Technically Speaking

May 13, 2015

Inside this Report

Highlights

S&P/TSX Composite Index: In Short-term Upward

Channel But Approaching Resistance ........................2

S&P 500: Rising Wedge Pattern Should Resolve

Soon ...........................................................................3

WTI Oil Price: Recovering But Overbought In The

Short-term ..................................................................4
Copper Price: Approaching Key Resistance...............5

Gold Price: Range Bound ...........................................6

US Treasuries: Oversold And Due For A Bounce ......7

S&P/TSX Capped Utilities Index: Expecting A Bounce

But Trend Remains Negative .....................................8
S&P/TSX Capped Health Care Index: Trend Remains
Bullish .........................................................................9
Glossary ...................................................................10

Important Investor Disclosures .................................12

Ryan Lewenza, CMT, CFA

SVP, Private Client Strategist

The S&P/TSX Composite Index (S&P/TSX) has traded in an upward channel since its December lows. However,
the S&P/TSX continues to face stiff technical resistance around the 15,525 level. For now, were neutral on the
S&P/TSX as its trapped within the 200-day moving average (MA) and horizontal price resistance.
The S&P 500 Index (S&P 500) has been trading in a rising wedge pattern for much of the last year. It is quickly
approaching the apex, so we soon expect a resolution of this pattern. We remain constructive on the S&P 500
with the index in a well-defined uptrend.
WTI oil prices recovered sharply in April, surprising many who were calling for US$20-$30/bbl (not us!). In the
short-term, momentum looks stretched with an RSI reading of 66 and an elevated MACD level. As such, we
expect some backing and filling to work off the short-term overbought condition.
Copper prices have recovered sharply since the January lows, with copper breaking above its intermediate
downtrend and 200-day MA. However, copper prices look extended in the short-term with an elevated RSI
reading. We expect some short-term profit taking in copper.
The gold price has done little over the last year, as it consolidates between US$1,140/oz. and roughly
US$1,300/oz. Seasonal trends begin to improve during the summer, but we see continued range bound trading
for gold over the next few months.
There has been a dramatic sell off in government bonds over the last two weeks. For example, the US 10-year
Treasury yield has risen 40 bps since mid-April. However, in the short-term, US Treasuries are oversold and we
expect a trading bounce.
Canadian utilities have sold off in recent days on the back of higher government bond yields. Utilities could
experience a rally in the short-term; however, we would look to reduce utilities exposure into strength, as we
see government bond yields moving slowly higher over the next 9 to 12 months.
The S&P/TSX Capped Health Care Index has recently pulled back to its 50-day MA helping to work off the
overbought condition. With the sector continuing to outperform the broader market we would use the
weakness to add exposure. We added Valeant Pharmaceuticals (VRX-T) to our Guided Growth Portfolio on May
1, 2015.

Technically Speaking

May 13, 2015 | Page 2 of 12

S&P/TSX Composite Index: In Short-term Upward Channel But Approaching Resistance

Source: Stockcharts.com, Raymond James Ltd.

The S&P/TSX has traded in an upward channel since its December lows. The index is trading above its 200-day MA, while the 50-day MA is above the 200-day MA (technical
positives).
However, the S&P/TSX continues to face stiff technical resistance around the 15,525 level which represents the July 2014 and April 2015 highs.
For now, were neutral on the S&P/TSX as its trapped within the 200-day MA and horizontal price resistance. We require a breakout of this range to more confidently
forecast the S&P/TSXs next move.
Lastly, we are cognizant of the approaching weak seasonal period for the stock market (May through October), and therefore are closely monitoring the downside. A break
below the 200-day MA (14,929) and 14,606 (March lows) would be concerning, and could trigger us to get more defensive in the short-term.

Technically Speaking

May 13, 2015 | Page 3 of 12

S&P 500: Rising Wedge Pattern Should Resolve Soon

Source: Stockcharts.com, Raymond James Ltd.

The S&P 500 has been trading in a rising wedge pattern for much of the last year. It is quickly approaching the apex, so we soon expect a resolution of this pattern.
On a shorter term basis, the S&P 500 continues to face stiff technical resistance at the 2,110 to 2,120 range. A break above this range would be positive as it would resolve
the consolidation pattern seen YTD. In this scenario, we would project an upside price target of roughly 2,200, which is based on the upper trendline projected forward.
We remain constructive on the S&P 500 with the index in a well-defined uptrend. Additionally, the S&P 500 remains above the rising 100-day MA, which has provided
important technical support for the index since Q4/13.
Key supports for the S&P 500 include 2,072 (100-day MA) and 2,030 (200-day MA). A break below these levels would be bearish, and likely cause us to revisit our bullish
stance on the US equity markets.

