October 22, 2013

Report prepared by: Ryan Lewenza, CFA, CMT North America Equity Strategist

Volume 7 Highlights

Our call for short-term weakness has not materialized, and with the recent breakout for the S&P/TSX Composite Index (S&P/TSX), we are getting more constructive on the outlook for Canadian equities. The S&P/TSX is nearing a short-term overbought condition with its Relative Strength Index (RSI) reading of 63 (above 70 indicates overbought), so we could see some near-term backing and filling in the coming days. However, if the S&P/TSX holds above the previous 12,900 resistance (now support) level and the 50-day moving average (MA), currently at 12,756, then we would likely become more bullish on the S&P/TSX, as the index may finally be in a new higher trading range. With the S&P/TSX Capped Industrials Index in a confirmed long-term uptrend, and trading above its rising 50- and 200-day MAs, we continue to favour this sector and recommend that investors overweight it in their portfolios relative to the benchmark weight. The S&P 500 Index (S&P 500) has been strong on the back of a short-term resolution of the budget and debt limit impasse in Washington. With these fiscal issues sidelined until early 2014 (the debt limit is suspended until February 7, 2014), and the U.S. Federal Reserve (Fed) likely to maintain its asset purchases until H1/14, we believe the path of least resistance is to the upside. The U.S. dollar index remains under pressure in part due to the Washington budget/debt battle. The U.S. dollar index is finding resistance around 80.75, which was support in June and August. Given this change of polarity and the U.S. dollar trading below key MAs, the short-term outlook remains negative. The short- and long-term trends remain negative for gold prices. Gold rallied strongly on October 17, due in part to its near oversold condition as its RSI neared the 30 level. Gold prices could see some additional near-term strength but we would look for upside to be capped around the US$1,340/oz-US$1,350/oz level, which is the intersection of the 50-day MA and its short-term downtrend. In this weeks report we highlight Brookfield Asset Management Inc. (BAMA-T) and Lam Research Corp. (LRCX-Q) as attractive technical buy candidates, and recommend investors trim/sell Gap Inc. (GPS-N).

Inside
Technical Commentary (Pages 2 9) Technical Almanac Trading Ideas (Pages 10 12) Relative Strength Analysis (Pages 13 16) Sentiment Indicators (Page 17) Overbought/Oversold Stocks (Page 18) Market Statistics (Page 19)

This Document is for distribution to Canadian clients only. Please refer to Appendix A in this report for important information.

The Technical Take

October 22, 2013

Technical Commentary
S&P/TSX Composite Index

Our call for short-term weakness has not materialized, and with the recent breakout for the S&P/TSX Composite Index (S&P/TSX), we are getting more constructive on the outlook for Canadian equities. As weve highlighted a number of times in recent reports, the S&P/TSX was encountering stiff technical resistance at 12,900, which has contained the S&P/TSX throughout 2013. However, following the positive development in Washington to extend the debt limit date, and end the partial government shutdown, the S&P/TSX broke and held above 12,900 for two consecutive trading days, which is the minimum time needed to declare a valid breakout. Other technical developments that increase the odds that the breakout could hold include: 1) key sectors such as financials, energy and industrials remain technically strong and we see little evidence of a topping pattern in these sectors; 2) the S&P/TSX is trading above its rising 50-day moving average (MA) and has been finding technical support at the important MA on pullbacks since the summer (green arrows); 3) trading volume continues to expand with the rising price trend, as seen by the rising On Balance Volume indicator (lower panel). The S&P/TSX is nearing a short-term overbought condition with its Relative Strength Index (RSI) reading of 63 (above 70 indicates overbought), so we could see some near-term backing and filling in the coming days. However, if the S&P/TSX holds above the previous 12,900 resistance (now support) level and the 50-day MA, currently at 12,756, then we would likely become more bullish on the S&P/TSX, as the index may finally be in a new higher trading range. In this scenario, we would target 13,500 as the next technical level for the S&P/TSX. Page 2

