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technical analysis 29/01/2014

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technical analysis – US charts of the day

VMC (Vulcan Materials) BUY. Bullish breakout on

strong volume and good RS vs. S&P 500. Targeting

$75-80 with an initial stop loss @ $54.84.

RF (Regions Financials) Reiterating our Jan 10th

BUY. Multi-month bullish breakout on strong volume.

Good RS, momentum. Target $12-13 stop @ $9.93.

SIAL (Sigma-Aldrich) Reiterating our Jan 9th

Speculative BUY. S/t pullback in m/t uptrend. Target

$110-112 with an initial tight stop loss @ $89.88.

AMGN (Amgen) Reiterating our Jan 23rd BUY.

Recent multi-month bullish breakout, improving RS vs.

S&P 500. Target $150-155, higher stop @ $111.79.

ALXN (Alexion Pharma) Reiterating our Dec 20th

BUY. Bullish breakout on stronger volume, good RS vs.

S&P 500. Target $156-160, higher stop @ $124.41.

AAPL (Apple) STOP LOSS – 2.16% abs. -4.48% rel.

vs S&P 500. Closing our October 22nd long position

due to move below our dynamic trailing stop. SELL.

Riccardo Ronco 44 20 7233 3245 [email protected]


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XAU vs 4-year Rate of Change: strategically this

sector is at its worst as seen in 2000. Tactically lots of

questions still to answer but l/t this looks attractive.

S&P 500 vs 5-dma TRIN Index: s/t market is

quite oversold and could bounce. However, there are

many intermarket forces lining up against equities.

US IEF/TLT ratio: our weekly ratio is breaking down

following a m/t negative divergence. Investors flowing

into TLTs: monitor carefully equities at these levels.

S&P 500 vs High-Yield Corp.: our SPY/HYG

weekly ratio shows a possible m/t rotational signal out

of stocks into Corp. debt. Weekly momentum neg. div.

US 5-yr forward 5-yr: inflation expectations are

dropping fast here. Each time we moved below 2.20%

the Fed has intervened. Taper off?

Daily S&P 500: BULLISH. Our stop to go

NEUTRAL (fully hedged) is on a close below 1776

on SPX. Market bouncing exactly on our level, for now



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Indices ticker Close % change Supports Resistances

