and the rolling over of the 10-wk/30-wk ma warns of a top. In addition, negative outside weeks (12/25/15, 2/5/16, 5/13/16, and 6/17/16) also suggest strong selling pressure. However, as long as NKE retains its key primary uptrend (mid-50s) and maintains above its major intermediate term support at 51-53 or the 30-mo ma (52.3), 38.2% retracement (50.27) from 2012-2012 rally, and Mar '15 breakout (50) higher prices are possible. A surge above 60.33 (08/27/16 high) signals the start of a sustainable turnaround.
Rationale: A 2-year falling wedge pattern breakout above 71-72 during mid-Apr '16 coupled with a weekly golden cross buy signal during same timeframe hint of a medium-term recovery. The 34.5% rally over the past 22 weeks has led to an overbought condition but has also created a solid head/shoulders bottom pattern. OXY failed to close above 50% retracement (79.78) from its 2014-16 decline may trigger a consolidation to key initial support at 66.20-66.94 (Mar'16/Apr'16 lows) and then to 58.21(Jan'16 low).
Rationale: A surge above 79.79 during Apr '13 confirms a multi-year breakout and renders upside targets to 115-117, over time. However, on a medium term basis, the 18.97% rally from its Jan '16 lows has created a moderately over-bought condition suggesting a consolidation before the resumption of primary uptrend toward 115-117. Initial support moves up to 104.75-107 or the 7/7/16 gap up breakout and the 30-wk ma. Secondary support is at 100-101(Apr/May/Jun '16 lows). The bottom of the 2011/2012 uptrend near 96-98 provides intermediate-term support.
Rationale: A 10-year downtrend breakout above 19 +/- 1 during 2011 (not shown) confirmed an intermediate term recovery. This rally has stalled at 36.46 (Aug '15) or near its 61.8% retracement (35.36) from the 1999-2009 decline and the 2004 highs (38.85) prompting a -22.52% correction. Nonetheless, a positive outside week (7/1/16) hints of another test of formidable supply at 36.46-38.89. However, a negative outside week (8/5/16) has pressured the stock to decline to key support along 32.50-32.96 (30-wk ma and May'16 low/ Mar'14 high).
Rationale: Despite a -30.75% selloff from its all-time high (93.89 - Dec '14) to its recent low (65.02 -Aug '15) this consumer staples name retains its longer-term structural uptrend channel (not shown), which dates back to the 1990s between the high-50s and the low-to-mid 90s. Positive outside weeks during Sep/Oct/Dec '15 and Jan/Mar/Jul/Aug '16 as well as a positive outside month in Jan '16 bode well for an intermediate term recovery. PG is now challenging cru-cial resistance at 88.50-91.79. A breakout here suggests a retest of 93.89. Key support is in the low-to-mid 80s.
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UBS CIO WM Research 3 October 2016 22
Philip Morris International (PM)
Source: FactSet, UBS, as of 29 September 2016
Support levels Resistance levels
First Second Third First Second Third
96-97 88-90 75-76/72 102.5-104.20 107-108 116-118
Technical rating Bullish
Sector Cons Staples
Last Sale Price $97.78
Rationale: This Consumer Staples has broken above two key resistance zones including the 2013 downtrend (86) dur-ing Oct '15 and its prior May '13 all-time high (96.73) on Mar '15. A successful test of its prior breakout during Apr/May '16 bodes well for higher prices to 102.5-104.20, 107-108 and 116-118, over time. However, a near-term overbought condition and a 6-month head/shoulders top pattern warns of a consolidation to 96-97 or the prior Mar '16 breakout, and Apr/Jun/Jul '16 lows (neckline support). Breakdown here suggests a decline toward 88-90.
Rationale: We retain a Bullish longer-term technical outlook due to the stock retaining its primary uptrend channel dating back to 2008/2009 bottom (48-49). However, a negative outside month (Apr '16) coupled with a violation of the top of the channel (59-60) has led to a consolidation via a 1-year triangle pattern between 52.63-53.41 and 59-61.5. A breakdown below 52.63 can open the door for a retest of the mid-to-high 40s. On the other hand, a breakout above top of the triangle at 59-61.5 reaffirms the primary uptrend and suggests upside targets to the mid-to-high 60s.
