TSX/S&P 100 Relative Strength US$ only back to its LT avg

Mark Der ie t , CFA, CMT (416) 943-6738 [email protected]

MORNING MEETING NOTES MARCH 12, 2015

During the past twenty-four months, Cormark Securities Inc., either on its own or as a syndicate member, participated in the underwriting of securities and/or

provided financial advice regarding the stock market insight and financial analysis regarding potential transactions for these companies

Our disclosure statements are located at the end of this report

TSX/S&P 100 Relative Strength US$ only back to its LT avg. new bears: SU HSE CPG ABX G POT DVN MON. IPL 1st bear in 90 months!

Unless otherwise denoted, all figures shown in C$ Purpose of report:

Given our expectation for a more trading-oriented market, we are placing more emphasis on short-term daily chart patterns and signals. The risk of looking short-term is the greater potential for whipsawand at times may be the opposite of our long-term quant/technical models. We focus on relativestrength as it has leading tendencies for absoluteprice trends. Moreover, in bull markets we want tohighlight stocks going up the most and in bearmarkets stocks going down the least.

We view time as an element of risk. There is no way of knowing for certain how long an established trendwill last, but the longer it is in place, the higher the riskof a reversal.

Recent Inflections 1) Canada: Bull: TRQ Bear: HSE SU CPG REI.un HR.un AEM WFT ABX POT G FNV SLW 2) S&P100 Bull: CMCSA BK C AIG JPM GE GOOG Bear: PEP DVN AMGN UNP ORCL MON

The US$ has been red hot and is overbought short-term, but has only just come back to its long-term average = 100. US$ strength has weighed on commodities and resource stocks, and several commodity currencies are breaking to new lows. The C$ is back to its recent lows. Next support = $0.77 / 0.75. Resistance = $0.80 / 0.81. This C$ selloff is much more pronounced than the start of the prior two downtrends in the 1970’s-mid-80’s and the early 1990’s- 2001, during which the first leg down was 20% over 3 years compared to 26.5% now. We first suggested long-term downside of $0.72 a few years ago when the secular bull for commodities ended, but now wonder if a full round trip back to the $0.62 area may occur given that the run up was bigger and the first down leg was more severe. Recent Bulls: Canada: none US: BK C GOOG. B) Recent Bears: Canada: Resources: SU HSE CPG ABX G POT US: DVN MON UNP C) Longer-term bull/bear inflections (based on weekly charts): Canada: Bull: CIX MX. Bears: IPL (1st time in 90 months!) US: Bull: Bear: ABBV INTC KO D) Sector Rotation: Our cyclical vs. defensive charts have rallied in both Canada and Globally with the 10>100-day. Canada is testing key resistance at its 20-day. Our proxies TCK.b vs. L and BHP vs. JNJ have also improved, though are starting to lose steam.

Over weights: Canada: Tech, Staples, Health Care, Discretionary, Industrials, REITs, Base Metals US: Discretionary, Insurance, Materials, Industrials Sector “5-star” ratings: strong (4-5 stars): Canada: Discretionary, Health Care, Tech. US: small vs. large, Tech, Health Care, Discretionary, brokers, Telecom, Materials. E) Performance: YTD bulls -0.3% vs. bears +0.7%. Since inception (Dec.31/08), Bulls +159.9% (CAGR 16.2%) vs. Bears +2.7% (CAGR 0.7%). 59/74 months had a positive spread. Our longer-term bull/bear models (based on weekly charts), since Sep. 16, the Bulls are +5.9% and the bears -8%



Our disclosure statements are located at the end of this report 2

Currencies US$ just back to its long-term average. Base targets 110. C$ starting another leg down. Next Support = 0.77 / 0.72.

{10}

Currencies: US$ major breakout targets 110 on DXY. (Euro < $1.20 targets 1.00)C$ long-term target $0.72. starting another leg down short-term.

DXY major breakout > $0.89 targets 110 – similar setup as 1990’s.

Vertical lines = MACD > 0

C$: Last 2 major downtrends fell by 30%+ over 10 years (= 72 cents), front end loaded nearly 20% in 3

years (85 cents - achieved)

.

Decile Rankings: 1= best, 10 = worst; Source: CPMS and Bloomberg




TSX100 “Sunshine / Rain” Upper right quadrant = strength with tendency to rotate clockwise.