Dow Jones Indus. Avg INDU 15928.56 0.57 15783 16453 - 16588

Nasdaq 100 Stock Indx NDX 3505.72 -0.09 3482 3634

Nasdaq Composite Index CCMP 4097.96 0.35 4052 4246

Nyse Composite Index NYA 10066.85 0.86 9935 10378 - 10406

Russell 2000 Index RTY 1138.24 0.93 1121 1182

S&P 100 Index OEX 795.50 0.38 789 819 - 824

S&P 400 Midcap Index MID 1314.32 0.91 1295 1359

S&P 500 Index SPX 1792.50 0.61 1772 1846 - 1850

S&P 600 Smallcap Index SML 644.34 0.81 636 667

Australian Dollar Spot AUD 0.8779 0.46 0.866 0.8888 - 0.9086

Canadian Dollar Spot CAD 1.1153 0.33 1.095 - 1.058 1.117

Dollar Index Spot DXY 80.5680 0.05 80.15 - 80.08 81.3 - 81.38

Eur-Jpy X-Rate JYEU 140.73 0.36 139.2 142.42 - 145.13

Euro Spot EUR 1.3671 -0.01 1.353 - 1.35 1.373 - 1.379

Gold Spot $/Oz GOLDS 1256.88 -0.02 1231.85 - 1200.9 1279.6

Japanese Yen Spot JPY 102.94 0.38 101.77 104.84 - 105.44

Silver Spot $/Oz SILV 19.58 -0.59 19.47 - 19.32 20.31 - 20.64

Swiss Franc Spot CHF 0.8972 0.11 0.89 0.913 - 0.915

Bloomberg Ticker S&P 500 level 2 GICS groups (best to worst) 1 d % 5 d % 20 d %

Overw

eig

ht

S5SFTW Software & Services 1.43 -3.20 -1.80

S5TRAN Transportation 1.18 -1.74 -1.84

S5TECH Technology Hardware & Equip. -4.34 -5.87 -4.60

S5PHRM Pharmaceuticals & Biotechnology 1.59 -2.54 1.41

S5CPGS Capital Goods 0.85 -3.21 -3.72

S5MEDA Media 0.92 -1.51 -3.38

S5SSEQX Semiconductors & Semi. Equip. 0.59 -2.54 -1.64

S5MATRX Materials 0.54 -4.88 -4.67

Neutr

al

S5HCES Health Care Equipment & Services 0.68 -2.40 -0.10

S5RETL Retailing 0.64 -1.89 -4.22

S5CODU Consumer Durables & Apparel 1.33 -1.03 -5.58

S5COMS Commercial Services & Supplies 0.23 -3.39 -5.02

S5HOTR Hotels Restaurants & Leisure 0.54 -2.04 -3.54

S5BANKX Banks 0.83 -2.33 1.08

S5AUCO Automobiles & Components 0.30 -4.84 -3.45

S5INSU Insurance 1.50 -4.28 -6.71

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ht

S5DIVF Diversified Financials 1.38 -3.54 -3.26

S5FDSR Food & Staples Retailing 0.90 -1.08 -4.16

S5ENRSX Energy 0.78 -2.43 -4.40

S5HOUS Household & Personal Products 0.98 -1.37 -3.14

S5FDBT Food Beverages & Tobacco 0.49 -1.81 -2.54

S5UTILX Utilities 0.41 -0.70 1.15

S5TELSX Telecommunication Services 0.01 -0.56 -4.08

S5REAL Real Estate 1.01 -1.68 1.44

N.B. Ranking is based on the relative performance vs S&P 500 on a 26-week basis. The percentage changes (1 - 5 and 20 days) are provided for information purpose only.



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S&P 500 daily spectrum

S&P 500 Cons.

Disc

Cons.

Staples Energy Finan.

Health

Care Industr. Tech

Basic.