The Technical Take

October 22, 2013

Canadian Sector Highlights

Name S&P/TSX TELECOM SERV IDX S&P/TSX INFO TECH INDEX S&P/TSX CONS STAPLES IDX S&P/TSX INDUSTRIALS IDX S&P/TSX FINANCIALS INDEX S&P/TSX UTILITIES INDEX S&P/TSX ENERGY INDEX S&P/TSX CONS DISCRET IDX S&P/TSX COMPOSITE INDEX S&P/TSX HEALTH CARE IDX S&P/TSX MATERIALS INDEX Last Price 1102.89 137.78 2558.84 1787.34 1953.69 1756.80 2810.09 1408.38 12967.38 1449.86 2085.23 50 DMA 1073.56 136.18 2488.99 1718.92 1896.56 1731.74 2758.60 1378.28 12746.49 1407.43 2177.09 Trend of 50 DMA Uptrend Uptrend Uptrend Uptrend Uptrend Uptrend Uptrend Uptrend Uptrend Uptrend Downtrend 200 DMA 1110.45 127.76 2329.00 1676.47 1835.28 1866.23 2723.42 1243.35 12588.27 1193.79 2399.21 Trend of 200 DMA Downtrend Uptrend Uptrend Uptrend Uptrend Downtrend Uptrend Uptrend Uptrend Uptrend Downtrend RSI Market Ranking of Weekly Momentum 14 Day Condition Current 2 3 4 5 60.80 Neutral 1 10 7 2 7 60.91 Neutral 2 8 9 4 8 69.56 Neutral 3 4 1 11 6 67.17 Neutral 4 2 4 3 1 70.33 Overbought 5 6 2 8 4 58.14 Neutral 6 5 8 1 9 62.03 Neutral 7 9 5 10 3 60.57 Neutral 8 3 3 7 2 61.29 Neutral 9 7 6 6 5 60.37 Neutral 10 1 10 5 10 38.25 Neutral 11 11 11 9 11 6 1 10 8 2 3 7 6 4 5 9 11

Source: Bloomberg Finance L.P. As at October 17, 2013.

Weekly Momentum: Sector performance was mixed last week with the telecommunication services, information technology, consumer staples and industrials sectors showing the strongest performance. The telecom services sector is showing improved performance, with the sector near the top of the sector rankings in three of the last six weeks. Industrials remain very strong, as the sector has been near the top of the sector rankings model, in each of the last six weeks. The health care sector continues to weaken, following a strong H1/13, with the sector near the bottom of the sector rankings in four of the last six weeks. The materials sector remains weak, with the sector posting the weakest returns in five of the last six weeks. Market Condition: The financials sector is currently overbought with an RSI level of 70.33. Other: The materials sector is the only sector below its 50- and 200-day MAs. The telecom services and utilities sectors remain below their respective 200-day MAs.

Page 3

The Technical Take

October 22, 2013

S&P/TSX Capped Industrials Index

The S&P/TSX Capped Industrials Index recently made a new price high, while its relative strength remains strong. With the S&P/TSX Capped Industrials Index in a confirmed long-term uptrend, and trading above its rising 50- and 200-day MAs, we continue to favour this sector and recommend that investors overweight it in their portfolios relative to the benchmark weight.

Page 4

The Technical Take

October 22, 2013

S&P 500 Index

In The Technical Take report dated October 7 we stated that we see the potential for additional downside in the very near-term, with the index pulling back to its trendline, which currently intersects at 1,665. This short-term call turned out to be accurate, as the S&P 500 Index (S&P 500) temporarily broke down through its 50-day MA, and pulled back to its trendline. In fact, the S&P 500 broke down through its trendline for a few days, but recovered and has been strong since, on the back of a short-term resolution of the budget and debit limit impasse in Washington. With these fiscal issues sidelined until early 2014 (the debt limit is suspended until February 7), and the U.S. Federal Reserve (Fed) likely to maintain its asset purchases until H1/14, we believe the path of least resistance is to the upside. The S&P 500 is now trading at a short-term resistance level of 1,730 to 1,740, which is the intersection of the midSeptember high and the upper trendline. We believe this high will be broken and expect the S&P 500 to continue its rally in the coming weeks. One concern is the negative trending MACD momentum indicator, which continues to make lower highs. However, if price trends remain bullish, the negative MACD divergence will play a lesser role in our technical outlook. Interestingly, bullish investor sentiment barely budged over the last few weeks, as the American Association of Individual Investors (AAII) bullish sentiment index rose 5% to 46.28% for the week of October 17, while bearish sentiment declined from 33.58% to 24.92% (see page 17). Clearly, investors were seeing through the potential risk of a default. The fiscal issues will resurface in early 2014, but for now, we remain bullish and recommend that investors buy the dips. Page 5

The Technical Take

October 22, 2013

U.S. Sector Highlights

Name S&P 500 UTILITIES INDEX S&P 500 CONS STAPLES IDX S&P 500 INDUSTRIALS IDX S&P 500 FINANCIALS INDEX S&P 500 TELECOM SERV IDX S&P 500 INDEX S&P 500 ENERGY INDEX S&P 500 INFO TECH INDEX S&P 500 HEALTH CARE IDX S&P 500 MATERIALS INDEX S&P 500 CONS DISCRET IDX Last Price 50 DMA 192.18 190.58 423.19 415.21 404.35 395.41 278.74 270.25 153.64 150.98 1719.67 1678.72 623.07 604.83 526.31 517.79 605.62 584.97 272.04 262.56 484.74 472.74 Trend of 50 DMA 200 DMA Uptrend 192.89 Uptrend 409.56 Uptrend 372.18 Uptrend 256.89 Uptrend 155.82 Uptrend 1606.57 Uptrend 587.63 Uptrend 495.66 Uptrend 549.21 Uptrend 252.02 Uptrend 439.98 Trend of 200 DMA Downtrend Uptrend Uptrend Uptrend Downtrend Uptrend Uptrend Uptrend Uptrend Uptrend Uptrend RSI 14 Day 53.01 59.44 56.57 62.13 53.32 60.60 62.96 59.18 63.32 58.56 57.65 Market Ranking of Weekly Momentum Condition Current 2 3 4 5 Neutral 1 9 2 2 11 Neutral 2 11 11 6 5 Neutral 3 10 3 1 1 Neutral 4 5 10 3 8 Neutral 5 8 6 11 4 Neutral 6 7 7 7 6 Neutral 7 4 5 10 10 Neutral 8 6 4 8 9 Neutral 9 1 9 9 7 Neutral 10 2 8 5 3 Neutral 11 3 1 4 2 6 10 9 3 2 11 8 7 5 1 6 4