Rationale: From their 2014 highs, WTI Crude Oil fell 75.82% to 26.05 and SLB declined 49.81% to 59.60. An extreme oversold condition and a successful test of the bottom of its falling wedge at 59.6 (Jan '16) signal a recovery. A subse-quent falling wedge breakout at 74-76 further reaffirms a sustainable rally. This rally is facing resistance at 82-85 or the 38.2% retracement from its 2014-2016 decline and the Aug'15/Nov '15/Apr'16 highs. A breakout here can extend the rally to the high-80s to the mid-90s. Below 73.5-72 suggests a correction to 66-68 (Aug/Sep/Oct'15 lows).
Rationale: A 3-year downtrend channel breakout above 36.5-37 earlier in the year (Feb '16) is technically significant as this signals the start of an intermediate term recovery. This breakout renders an upside target to 39-41 (near-term) or the 50% retracement from its 1999-2003 decline and the May '08 highs. Above this supply suggests 43-44 (medium-term) and then to the low-50s (long-term). An overbought condition has developed near 43-44 (2007/Jul '16 highs), signalling a consolidation to 39-40 (9/16/2016 wk-low/38.2% retracement from 2015-2016 rally) and then mid-30s.
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Texas Instruments Incorporated (TXN)
Source: FactSet, UBS, as of 29 September 2016
Support levels Resistance levels
First Second Third First Second Third
66-68 63-64 59-60 72.5-74.5 78-79 90/99.78
Technical rating Bullish
Sector Technology
Last Sale Price $69.84
Rationale: The 2013 breakout above 39.63 (2007 highs) or the neckline resistance of a large 2002 head/shoulders bottom pattern renders upside targets to the mid-60s (near-term), the mid-to-high 70s (medium-term) and then to 90/100 (long-term). Although we believe TXN will continue to trend higher, over time, an overbought condition cou-pled with failure to clear above the low-to-mid 70s may trigger a near-term consolidation to initial support at 66-68 (Jul '16 gap up/09/12/16 low) and below this to 63-64 (Jan'16 uptrend) and then 59-60 (May '16 breakout/Mar'15 high).
Rationale: The ability to find support near the mid-to-high 80s (Jan/Feb '16) has stabilized the strong selling. A subse-quent surge above 105-107.58 also negates a large 2-year head/shoulders top pattern and suggests a retest of its head at 114.40 (Jan '15 high). A breakout here reaffirms the resumption of the long-term uptrend rendering upside targets to 117-118. However, fail attempts to clear above 114.40 may trigger a consolidation to key initial support at 106-107 (30-wk ma /Jul '16 breakout). A medium-term trading range is likely to develop between 100-104.5 and 112-114.4.
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United Technologies Corp (UTX)
Source: FactSet, UBS, as of 29 September 2016
Support levels Resistance levels
First Second Third First Second Third
97-98 91-92 83-85.5 109-112 119.5-120.5 124.45
Technical rating Neutral
Sector Industrials
Last Sale Price $101.06
Rationale: Although the longer-term still remains favourable, the intermediate-term technical outlook has weakened due to the 2009 uptrend breakdown at 101-102 during Jul '15.The recent rally from low-100's was stalled at 109.83 which coincides with the extension of the 2012 uptrend as well as the 61.8% retracement (109) from the 2015-2016 decline. A breakout here renders upside target till low -120s. Moderately overbought condition suggesting a pullback to 99-97 (38.2% retracement from its 2015-16 decline and Jun'16 lows).
Visa Inc Cl A (V)
Source: FactSet, UBS, as of 29 September 2016
Support levels Resistance levels
First Second Third First Second Third
81-78 73.5/66-67 60-61 82-84 92-96/98 102-103
Technical rating Bullish
Sector Technology
Last Sale Price $81.92
Rationale: The longer-term primary trend from 2008-09 lows remains intact. However, the relative strength trend (vs SPX) is slowing this year. This suggests a consolidation to alleviate an overbought condition. This technology name needs to maintain above the prior breakout (low-to-mid 80s) for continuation of uptrend towards to 92-96 or the top of its up-trend channels and then to as high as 108-110, over time. Fail attempts to breakout 92 may trigger a consolidation to key initial support at 81-78 (10-wk/30-wk ma) and below this to the Oct '14 uptrend and the Jul '16 lows at 73.25-73.5.