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May 13, 2015 | Page 4 of 12

WTI Oil Price: Recovering But Overbought In The Short-term

Source: Stockcharts.com, Raymond James Ltd.

WTI oil prices recovered sharply in April, surprising many who were calling for US$20-$30/bbl (not us!). With the recent surge, WTI has broken above its short-term
downtrend, the 50-day MA, and horizontal price resistance of US$54/bbl.
In the short-term, momentum looks stretched with an RSI reading of 66 and an elevated MACD level. As such, we expect some backing and filling to work off the short-term
overbought condition. Ideally, WTI will hold the US$54/bbl level on the expected pullback, with resistance then becoming support. We do not envision WTI retesting the
March lows of US$42.41/bbl.
While were constructive on oil prices longer term we see stiff technical resistance in the US$67 to US$68/bbl range. The US$67.34/bbl level represents a 38% Fibonacci
retracement level while the 200-day MA comes in at $68.23/bbl. We expect this will provide formidable resistance for WTI, at least initially.

Technically Speaking

May 13, 2015 | Page 5 of 12

Copper Price: Approaching Key Resistance

Source: Stockcharts.com, Raymond James Ltd.

Copper prices have recovered sharply since the January lows, with copper breaking above its intermediate downtrend and 200-day MA.
However, copper prices look extended in the short-term with an elevated RSI reading. Additionally, copper is trading at an important technical level at $3/lb.
We expect some short-term profit taking in copper, possibly taking copper back to its short-term uptrend and 50-day MA around the US$2.70/lb.

Technically Speaking

Gold Price: Range Bound

Source: Stockcharts.com, Raymond James Ltd.

The gold price has done little over the last year, as it consolidates between US$1,140/oz. and roughly US$1,300/oz.
Gold remains below its long-term 200-day MA while the 50-day MA remains below the 200-day (technical negatives).
Seasonal trends begin to improve during the summer, but we see continued range bound trading for gold over the next few months.

May 13, 2015 | Page 6 of 12

Technically Speaking

May 13, 2015 | Page 7 of 12

US Treasuries: Oversold And Due For A Bounce

Source: Stockcharts.com, Raymond James Ltd.

There has been a dramatic sell off in government bonds over the last two weeks. For example, the US 10-year Treasury yield has risen 40 bps since mid-April.
Looking at the TLT, our proxy for the US government bond market, it has broken below its long-term uptrend and its 200-day MA (technical negatives).
However, in the short-term, TLT is oversold with its RSI reading of 30.01. As such, we expect a trading bounce in US Treasuries.

Technically Speaking

May 13, 2015 | Page 8 of 12

S&P/TSX Capped Utilities Index: Expecting A Bounce But Trend Remains Negative

Source: Stockcharts.com, Raymond James Ltd.

Canadian utilities have sold off in recent days on the back of higher government bond yields. For example, the US 10-year Treasury yield have risen 40 bps in just two weeks
(lower panel) which has cause interest-sensitive stocks to sell off.
We believe the sell-off in global bonds is overdone in the short-term and could rally, with yields declining. If correct, utilities could experience a trading bounce, especially
given the oversold condition for the sector (RSI level is at 30.80).
If correct, utilities could experience a rally in the short-term; however, we would look to reduce utilities exposure into strength, as we see government bond yields moving
slowly higher over the next 9 to 12 months.

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May 13, 2015 | Page 9 of 12

S&P/TSX Capped Health Care Index: Trend Remains Bullish

Source: Stockcharts.com, Raymond James Ltd.

The Canadian health care sector has stood out this year, driven by strong gains in Valeant Pharmaceuticals (VRX-T) and Catamaran Corporation (CTC-T) which was acquired
in Q1/15.
Following the strong gains in Q1/15, the sector had become overbought and vulnerable to profit taking. The sector has recently pulled back to its 50-day MA helping to work
off the overbought condition.
With the sector continuing to outperform the broader market (lower panel) we would use the weakness to add exposure. We added VRX to our Canadian Growth Guided
Portfolio on May 1, 2015.