Source: Bloomberg Finance L.P. As at October 17, 2013.

Weekly Momentum: The defensive utilities and consumer staples sectors outperformed last week. Utilities have shown improved performance, with the sector near the top of the sector ranking in three of the last six weeks. Industrials remain strong, with the sector near the top of the sector rankings in five of the last six weeks. The consumer discretionary sector fell to bottom spot last week, which is notable given its strong performance over 2013. Market Condition: All sectors are neutrally ranked, with RSI readings between 30 and 70. Other: With the recent strength, all sectors are trading above their 50-day MAs. The utilities and telecommunications sectors remain below their 50- and 200-day MAs.

Page 6

The Technical Take

October 22, 2013

U.S. S&P 500 Consumer Staples Index

In The Technical Take report dated October 7, 2103 we stated that we see the potential for a technical bounce in the S&P 500 Consumer Staples Index but recommend that investors look to reduce exposure in the sector on strength. We believed the S&P 500 Consumer Staples Index would rally off its 200-day MA, which is exactly what has occurred over the last week, with the index up 3.5%. The sector is now coming up against technical resistance around 430, while its relative strength remains weak. We reiterate what we said on October 7: reduce exposure into strength and redeploy funds into the industrials, financials and information technology sectors.

Page 7

The Technical Take

October 22, 2013

Intermarket Picture

U.S. Dollar Index The U.S. dollar index remains under pressure in part due to the Washington budget/debt battle. The U.S. dollar index is finding resistance around 80.75, which was support in June and August. Given this change of polarity and the U.S. dollar trading below key MAs, the short-term outlook remains negative, and we see the U.S. dollar index possibly retesting key support at 79.

U.S. 10-Year Treasury Yield The 10-year U.S. Treasury remains range-bound between 2.45% and 2.90%, which we expect to continue in the coming weeks and possibly longer. We believe the next major catalyst for Treasuries will be the Fed taper, which we believe could occur in Q1/14. Near-term, we note that the 10-Year Treasury yield hit resistance at the 50-day MA, and we could see the 10-year Treasury retest its support around 2.45%. Page 8

The Technical Take

October 22, 2013

Gold The short- and long-term trends remain negative for gold prices. Gold rallied strongly on October 17, due in part to its near oversold condition as its RSI neared the 30 level. Gold prices could see some additional near-term strength but we would look for upside to be capped around the US$1,340/oz-US$1,350/oz level, which is the intersection of the 50-day MA and its short-term downtrend.

Oil West Texas Intermediate (WTI) oil prices continue to trend lower and seem set to retest their support around US$98/bbl which has been our technical target for some time. Should this forecast unfold, we would then expect a bounce off this support level. Page 9

The Technical Take

October 22, 2013

Technical Almanac Trading Ideas

Gap Inc. (GPS-N) Published October 11, 2013

This week we are highlighting the technical breakdown of Gap Inc. from our breakout/breakdown model*. GPS was a strong outperformer in the 1H/13, as the stock rallied from the low $30s up to its peak of $46 in August. However, this trend has reversed and we would recommend investors sell/trim their positions as more downside may be possible. First, we note the uptrend and 50-day moving average (MA) have been broken on the downside. Second, the stock formed a head and shoulders top over the summer, and with this weeks technical breakdown below its neckline at $40, the pattern has been completed, with measuring implications down to $34. Finally, we note GPSs weakening relative strength, as its relative uptrend was broken in August (lower panel). We see the potential for further downside in GPS, possibly down to $34, and therefore we would recommend investors look to sell/trim the position. Following the recent sell-off, the stock is near an oversold condition, so we could see a short-term oversold bounce in the stock, which we would use to exit the position.

NOTE: *Our technical breakout/breakdown model is based on a weekly screen of the S&P 500 and S&P/TSX Composite for stocks making a new high/low over the last 90 days on volume greater than +1 standard deviation from the 90-day average volume.