Rationale: A multi-year breakout above 2007 highs (43.01) in late-2012 (not shown) still renders an upside target to 62.3-64.5. In addition, a 3-year trading range breakout last month above 54.31 also suggests upside targets to 63.5. Although higher prices are still possible over the intermediate-to-longer term, the recent rally after breaking out 48-49 (Jan'16) has stalled at 56.95 (7/5/16) resulted in an island reversal as well as a negative outside week (7/29/16). Key support is near 49-50 (Apr and May'16 low and 30-mo ma) and then to 43-45 (38.2% retracement of 2008-16 rally).
Rationale: The Aug-Sep '15 correction led to a violation of the bottom of its 2012 uptrend channel. WFC remains in a downward sloping channel since July'15 renders downside target to low- 40's. Violation of key support at 44.17-44.5 (Feb'14 / Feb'16 lows) warns of selling pressure till low-40's and the bottom of the channel at 38-40 remains crucial support. However, oversold condition may prompt a pullback to key initial resistance at 48-49 (10 wk-ma and 30 wk-ma/ July'16 high) and above this to 51-52 (Apr'16, May'16, Jun'16 and Aug'16 highs).
Rationale: The Mar '16 breakout above its 2014 downtrend XOM signalled a recovery. This recovery has stalled near intermediate term resistance at 95-96 or the 76.4% retracement from its 2010 to 2014 rally and the 2007/2008 highs prompting a pullback to 83.5-86 to the Apr '16 breakout and the 38.2-50% retracement from 2015-2016 rally. How-ever, moderate oversold condition may prompt a relief rally till 88-89.50(Aug'16 high). We expect XOM to consolidate within the low-80s to the mid-90s over the near term (the respective bottom and top of the channel).
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UBS CIO WM Research 3 October 2016 28
Appendix
Description and Methodology This report provides technical analysis on a dynamic list of stocks that, we believe, are of a wide interest. Please note that technical views are highly variable and will change with market conditions. Accordingly, these 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.
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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.
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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.
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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.
Companies mentioned in this report:Apple Inc. (AAPL - Bellwether, $113.05), AbbVie (ABBV - Most Preferred, $63.07), Abbott Laboratories (ABT -Bellwether, $42.29), Accenture Plc (ACN - Most Preferred, $122.17), Amgen Inc. (AMGN - Bellwether, $166.81),Amazon.com Inc. (AMZN - Bellwether, $837.31), Boeing Co. (BA - Not Rated, $131.74), Bank of America (BAC -Most Preferred, $15.65), Bristol-Myers Squibb Co. (BMY - Most Preferred, $53.92), Celgene Corp. (CELG - MostPreferred, $104.53), Campbell Soup Co. (CPB - Least Preferred, $54.70), Cisco Systems Inc. (CSCO - Most Preferred,$31.72), CVS Health (CVS - Most Preferred, $88.99), Chevron (CVX - Most Preferred, $102.92), Walt Disney Co.(DIS - Most Preferred, $92.86), EMC Corp. (EMC - Not Rated, $29.05), Facebook (FB - Bellwether, $128.27), GeneralElectric Co. (GE - Not Rated, $29.62), Alphabet Inc. Class A (GOOGL - Most Preferred, $804.06), Home Depot Inc.(HD - Most Preferred, $128.68), Honeywell International Inc. (HON - Not Rated, $116.59), Intl Business Machines(IBM - Least Preferred, $158.85), Intel Corp. (INTC - Most Preferred, $37.75), Johnson and Johnson (JNJ - Bellwether,$118.13), JPMorgan (JPM - Most Preferred, $66.59), Coca-Cola Co. (KO - Bellwether, $42.32), McDonald's Corp.(MCD - Most Preferred, $115.36), Mondelez International (MDLZ - Most Preferred, $43.90), Medtronic Inc. (MDT -Most Preferred, $86.40), 3M Co. (MMM - Not Rated, $176.23), Altria Group Inc. (MO - Bellwether, $63.23), Merckand Co Inc (MRK - Bellwether, $62.41), Microsoft Corp. (MSFT - Bellwether, $57.60), Nike Inc. (NKE - Most Preferred,$52.65), Occidental Petroleum (OXY - Most Preferred, $72.92), PepsiCo Inc. (PEP - Bellwether, $108.77), Pfizer Inc. (PFE- Most Preferred, $33.87), Procter & Gamble Co. (PG - Bellwether, $89.75), Philip Morris Intl Inc. (PM - Most Preferred,$97.22), Starbucks Corp. (SBUX - Most Preferred, $54.14), Schlumberger (SLB - Most Preferred, $78.64), AT&T Inc.(T - Most Preferred, $40.61), Texas Instruments Inc. (TXN - Bellwether, $70.18), United Parcel Service Inc. (UPS - NotRated, $109.36), United Technologies Corp. (UTX - Not Rated, $101.60), Visa Inc. (V - Most Preferred, $82.70), VerizonCommunications Inc. (VZ - Least Preferred, $51.98), Wells Fargo (WFC - Bellwether, $44.28), Exxon Mobil (XOM - MostPreferred, $87.28)
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.