Mat. Telecom Utilities Total

Nr. Stocks 80 40 43 80 54 63 62 31 6 31 500

Advance 80.0% 92.5% 79.1% 96.3% 85.2% 82.5% 82.3% 71.0% 50.0% 80.6% 82.2%

Decline 20.0% 7.5% 20.9% 3.8% 14.8% 17.5% 17.7% 29.0% 50.0% 19.4% 16.8%

New Highs 1.3% 0.0% 2.3% 0.0% 1.9% 0.0% 3.2% 3.2% 0.0% 3.2% 1.4%

New Lows 0.0% 2.5% 2.3% 0.0% 0.0% 0.0% 0.0% 0.0% 16.7% 0.0% 0.6%

Up Trend 26.3% 35.0% 41.9% 28.8% 66.7% 22.2% 51.6% 25.8% 16.7% 61.3% 37.2%

Down Trend 73.8% 65.0% 58.1% 71.3% 33.3% 77.8% 48.4% 74.2% 83.3% 38.7% 61.8%

Congestion 21.3% 22.5% 14.0% 20.0% 31.5% 31.7% 37.1% 22.6% 33.3% 32.3% 25.8%

Neutral 52.5% 75.0% 76.7% 73.8% 68.5% 63.5% 58.1% 61.3% 33.3% 67.7% 65.4%

Excess 26.3% 2.5% 9.3% 6.3% 0.0% 4.8% 4.8% 16.1% 33.3% 0.0% 8.8%

Up 2.5% 10.0% 11.6% 0.0% 3.7% 1.6% 3.2% 0.0% 0.0% 16.1% 4.2%

Advancing 2.5% 10.0% 16.3% 8.8% 14.8% 3.2% 11.3% 9.7% 16.7% 51.6% 11.4%

Down 30.0% 27.5% 23.3% 32.5% 55.6% 47.6% 54.8% 25.8% 0.0% 12.9% 35.8%

Terminating 65.0% 52.5% 48.8% 58.8% 25.9% 47.6% 30.6% 64.5% 83.3% 19.4% 47.6%

Overbought 2.5% 2.5% 2.3% 3.8% 0.0% 0.0% 6.5% 0.0% 0.0% 3.2% 2.4%

Neutral 35.0% 45.0% 48.8% 33.8% 63.0% 33.3% 41.9% 29.0% 50.0% 80.6% 44.0%

Oversold 62.5% 52.5% 48.8% 62.5% 37.0% 66.7% 51.6% 71.0% 50.0% 16.1% 53.6%

Legenda: For each of the 10 S&P 500 major groups, we calculate how many stocks have closed up or down, how many have made 52-week New Highs or

New Lows, how many are in Up/Down trend and how many are in Congestion (Trend Momentum below 15) or in Trend Excess (Trend Momentum above 85).

The respective short - term phase of each stock in a cyclical swing is considered (as per our daily stock screening reports) and how many have reached an

Overbought/Neutral/Oversold condition according to their respective 14-day Stochastic indicator.

FLOWS

Stock Ticker Close % change Volume % Vol > 50dma %52 wk RS

Seagate Technology STX 51.52 -11.25

17,578,700 408% 65

Cliffs Natural Resources Inc CLF 19.81 2.11

32,716,856 320% 10

Stericycle Inc SRCL 115.18 -0.55

1,587,708 299% 23

Corning Inc GLW 17.10 -6.15

41,320,720 280% 69

Mastercard Inc-Class A MA 78.83 3.66

7,738,725 280% 0

Vulcan Materials Co VMC 61.58 6.10

2,675,027 228% 57

Apple Inc AAPL 506.50 -7.99

38,119,084 209% 44

Illinois Tool Works ITW 79.01 0.92

5,558,621 196% 78

Dr Horton Inc DHI 23.00 9.84

19,841,336 189% 40

Waters Corp WAT 110.41 7.30

1,449,714 180% 82

FLOWS LEGENDA: we are highlighting those S&P 500 names with a daily volume higher than its 50-day moving average. If volume is above its 50-day

moving average (0% is the level of the moving average to normalize data) then the stock could be under institutional ‘interest’. The % 52 week Relative Strength is

a simple measure of where the RS of the stock vs the S&P 500 is located in the last 52 weeks: 100 = strong outperformer, 0 = strong laggard. Stocks in the above

table are ranked by decreasing % volume vs its own average.


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Information about technical analysis

This trading idea is based upon technical analysis, which involves the study of historical price and volume trading patterns and the potential direction of future

trading based upon such information. There is no direct or implied guarantee of any particular outcome. This analysis is different from fundamental analysis and

the conclusions reached may differ. Technical research does not represent a rating or coverage of any discussed issuer(s).

Our daily charts for European and U.S. equities try to highlight in a quick and easy way information about the trend, the relative performance against its

benchmark, price momentum and accumulation/distribution using volume. Our conviction is clearly a function of these elements and of the time frame used.

To determine the trend we use the classic combination of two moving averages based on a 50 and 200 day length. The trend of the stock will move above

and below these moving averages and we will look for buy (sell) ideas when price will be above (below) both of them or during mild pullbacks affecting only the

50-day moving averages.

Given two or more signals on stocks in uptrend we use the relative strength versus its benchmark (usually the Eurostoxx 600 for European names and the S&P

500 for U.S. names) to discriminate which one offers the best opportunity for a given signal. Again we like stocks in uptrend with a bullish relative strength as buy

candidates.

Momentum (we use the classic MACD Moving Average Convergence Divergence Indicator) tells us where we are in the current phase of the trend. The MACD

indicator represents the difference between two moving averages of 12 and 26 days. If this indicator is widening, it confirms the trend in prices is healthy and

accelerating. A possible indication to reduce exposure in a stock that is in uptrend and outperforming is provided either by a short-term trend reversal toward the

zero line of this indicator or by a negative divergence between prices and the MACD indicator. New highs in price that are not confirmed by new highs in the

MACD, are leading indications that the pace of the trend is slowing down and a possible reversal is in the offing.