Page 10

The Technical Take

October 22, 2013

Brookfield Asset Management Inc. (BAMA-T) Published October 16, 2013

We are following up on our March 27, 2013 buy recommendation on Brookfield Asset Management Inc. after the stock made a new price high last week. In our March 27th report we recommended investors buy the stock around the $36 level, as it was oversold and approaching technical support at its 200-day moving average (MA) and uptrend line. The share price is up 9.5% since then and we see the potential for an additional 8% upside in the coming months. Our $43 technical price target is derived by measuring the recent trading range (BAM.A has traded between roughly $35 and $39, resulting in a $4 range), and projecting that range forward from the breakout level ($39). We would employ a stop loss just below $37, which is the convergence of the uptrend and the 50- and 200-day MAs.

Page 11

The Technical Take

October 22, 2013

Lam Research Corp. (LRCX-Q) Published October 18, 2013

From our breakout/breakdown model* this week we are highlighting the technical breakout of Lam Research Corp. We are bullish on the semiconductor space, and LRCX is a standout candidate within the industry. The stock is trading in a well-defined upward channel and above its rising 50- and 200-day moving averages (MA). LRCXs relative strength is impressive, as the stock continues to outperform the broader market, and has made successively higher relative highs (lower panel). Given LRCXs strong technical trends we are buyer of the stock, but note that following its recent strength, the stock could pullback in the short term. We would buy the stock on any weakness, with a preferred entry point being a pullback to its 50-day MA around $50. We recommend employing a stop loss just below its 200-day MA at $45.60.

NOTE: *Our technical breakout/breakdown model is based on a weekly screen of the S&P 500 and S&P/TSX Composite for stocks making a new high/low over the last 90 days on volume greater than +1 standard deviation from the 90-day average volume.

Page 12

The Technical Take

October 22, 2013

Relative Strength Analysis

S&P 500
Cyclicals
18OCT10 - 18OCT13
0.295
S&P 500 CONS DISCRET IDX Relative to S&P 500

18APR13 - 18OCT13
0.292
S&P 500 CONS DISCRET IDX Relative to S&P 500

0.261

0.281

The consumer discretionary sector remains in a longterm relative uptrend. Short-term trend is under pressure.
Sep 13 Oct 13

0.227 Oct 10

Apr 11

Oct 11

Apr 12

Oct 12

Apr 13

Oct 13

0.270 Apr 13

May 13

Jun 13

Jul 13

Aug 13

0.37
S&P 500 INFO TECH INDEX Relative to S&P 500

0.32
S&P 500 INFO TECH INDEX Relative to S&P 500

0.33

0.31

The information technology sector broke its intermediate downtrend and is trading range-bound in the short-term.
Aug 13 Sep 13 Oct 13

0.30 Oct 10

Apr 11

Oct 11

Apr 12

Oct 12

Apr 13

Oct 13

0.30 Apr 13

May 13

Jun 13

Jul 13

0.25
S&P 500 INDUSTRIALS IDX Relative to S&P 500

0.24
S&P 500 INDUSTRIALS IDX Relative to S&P 500

0.24

0.23

The industrial sectors long-term downtrend has recently been broken, due to its improving short-term trends.
Sep 13 Oct 13

0.22 Oct 10

Apr 11

Oct 11

Apr 12

Oct 12

Apr 13

Oct 13

0.22 Apr 13

May 13

Jun 13

Jul 13

Aug 13

0.20
S&P 500 MATERIALS INDEX Relative to S&P 500

0.16
S&P 500 MATERIALS INDEX Relative to S&P 500

0.17

0.16

The materials sector remains in a longterm relative downtrend. Improving on a shortterm basis.

0.15 Oct 10

Apr 11

Oct 11

Apr 12

Oct 12

Apr 13

Oct 13

0.15 Apr 13

May 13

Jun 13

Jul 13

Aug 13

Sep 13

Oct 13

0.46
S&P 500 ENERGY INDEX Relative to S&P 500

0.38
S&P 500 ENERGY INDEX Relative to S&P 500

0.41

0.36

The energy sector remains in a longterm relative downtrend. Short-term trend is range-bound.

0.35 Oct 10

Apr 11

Oct 11

Apr 12

Oct 12

Apr 13

Oct 13

0.35 Apr 13

May 13

Jun 13

Jul 13

Aug 13

Sep 13

Oct 13

Source: Bloomberg Finance L.P. As at October 18, 2013

Page 13

The Technical Take

October 22, 2013

Defensives
18OCT10 - 18OCT13
0.28
S&P 500 CONS STAPLES IDX Relative to S&P 500

18APR13 - 18OCT13
0.28
S&P 500 CONS STAPLES IDX Relative to S&P 500

0.26

0.26

The consumer staples sector broke its long-term support as a result of shortterm weakness.

0.23 Oct 10

Apr 11

Oct 11

Apr 12

Oct 12

Apr 13

Oct 13

0.24 Apr 13

May 13

Jun 13

Jul 13

Aug 13

Sep 13

Oct 13

0.18
S&P 500 FINANCIALS INDEX Relative to S&P 500

0.17
S&P 500 FINANCIALS INDEX Relative to S&P 500

The financial sectors long-term uptrend is under pressure. The sectors shortterm downtrend may have reversed.

