Churchill Management Group

MARKET UPDATE

February 5, 2014

Tactical Strategies Premier Wealth

Has the market hit a speed bump or the end of the road? After a strong 2013, that question seems to be on investor's minds as the market has started the New ear in negative territor!" #t is the first time sin$e 2010 that the sto$k market began the !ear with a negative month" A $ombination of fa$tors have investors worried about a market $orre$tion or even worse, a bear market, %where the market is down 20& or more from its highs'" (irst, the (ed has indi$ated that it wi)) $ontinue to taper" #nterest rates remain histori$a))! )ow" #n fa$t, the 10 !ear *reasur! fe)) substantia))! during +anuar!, but some are interpreting (ed *apering as being akin to a rate hike" Additiona))!, a potentia) $risis has erupted throughout the emerging markets and there are worries whether it $an be $ontained" ,u$h fears have driven some profit taking and the indi$es are down -& for the ,./, -& for the Nasdaq, and 0& for the 1ow as of toda!" At present, 2hur$hi))'s indi$ators remain mi3ed" (undamenta))!, the e$onom! remains s)uggish, though somewhat improved" 2onsumers remain a prob)em as 4ob parti$ipation is sti)) )ow and househo)d in$ome is sti)) depressed" et, a )ook around at investment a)ternatives su$h as fi3ed in$ome, internationa) options, et$", rea))! offers nothing better than the 5"," Are )ow rates enough to keep investors pouring do))ars into 5"," 6quities? *he answer is not !et $)ear" *e$hni$a))!, the breadth of the market %as measured b! the advan$ed7de$)ine )ine' )ooks strong, but the New High's indi$ator did not $onfirm during the re$ent ra))! and se))ing pressure has been heav! over the past few weeks" Again, the market is presenting an un$)ear pi$ture whether it is taking a breath or beginning a topping phase" 8ur ,entiment indi$ators have been froth! for some time, espe$ia))! when measuring items su$h as the use of 9argin 1ebt" :hi)e we don't have a $)ear indi$ation of a $oming ;ear 9arket !et, we are $ontinuous)! eva)uating our e3posure in our ta$ti$a) strategies" As of toda!, we are taking the first step toward a more defensive posture b! )ightening up our equit! e3posure" ,hou)d the un$ertaint! $)ear up for the better we wi)) step ba$k

in, but we fee) it is prudent to redu$e e3posure s)ight)! at this point" *here is an o)d sa!ing that <As goes +anuar!, so goes the !ear"< 5nfortunate)!, this is not entire)! true" :hen +anuar! has been positive, the rest of the !ear is positive =0& of the time" However, when +anuar! is negative, the remainder of the !ear is negative -0& of the time" Another mi3ed signa) at this point" *he good news in our /remier :ea)th a$$ounts is that our se$tor overweights %*e$h and ;iote$h' have been the )eaders, and our individua) sto$k ho)dings have he)d up better than the market" :e wi)) $ontinue to wat$h our indi$ators and wi)) keep !ou informed"

Maximum Growth
1oubts have set in over the turbu)en$e in the 6merging 9arkets, the effe$t of the (ed taper, Abenomi$s, and 2hina's e$onom!" ,ome $aution f)ags have been raised however it is premature to determine if this is a hea)th! pu))ba$k or part of a )arger topping pro$ess" *opping formations tend to provide boun$es whi$h $an be used to redu$e e3posure in the portfo)io" *here are severa) sentiment indi$ators f)ashing red, however, )eadership in the market has he)d up we))" :e wi)) be pi$king an! weeds in the portfo)io as needed and potentia))! redu$ing e3posure to ba)an$e the risk7reward in the portfo)io"

Strategic Growth
,trategi$ >rowth re)ies upon a mode) to determine its per$ent invested in individua) sto$ks" 1espite the re$ent vo)ati)it!, the mode) remains appro3imate)! ?0& invested, about a ho)ding or two )ower than where it finished the !ear" *here has been quite a spread so far this !ear" :e)) known names )ike App)e, Home 1epot, and #ntuit have had some se))ing pressure, whi)e other sto$ks su$h as @a)eant /harma$euti$a)s and (orest Aabs have seen some ni$e )ift"

Fully Invested Strategies Smart Sector

#t has been a mi3ed start for )ast !ear's best se$tors Hea)th$are and 2onsumer 1is$retionaries" Hea)th$are got off to a good start fue)ed b! ;iote$h sto$ks, and was up a per$ent in +anuar!" *he 2onsumer 1is$retionar! se$tor e3perien$ed some se))ing pressure and dropped around 0&" *he se))ing and vo)ume were enough for the mode) to move the se$tor from an overweight to an underweight" *he mode) is now overweight Hea)th, *e$h, 9ateria)s, and #ndustria)s" #t is underweight both $onsumer se$tors, 6nerg!, (inan$ia)s, and 5ti)ities" :ithin the broad markets, >rowth faired better than @a)ue, and Aarge, ,ma)), and 9id 2aps a)) he)d up around the same" *he internationa)s, espe$ia))! 6merging 9arkets, $ontinued to )ook weak and the mode) prefers 5, sto$ks to internationa)s"

Elite Equity
*here was a noti$eab)e pi$k up in vo)ati)it! from the sto$ks within the ,./ during +anuar!" :hi)e the fourth quarter offered a $a)m ride upward for most of the trading da!s, +anuar! has brought ba$k the overBrea$tion to earnings da!s" #t is $ommon again to have severa) sto$ks within the portfo)ios either up or down severa) per$ents on an! given da!" ,ti)), the net has been favorab)e to the 66 portfo)ios in $omparison to the market" *he mode) has been finding some emerging positive sto$ks to $ombat the profit taking affe$ting some of the past winners"

Equity ividend Income

1ividend sto$ks have not avoided the re$ent market turmoi) but have he)d up re)ative to the market" :ith the 10 !ear *reasur! having dropped some C0bps in the )ast month, 5ti)ities have been showing more strength and he)ping the portfo)ios" *e$hni$a))!, man! of the dividend pa!ing sto$ks have been )ooking more attra$tive over the past few weeks despite the market $hoppiness" ;est regards, !hurchill Management Grou"
** This report is meant to inform the reader of our current market opinion, which we, as professional money managers, use in our decision-making. It should be noted that stock market and bond market data are subject to varying interpretations and any one interpretation will not necessarily guarantee investment success. The information obtained from the sources specified herein and used as basis for our current market opinion is believed reliable, but we do not guarantee the accuracy of such information. This email and any files transmitted with it are confidential and intended solely for the use of the individual or entity to whom they are addressed. If you have received this email in error please notify the system manager. Please note that any views or opinions presented in this email are solely those of the author and do not necessarily represent those of the ompany. !inally, the recipient should check this email and any attachments for the presence of viruses. The ompany accepts no liability for any damage caused by any virus transmitted by this email.

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