TSX100

BMO↓

CM↓

NA

TD

CTC.a

GIL↑↑

MG↑↑

SJR.b↓↓

HCG

TRI

CCT↓

ARX

TOU↑

AC

CCO

CNQ↑

COS

CPG↑↑↑

CVE

MDAHSE↑

IMO

IPL

QSR↓

GEI↑↑↑

ALA↑

IAG

PPL↑

BEP.UN↓

PSK↑↑

SU

OCX

TRP↓

VET↑

BAM.a

BPY.UN

CIX↑↑

FFH

DOL

IFC↑

IGM↓

PWF↑

REI.un↓

SLF↓↓

MX↑↑↑↑↑

ABX↑

AEM

ELD↓↓↓

G↓↓↓

CAE↓↓

EMP/A

WFT

K↓↓↓↓↓

YRI↓↓

VRX

BBD.b

CNR↑

CP↑↑

FTT↑↑

SNC↓↓

BB

AGU

VSN↓

FNV↓↓↓

LUN↑

RBA

STN↑

POT↓OTC

TCK.b↑↑↑↑↑

KEY↑↑

ATD.B

L

SAP

EFN↑↑↑↑↑

WN

TRQ↑↑↑

RCI.b↓↓

TCU↓

EMA↓

FTS↓↓↓

BNS

RY

ECA

ENB↓↓

HR.un↓↓

GWO↑↑

MFC

POW↑

PEY↑

GIB.a

FM↑

ACO.x↓↓

SLW↓↓↓↓

MRU

CSU↑

BCE↓↓

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Long-Term

Sh

ort

-Ter

m

IMPROVING STRONG

WEAKWEAKENING

No

No

No

MATERIALS INDUSTRIALS TECHNOLOGY DISCRETIONARY STAPLESGOLD HEALTH CARE FINANCIALS TELECOMBANKSENERGY UTILITIES

.


Guide: Investors should be hunting for new long ideas in the upper left improving quadrant and reducing exposure/shorting in the lower right weakening quadrant. One should also generally overweight stocks in the strong upper right quadrant and underweight stocks in the weak lower left quadrant. It is also important to note where stocks have come from. When a stock starts to migrate down the short-term y-axis away from the sunshine or up the y-axis away from the rain cloud an inflection may be at hand. Arrows identify recent shifts - each arrow represents a 10% change in the short-term y-axis over the past month.




S&P100 “Sunshine / Rain” Upper right quadrant = strength with tendency to rotate clockwise.