0.16

0.16

0.14 Oct 10

Apr 11

Oct 11

Apr 12

Oct 12

Apr 13

Oct 13

0.16 Apr 13

May 13

Jun 13

Jul 13

Aug 13

Sep 13

Oct 13

0.37
S&P 500 HEALTH CARE IDX Relative to S&P 500

0.36
S&P 500 HEALTH CARE IDX Relative to S&P 500

0.32

0.35

The health care sector remains in a long-term uptrend, making new highs in 2013.

0.28 Oct 10

Apr 11

Oct 11

Apr 12

Oct 12

Apr 13

Oct 13

0.34 Apr 13 0.11

May 13

Jun 13

Jul 13

Aug 13

Sep 13

Oct 13

0.12
S&P 500 TELECOM SERV IDX Relative to S&P 500

S&P 500 TELECOM SERV IDX Relative to S&P 500

0.10

0.10

The telecom sector recently made new long-term relative lows. Short-term trends remain weak.

0.09 Oct 10

Apr 11

Oct 11

Apr 12

Oct 12

Apr 13

Oct 13

0.09 Apr 13

May 13

Jun 13

Jul 13

Aug 13

Sep 13

Oct 13

0.16
S&P 500 UTILITIES INDEX Relative to S&P 500

0.14
S&P 500 UTILITIES INDEX Relative to S&P 500

The utilities sector is making new longterm relative lows. The sectors shortterm trends remain weak.

0.13

0.12

0.11 Oct 10

Apr 11

Oct 11

Apr 12

Oct 12

Apr 13

Oct 13

0.11 Apr 13

May 13

Jun 13

Jul 13

Aug 13

Sep 13

Oct 13

Source: Bloomberg Finance L.P. As at October 18, 2013

Page 14

The Technical Take

October 22, 2013

S&P/TSX Composite
Cyclicals
18APR13 - 18OCT13 18OCT10
0.113
S&P/TSX CONS DISCRET IDX Relative to S&P/TSX Comp

18APR13 - 18OCT13
0.112
S&P/TSX CONS DISCRET IDX Relative to S&P/TSX Comp

0.092

0.104

The consumer discretionary sector remains in a longand short-term relative uptrend.

0.071 Oct 10

Apr 11

Oct 11

Apr 12

Oct 12

Apr 13

Oct 13

0.096 Apr 13

May 13

Jun 13

Jul 13

Aug 13

Sep 13

Oct 13

0.02
S&P/TSX INFO TECH INDEX Relative to S&P/TSX Comp

0.01
S&P/TSX INFO TECH INDEX Relative to S&P/TSX Comp

0.01

0.01

The information technology sectors longer-term trend is improving. The sector is trading range-bound in the short-term. The industrial sectors long-term trend is bullish.

0.01 Oct 10

Apr 11

Oct 11

Apr 12

Oct 12

Apr 13

Oct 13

0.01 Apr 13

May 13

Jun 13

Jul 13

Aug 13

Sep 13

Oct 13

0.14
S&P/TSX INDUSTRIALS IDX Relative to S&P/TSX Comp

0.14
S&P/TSX INDUSTRIALS IDX Relative to S&P/TSX Comp

0.12

0.14

0.10 Oct 10

Apr 11

Oct 11

Apr 12

Oct 12

Apr 13

Oct 13

0.13 Apr 13

May 13

Jun 13

Jul 13

Aug 13

Sep 13

Oct 13

0.34
S&P/TSX MATERIALS INDEX Relative to S&P/TSX Comp

0.19
S&P/TSX MATERIALS INDEX Relative to S&P/TSX Comp

0.25

0.18

The materials sectors trend is weak on a long- and shortterm basis.

0.16 Oct 10

Apr 11

Oct 11

Apr 12

Oct 12

Apr 13

Oct 13

0.16 Apr 13

May 13

Jun 13

Jul 13

Aug 13

Sep 13

Oct 13

0.25
S&P/TSX ENERGY INDEX Relative to S&P/TSX Comp

0.23
S&P/TSX ENERGY INDEX Relative to S&P/TSX Comp

The energy sector broke its long-term downtrend in June. The sector is trading range-bound in the short-term.

0.23

0.22

0.21 Oct 10

Apr 11

Oct 11

Apr 12

Oct 12

Apr 13

Oct 13

0.21 Apr 13

May 13

Jun 13

Jul 13

Aug 13

Sep 13

Oct 13

Source: Bloomberg Finance L.P. As at October 18, 2013

Page 15

The Technical Take

October 22, 2013

Defensives Defensive
18APR13 -- 18OCT13 18OCT13 18OCT10
0.21
S&P/TSX CONS STAPLES IDX Relative to S&P/TSX Comp

18APR13 - 18OCT13
0.21
S&P/TSX CONS STAPLES IDX Relative to S&P/TSX Comp

0.17

0.20

The consumer staples sectors longand short-term relative trends are positive.