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UBS CIO WM Research 3 October 2016 32
Appendix
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 (3 October 2016)3M Co. 1, 2, 3, 4, 5, Abbott Laboratories 1, 2, 3, 4, AbbVie 1, Accenture Plc 1, 3, 4, Alphabet Inc. Class A 1, 2, 5, 11,Altria Group Inc. 1, 3, 4, Amazon.com Inc. 1, 3, 4, Amgen Inc. 1, 2, 3, 4, 5, 6, 7, Apple Inc. 1, 2, 3, 4, 5, AT&T Inc. 1, 2, 3,4, 6, 10, Bank of America 1, 2, 3, 4, 5, 7, 10, 11, Berkshire Hathaway Inc. 1, 2, 9, Boeing Co. 1, 3, 4, 8, 9, Bristol-MyersSquibb Co. 1, 3, 4, Campbell Soup Co. 1, 3, 4, Celgene Corp. 1, 2, 5, 11, Chevron 1, 2, 3, 4, 11, Cisco Systems Inc. 1,2, 3, 4, 10, 11, Coca-Cola Co. 1, 2, 3, 4, 5, CVS Health 1, 2, 3, 4, Exxon Mobil 1, 2, 3, 4, 11, 13; Facebook 1, GeneralElectric Co. 1, 2, 3, 4, 5, 9, 11, 12, Home Depot Inc. 1, 3, 4, Honeywell International Inc. 1, 2, 3, 4, 11, Intel Corp. 1, 2, 3,4, 5, 9, 10, 11, Intl Business Machines 1, 2, 3, 4, 5, 10, Johnson and Johnson 1, 2, 3, 4, 7, 10, 11, JPMorgan 1, 2, 3, 4, 5,10, 11, McDonald's Corp. 1, 3, 4, 9, Medtronic Inc. 1, 2, 5, 10, 11, Merck and Co Inc 1, 2, 3, 4, 5, 9, 11, Microsoft Corp.1, 2, 3, 4, 5, 10, 11, 12, Mondelez International 1, 2, 3, 4, 7, 10, 11, Nike Inc. 1, Occidental Petroleum 1, 2, PepsiCo Inc.1, 2, 3, 4, 5, 6, 7, 10, 11, Pfizer Inc. 1, 2, 3, 4, 11, 12, Philip Morris Intl Inc. 1, 2, 3, 4, 6, 7, 10, Procter & Gamble Co.1, 3, 4, 7, 10, Schlumberger 1, 3, 4, Starbucks Corp. 1, 2, 5, Texas Instruments Inc. 1, 3, 4, United Parcel Service Inc. 1,2, 3, 4, 5, 6, 7, 10, 11, United Technologies Corp. 1, 2, 3, 4, 9, Verizon Communications Inc. 1, 2, 3, 4, Visa Inc. 1, 2, 5,Walt Disney Co. 1, 2, 3, 4, 9, 12, Wells Fargo 1, 2, 3, 4, 5, 6, 7, 9, 10, 11,
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Technical Review of Stocks
UBS CIO WM Research 3 October 2016 33
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11. 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.12. The UBS Wealth Management strategist, a member of his or her team, or one of their household members has along common stock position in this company.13. UBS AG, Australia Branch is acting as joint financial advisor to InterOil Corporation on an arrangement agreementwith ExxonMobil and will receive a fee for acting in this capacity.