Finally we consider volume in our work in two forms: raw volume represented by a vertical histogram (red for negative trading sessions, blue for positive ones)

and the OBV indicator. Raw volume can indicate the underlying structure of buying and selling in the short-term: we like higher price on higher volume and lower

prices on lower volume, indicating a positive feedback in investors’ mentality. Spikes in volume are usually associated with climaxes and a short-term reversal is

usually the norm. The OBV indicator tries to help to answer the question whether the stock is under accumulation or distribution. The OBV indicator follows prices

95% of the time: we add (subtract) the volume of the day if the close is positive (or negative) to a running total. A stock that has been for 2-3 months in a tight

trading range with an OBV indicator that is breaking higher (lower) provides a leading indication of accumulation (distribution) and helps the investor/trader to

be prepare ahead of the breakout in prices.

Information about technical ratings

Aviate Global’s technical rating system has seven categories to differentiate short-, medium-, and long-term time horizons. If there is no rating listed for a stock,

Aviate Global is neutral and has no opinion on the stock.

Speculative Buy: A short-term buying opportunity lasting up to one month with projected upside of 10% or more.

Buy: A medium-term buying opportunity lasting up to six months with projected upside of 25% or more.

Strong Buy: A long-term buying opportunity lasting more than one year with return potential of 50% or more.

Sell Short: A short-term selling opportunity lasting up to one month with projected downside of 10% or more.

Take Profit: Immediate closing out of existing position at a profit.

Sell/Reduce: Used for a stock with a deteriorating long-term technical outlook that is expected to have a very limited or negative return over the medium to long

term.

Stop Loss: Immediate closing out of existing position at a loss.

Aviate Global’s technical ratings use specific return targets; returns are not guaranteed and are used for illustrative purposes only. Chart sources: Bloomberg,

TradeStation and Aviate Global LLP.

This note is circulated to you as a client of Aviate Global LLP. Please note that the views contained within may have been disclosed earlier today to some clients via Bloomberg. If you

would like to receive our earlier Bloomberg message, please contact Paul Moran on +44 20 7233 3218. Aviate Global LLP generates high conviction trading and investment ideas for its

clients. It does not carry out any proprietary trading or corporate advisory activities. Aviate Global’s publications are for the sole benefit of its clients. Unauthorised copying or distribution

is prohibited. Aviate Global LLP is authorised and regulated by the Financial Services Authority and is a member of the London Stock Exchange. Registered in England and Wales No.

OC324323.

NOTICE TO U.S. INVESTORS

This report is issued and approved for distribution in the United Kingdom by Aviate Global LLP. Aviate Global LLP is authorised and regulated by the United Kingdom Financial Conduct

Authority (FCA authorisation number 465131). This report has been prepared by Aviate Global LLP solely for the purpose of supplying information to the clients of Aviate Global LLP

and/or its affiliate(s) to whom it is distributed. This report is not, and should not be construed as, a recommendation, solicitation or offer to buy or sell any securities or related financial

products. This report does not constitute investment advice, does not constitute a personal recommendation and has been prepared without regard to the individual financial circumstances,

needs or objectives of persons who receive it. This report has not been prepared, reviewed or approved by Aviate Global (US) LLP, Aviate Global LLP’s affiliated U.S.-registered broker-

dealer and a member of FINRA. This report is intended to be distributed by Aviate Global LLP in the United States solely to “major U.S. institutional investors” as defined by Rule 15a-6 of

the Securities Exchange Act of 1934, as amended. For the avoidance of doubt, this report is not intended for individual or non-institutional investors and should not be distributed to any

such individual or entity. Interested “major U.S. institutional investors” should contact Aviate Global, (US) LLP, our U.S. registered broker-dealer affiliate, or another U.S.-registered broker-

dealer, to effect transactions in the securities that are the subject of this report. Aviate Global (US) LLP also is registered as an Introducing Broker with the National Futures Association (NFA

ID 0439324). Aviate Global (US) LLP does not deal with or for U.S. persons that do not meet the definition of an Eligible Contract Participant (as defined in the U.S. Commodity Exchange

Act).

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