0.12 Oct 10

Apr 11

Oct 11

Apr 12

Oct 12

Apr 13

Oct 13

0.18 Apr 13

May 13

Jun 13

Jul 13

Aug 13

Sep 13

Oct 13

0.16
S&P/TSX FINANCIALS INDEX Relative to S&P/TSX Comp

0.15
S&P/TSX FINANCIALS INDEX Relative to S&P/TSX Comp

The financial sector remains in a longterm relative uptrend. The sector is reaching new relative highs in the shortterm.

0.14

0.15

0.12 Oct 10

Apr 11

Oct 11

Apr 12

Oct 12

Apr 13

Oct 13

0.14 Apr 13

May 13

Jun 13

Jul 13

Aug 13

Sep 13

Oct 13

0.12
S&P/TSX HEALTH CARE IDX Relative to S&P/TSX Comp

0.12
S&P/TSX HEALTH CARE IDX Relative to S&P/TSX Comp

0.08

0.10

The health care sector remains in a strong long- and short-term uptrend.

0.03 Oct 10

Apr 11

Oct 11

Apr 12

Oct 12

Apr 13

Oct 13

0.09 Apr 13 0.10

May 13

Jun 13

Jul 13

Aug 13

Sep 13

Oct 13

0.10
S&P/TSX TELECOM SERV IDX Relative to S&P/TSX Comp

S&P/TSX TELECOM SERV IDX Relative to S&P/TSX Comp

0.08

0.09

The telecom sector recently broke its long-term relative support. The sectors shortterm trend is improving.

0.06 Oct 10

Apr 11

Oct 11

Apr 12

Oct 12

Apr 13

Oct 13

0.08 Apr 13

May 13

Jun 13

Jul 13

Aug 13

Sep 13

Oct 13

0.18
S&P/TSX UTILITIES INDEX Relative to S&P/TSX Comp

0.16
S&P/TSX UTILITIES INDEX Relative to S&P/TSX Comp

The utilities sector continues to make new relative lows.

0.15

0.15

0.13 Oct 10

Apr 11

Oct 11

Apr 12

Oct 12

Apr 13

Oct 13

0.13 Apr 13

May 13

Jun 13

Jul 13

Aug 13

Sep 13

Oct 13

Source: Bloomberg Finance L.P. As at October 18, 2013

Page 16

The Technical Take

October 22, 2013

Sentiment Indicators
Volatility (VIX) Index
30 1.5

CBOE Total Put/Call Ratio 5-Day MA

1.4

25

VIX continues to find resistance around the 20 level

1.3
1.2

20

1.1 1.0 0.9

15

0.8 0.7

10

0.6 0.5

5 Jan-12

Apr-12

Jul-12

Oct-12

Jan-13

Apr-13

Jul-13

Oct-13

0.4 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 CBOE Put/Call Level 0.87 1 M Ago 1.11 3 M Ago 1.00

VIX

Level 13.22

1 M Ago 14.53

3 M Ago 13.78

AAII Investor Sentiment: Bulls Minus Bears

60 50 40 30 20 10 0 -10 -20 -30 -40 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13

NYSE % of Stocks Above 200-day MA

100 90 80 70

Impasse in Washington had little impact on investor sentiment

60
50

40
30

20
10

0 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13

Bulls Bears Bulls - Bears

Level 46.28 24.92 21.36

1 M Ago 45.52 24.58 20.94

3 M Ago 48.94 18.30 30.64

% of Stocks Above 200-day MA

Level 70

1 M Ago 69

3 M Ago 77

Source: Bloomberg Finance L.P. As at October 17, 2013

Page 17

The Technical Take

October 22, 2013

Overbought/Oversold Stocks
S&P 500
Most Overbought Name WYNN RESORTS LTD SOUTHWEST AIRLINES CO MOLEX INC EDWARDS LIFESCIENCES CORP PIONEER NATURAL RESOURCES CO NEWFIELD EXPLORATION CO WASHINGTON POST-CLASS B MCKESSON CORP FEDEX CORP SEAGATE TECHNOLOGY WHOLE FOODS MARKET INC EOG RESOURCES INC GARMIN LTD PERRIGO CO WPX ENERGY INC
Source: Bloomberg Finance L.P. As at October 17, 2013

RSI (14D) 79.28 77.57 77.25 76.93 76.12 75.32 74.07 73.98 73.85 73.77 73.50 73.19 72.93 72.83 72.43

Most Oversold Name TERADATA CORP CITRIX SYSTEMS INC J.C. PENNEY CO INC STANLEY BLACK & DECKER INC GAP INC/THE FLIR SYSTEMS INC NETAPP INC RED HAT INC CABLEVISION SYSTEMS-NY GRP-A CARNIVAL CORP YUM! BRANDS INC RALPH LAUREN CORP ABERCROMBIE & FITCH CO-CL A NEWMONT MINING CORP EXELON CORP