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Glossary
Ascending Triangle
A continuation pattern where the period of consolidation takes the shape of an upward sloping triangle with an ascending lower trendline. A break down through the support trendline
can sometimes mark a reversal pattern.
Bollinger Bands
Bollinger bands gauge a securitys trading activity and trend by showing a range of normal price swings.
Candlestick Chart
A graphical representation of prices where opening and closing prices are connected to form coloured boxes. Generally, a series of dark candlesticks suggest downside momentum and
light candlesticks upside momentum.
Continuation Pattern
A chart formation that signals the continuation of the prevailing trend. Continuation patterns often occur after a period of brief consolidation.
Descending Triangle
A continuation pattern where the period of consolidation takes the shape of a downward sloping triangle with a declining upper resistance trendline. A break up through the resistance
trendline can sometimes mark a reversal pattern.
Double Bottom
Chart formation that normally occurs after an extended downtrend and resembles a W. Double bottoms signal potential price reversals.
Double Top
Chart formation that normally occurs after an extended uptrend and resembles an M. Double tops signal potential price reversals.
Fibonacci Sequences
Mathematical relationships that help predict points of support or resistance. The key Fibonacci ratio is 61.8% also referred to as "the golden ratio" or "the golden mean".
Flag
A chart formation in which prices move sharply to create a near vertical line (the flag pole) followed by a small move in the opposite direction (the flag). Flags are often continuation
patterns.
Gap
An open space on a chart. A gap is created when the low of one time period is above the high of the previous period, or the high of one time period is below the low of the previous
period. Gaps can signal breakouts or continuations of up or down trends.

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Head-and-Shoulders Formation
A reversal chart formation that looks like a head and shoulders (with both a defined left and right shoulder). Head-and-shoulders formations can occur at both the bottom and top of a
trend.
MACD
The moving average convergence/divergence determines turning points in a trend by differencing two exponential moving averages of specific periods. The trendline of the MACD can
also signal continuation or reversal trends for share prices.
Moving Average
A statistical tool that plots smoothed prices to signal future price trends. 50-day and 200-day moving averages are the most common indicators.
On Balance Volume (OBV)
A cumulative indicator that adds volume on up days and subtracts volume on down days. OBV shows buying or selling pressure. An upward sloping OBV confirms an uptrend, while a
downward sloping OBV confirms a downtrend.
Resistance Level
A technical level that prices may have trouble rising above (i.e., where the price may experience selling pressure).
Rounded Bottom
A bullish reversal pattern taking the shape of a U. Ideally, the rounded bottom should be accompanied by a similar volume pattern.
RSI
The relative strength index measures the velocity of directional price movements with extreme values indicating overbought and oversold conditions. The trendline of the RSI can also
signal continuation or reversal trends for share prices.
Support Level
A technical level that prices may have trouble falling below (i.e., where the price should have buying support).
Trendline
A line connecting a series of ascending lows (in the case of an up trendline) or descending highs (in the case of a down trendline).

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Important Investor Disclosures

Complete disclosures for companies covered by Raymond James can be viewed at: www.raymondjames.ca/researchdisclosures.
This newsletter is prepared by the Private Client Services team (PCS) of Raymond James Ltd. (RJL) for distribution to RJLs retail clients. It is not a product of the Research
Department of RJL.
All opinions and recommendations reflect the judgement of the author at this date and are subject to change. The authors recommendations may be based on technical
analysis and may or may not take into account information contained in fundamental research reports published by RJL or its affiliates. Information is from sources believed to
be reliable but accuracy cannot be guaranteed. It is for informational purposes only. It is not meant to provide legal or tax advice; as each situation is different, individuals should
seek advice based on their circumstances. Nor is it an offer to sell or the solicitation of an offer to buy any securities. It is intended for distribution only in those jurisdictions
where RJL is registered. RJL, its officers, directors, agents, employees and families may from time to time hold long or short positions in the securities mentioned herein and may
engage in transactions contrary to the conclusions in this newsletter. RJL may perform investment banking or other services for, or solicit investment banking business from, any
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Information regarding High, Medium, and Low risk securities is available from your Financial Advisor.
A member of the PCS team responsible for preparation of this newsletter or a member of his/her household has a long position in the securities of BRP Inc. (DOO-T).
RJL is a member of Canadian Investor Protection Fund. 2014 Raymond James Ltd.