RSI (14D) 11.71 18.21 22.72 22.91 26.99 29.68 30.70 31.19 32.00 32.79 33.32 34.30 35.41 35.75 36.07

S&P/TSX Composite
Most Overbought Name PETROMINERALES LTD GENIVAR INC BANK OF MONTREAL METHANEX CORP FAIRFAX FINANCIAL HLDGS LTD GENWORTH MI CANADA INC ALIMENTATION COUCHE-TARD -B DOLLARAMA INC WHITECAP RESOURCES INC ATLANTIC POWER CORP TRANSCONTINENTAL INC-CL A ROYAL BANK OF CANADA TRANSGLOBE ENERGY CORP ALLIED PROPERTIES REAL ESTAT CGI GROUP INC - CLASS A
Source: Bloomberg Finance L.P. As at October 17, 2013

RSI (14D) 89.17 82.26 79.64 76.67 75.88 74.66 74.55 72.33 72.25 71.50 71.16 70.87 70.82 70.81 69.43

Most Oversold Name MANITOBA TELECOM SVCS INC REITMANS (CANADA) LTD-A PRETIUM RESOURCES INC ELDORADO GOLD CORP DUNDEE PRECIOUS METALS INC DETOUR GOLD CORP TURQUOISE HILL RESOURCES LTD CAMECO CORP FIRST MAJESTIC SILVER CORP WAJAX CORP SILVER STANDARD RESOURCES FORTUNA SILVER MINES INC RIO ALTO MINING LTD LIGHTSTREAM RESOURCES LTD CANEXUS CORP

RSI (14D) 18.68 22.61 25.05 25.57 27.42 28.74 29.09 30.12 31.00 32.09 32.28 32.50 32.74 32.89 32.93

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Market Statistics
Region U.S. Index S&P 500 Dow Jones Industrial Average Dow Jones Transportation Dow Jones Utilities Nasdaq Composite Russell 2000 Russell 1000 Value Russell 1000 Growth S&P/TSX Composite S&P/TSX 60 S&P/TSX Smallcap S&P/TSX Venture DAX FTSE 100 Nikkei 225 Hang Seng Shanghai MSCI World MSCI EAFE MSCI Emerging Markets Consumer Discretionary Comsumer Staples Energy Financials Health care Industrials Information Technology Materials Telecommunications Utilities Consumer Discretionary Comsumer Staples Energy Financials Health care Industrials Information Technology Materials Telecommunications Utilities Last 1721.54 15373.83 6736.87 487.60 3839.43 1092.42 871.27 800.35 12957.21 744.82 575.56 925.88 8846.00 6571.59 14467.14 23228.33 2193.07 1558.19 1836.02 290.35 485.21 421.53 623.49 278.75 605.73 404.59 529.17 270.24 151.59 191.81 1410.91 2568.78 2815.23 1957.31 1456.69 1798.34 139.54 2034.05 1110.58 1762.27 1 Week 1.66 1.13 1.36 -0.21 2.05 2.22 1.71 1.78 1.89 1.87 1.93 1.11 1.38 1.99 3.91 0.26 -0.11 1.58 1.44 1.36 1.48 1.58 2.47 2.46 2.63 0.44 1.09 2.00 2.21 -0.22 1.28 1.44 2.44 2.34 3.09 0.36 2.06 1.28 -0.11 2.48 1 Month 3 Month 0.93 2.37 -1.50 -1.12 1.46 3.53 1.90 -2.72 2.46 6.31 2.51 4.86 0.89 1.65 1.35 4.44 1.07 0.99 0.51 0.85 2.43 -0.17 1.92 -0.37 0.14 1.49 2.12 3.55 0.84 0.15 1.53 1.20 1.60 -0.18 1.08 1.77 0.15 1.79 1.23 3.28 1.40 1.83 2.56 3.22 -2.29 -3.90 2.30 2.48 3.20 3.15 4.93 3.57 6.67 -0.20 -0.20 8.06 7.02 4.45 6.62 7.28 3.13 -0.97 3.20 1.19 5.17 4.89 2.22 7.36 -4.01 -3.00 6.06 -0.28 1.66 5.09 13.52 2.69 12.37 -0.86 3.74 -5.69 YTD 20.65 16.73 26.27 7.86 27.10 28.71 21.63 21.58 4.32 4.37 -0.83 -22.76 15.67 11.21 40.32 1.93 -3.55 17.32 14.52 3.87 28.92 17.30 16.83 26.04 30.88 22.99 13.47 14.49 5.42 8.31 32.06 21.10 5.94 11.34 60.19 19.94 30.11 -30.11 3.20 -8.81 1 Year 17.78 12.83 30.14 0.59 23.63 29.75 19.84 18.78 4.09 4.58 -3.83 -27.66 19.08 10.96 65.63 7.84 3.94 17.22 17.79 10.20 29.29 13.09 10.79 27.11 26.62 24.11 8.27 13.72 1.19 1.70 37.12 28.98 1.97 15.79 58.83 25.17 38.77 -34.49 5.20 -8.86 3 Year 13.52 11.41 12.59 6.35 15.84 15.85 13.60 14.30 0.95 0.76 -4.37 -19.71 10.69 4.77 15.36 -0.94 -9.69 8.68 4.04 n/a 21.04 12.72 12.06 13.07 18.82 13.22 10.73 8.35 8.38 5.93 10.57 16.74 -0.54 6.50 46.51 12.00 -12.04 -17.41 8.25 -1.65 5 Year 12.84 11.56 12.66 6.63 17.53 15.74 11.54 15.57 6.29 5.27 8.33 -0.06 12.99 10.05 10.90 9.67 2.54 10.56 7.82 n/a 23.31 11.38 11.38 5.96 14.52 13.44 15.23 12.12 9.22 6.50 10.91 14.27 5.49 6.40 40.70 13.66 -10.46 3.05 6.37 2.68

Canada

International

S&P 500 Sectors

S&P/TSX Sectors

Source: Bloomberg Finance L.P. 3 and 5 year returns are annualized. As at October 17, 2013

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Appendix A Important Disclosures

General Research Disclaimer The statements and statistics contained herein are based on material believed to be reliable, but are not guaranteed to be accurate or complete. This report is for informational purposes only and is not an offer or solicitation with respect to the purchase or sale of any investment fund, security or other product. Particular investment, trading, or tax strategies should be evaluated relative to each individuals objectives. Graphs and charts are used for illustrative purposes only and do not reflect future values or future performance. This document does not provide individual financial, legal, investment or tax advice. Please consult your own legal, investment and tax advisor. All opinions and other information in this document are subject to change without notice. The Toronto-Dominion Bank and its affiliates and related entities are not liable for any errors or omissions in the information or for any loss or damage suffered. TD Waterhouse Canada Inc. and/or its affiliated persons or companies may hold a position in the securities mentioned, including options, futures and other derivative instruments thereon, and may, as principal or agent, buy or sell such securities. Affiliated persons or companies may also make a market in and participate in an underwriting of such securities. Technical Research Disclaimer The opinions expressed herein reflect a technical perspective and may differ from fundamental research on these issuers. Fundamental research can be obtained through your TD Wealth advisor or on the Markets and Research site within WebBroker. The technical research opinions contained in this report are based on historical technical data and expectations of the most likely direction of a market or security. No guarantee of that outcome is ever implied. Research Report Dissemination Policy TD Waterhouse Canada Inc. makes its research products available in electronic format. These research products are posted to our proprietary websites for all eligible clients to access by password and we distribute the information to our sales personnel who then may distribute it to their retail clients under the appropriate circumstances either by email, fax or regular mail. No recipient may pass on to any other person, or reproduce by any means, the information contained in this report without our prior written consent. Analyst Certification The Portfolio Advice and Investment Research analyst(s) responsible for this report hereby certify that (i) the recommendations and technical opinions expressed in the research report accurately reflect the personal views of the analyst(s) about any and all of the securities or issuers discussed herein, and (ii) no part of the research analysts compensation was, is, or will be, directly or indirectly, related to the provision of specific recommendations or views expressed by the research analyst in the research report. Conflicts of Interest The Portfolio Advice & Investment Research analyst(s) responsible for this report may own securities of the issuer(s) discussed in this report. As with most other employees, the analyst(s) who prepared this report are compensated based upon (among other factors) the overall profitability of TD Waterhouse Canada Inc. and its affiliates, which includes the overall profitability of investment banking services, however TD Waterhouse Canada Inc. does not compensate its analysts based on specific investment banking transactions. Corporate Disclosure TD Wealth represents the products and services offered by TD Waterhouse Canada Inc. (Member Canadian Investor Protection Fund), TD Waterhouse Private Investment Counsel Inc., TD Wealth Private Banking (offered by The Toronto-Dominion Bank) and TD Wealth Private Trust (offered by The Canada Trust Company). The Portfolio Advice and Investment Research team is part of TD Waterhouse Canada Inc., a subsidiary of The Toronto-Dominion Bank. Trade-mark Disclosures Bloomberg and Bloomberg.com are trademarks and service marks of Bloomberg Finance L.P., a Delaware limited partnership, or its subsidiaries. All rights reserved. TD Securities is the trade name which TD Securities Inc. and TD Securities (USA) LLC. jointly use to market their institutional equity services. TD Securities is a trade-mark of The Toronto-Dominion Bank representing TD Securities Inc., TD Securities (USA) LLC, TD Securities Limited and certain corporate and investment banking activities of The Toronto-Dominion Bank. All trademarks are the property of their respective owners. /The TD logo and other trade-marks are the property of the Toronto-Dominion Bank or a wholly-owned subsidiary, in Canada and/or in other countries.

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