S&P100

AMZN↑↑↑↑↑

CMCSA↑↑F↑↑↑↑

HD↑

LOW

MCD↑↑↑

TWX↓↓

SPG↓↓

CL

COST

APC↑↑↑↑↑

PM

PG↓↓↓↓

WMT↓↓↓↓APA↑↑↑↑

CVX↑COP↑

DVN↑↑↑↑

XOM

HAL↑↑↑↑

NOV

OXY↑↑

SLB↑↑↑

WMB↑↑↑↑↑

ALL↓↓

BAC↓↓↓

BK↓

BRK/B↓↓COF

MET

USB

WFC

ABT↑

AMGN↓↓↓↓↓

BMY↓

GILD↑↑

JNJ↓

MDT

MRK↓

PFE↑↑

UNH

MMM↓

BA↑↑↑↑↑

CAT

FDX↓

HONLMT

UNP

UPS↓↓↓↓↓

UTX

AAPL↑↑↑

CSCO

ACN↓

GOOGL↑↑↑↑↑

IBM↑↑↑

MA

MSFT↓↓

ORCL↓↓

QCOM

TXN

AIG↑

EBAY↑

DOW↑↑↑↑↑

FCX

T↑↑

LLY↓

VZ↑↑↑

AEP↓↓↓↓↓

EXC↓↓↓

SO↓↓↓↓↓

SBUX↑↑↑

NKE↓↓↓

TGT↓↓

DIS↑↑↑↑

MO↑

KO

CVS

MDLZ↓↓↓

PEP↑

WBA

FOXA↓↓↓↓

AXP↓↓↓↓↓

C

GS

JPM↑

MS↓↓↓

ABBV↓↓↓↓↓

BAX↓↓

EMR

GD↓↓

GE↑

NSC↑↑↑

RTN↓

EMC↓

HPQ↓↓↓↓↓

INTC↓↓↓↓↓

V↓

DD↑↑

MON

GM↑↑↑↑

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Long-Term

Sh

ort

-Ter

m

IMPROVINGSTRONG

WEAK WEAKENING

No

No

No

MATERIALS INDUSTRIALS TECHNOLOGY DISCRETIONARY STAPLESGOLD HEALTH CARE FINANCIALS TELECOMENERGY UTILITIES


Guide: Investors should be hunting for new long ideas in the upper left improving quadrant and reducing exposure/shorting in the lower right weakening quadrant. One should also generally overweight stocks in the strong upper right quadrant and underweight stocks in the weak lower left quadrant. It is also important to note where stocks have come from. When a stock starts to migrate down the short-term y-axis away from the sunshine or up the y-axis away from the rain cloud an inflection may be at hand. Arrows identify recent shifts - each arrow represents a 10% change in the short-term y-axis over the past month.




Recent Bulls / Bears In Canada

Canada: Bears: SU HSE CPG ABX G POT

SU

HSE

CPG

ABX

G

POT

SU bear vs. TSX

CPG bear vs. TSX

HSE bear vs. TSX

ABX bear vs. TSX

POT bear vs. TSX G bear vs. TSX




Recent Bulls / Bears In U.S.

US: Bulls: BK C GOOG. Bears: DVN MON UNP

DVN

MON

UNP

BK

C

GOOG

DVN bear vs. S&P

UNP bear vs. TSX

MON bear vs. S&P

BK bull vs. S&P

C bull vs. S&P GOOG bull vs. S&P




Recent Bulls / Bears Longer-term inflections: Bulls: CIX EFN MX EBAY. Bears: IPL (1st bear signal in 90 months!) ABBV

CIX

EFN

IPL

MX

ABBV

EBAY

EFN bull vs. TSX CIX bull vs. TSX

IPL bear vs. TSX MX bull vs. TSX

ABBV bear vs. S&P EBAY bull vs. S&P




Recent Bulls / Bears Longer-term inflections in U.S.: Bulls: Bears: INTC KO

INTC

KO

KO bear vs. S&P INTC bear vs. S&P




Cyclicals vs. Defensives Weekly charts: Canada and Global charts both hooking up.

• CDN Cyclicals vs. Defensives

• Global Cyclicals vs. Defensives

Decile Rankings: 1= best, 10 = worst; Source: CPMS and Bloomberg Decile Rankings: 1= best, 10 = worst; Source: CPMS and Bloomberg

Weekly Momentum < zero but rising

Weekly Momentum < but rising

> 4 & 20, but < 40-week

> 4 and 20-week. Testing 40-week MA




Cyclicals vs. Defensives Daily Charts

Short-term: Canada & Global both have 10 > 100-day.

• CDN Cyclicals vs. Defensives

• Global Cyclicals vs. Defensives


10 > 100-day

Daily Momentum > zero and rising

Daily Momentum > zero but falling

10-day > 100




TCK.b vs. L BHP vs. JNJ

Cyclical/defensive proxies improving. TCK.b vs. L and BHP vs. JNJ momentum hooking up.

• TCK.b vs. L

• BHP vs. JNJ


Back < 20 week, and still < 40 & 80 week

Momentum < 0 but rising

Momentum < 0 but rising

>20 week, but < 40 & 80 week




TCK.b vs. L BHP vs. JNJ

Proxies TCK vs. L & BHP vs. JNJ both 10 > 100-day. Momentum starting to fall though.

• TCK.b vs. L

• BHP vs. JNJ


10 > 100-day

Momentum > 0 but falling

Momentum > 0 but falling

10 > 100-day




TSX / S&P100 Sector Weights

CDN Overweight: Tech, Staples, Health Care, Discretionary, Industrials, REITs, base metals

US Discretionary, Insurance, Materials, Industrials

TSX Index

Sector #LT Bull

# Bull % Bull Index Bulls vs Index rank

Consumer Discretionary 7 7 6 86% 5.7 13.2 2.32 4 Consumer Staples 6 6 6 100% 3.7 9.9 2.64 2 Energy 22 2 3 14% 19.9 8.4 0.42 14 E&P 13 - 3 23% 11.5 8.4 0.73 11 pipes/mid-stream 8 2 - 0% 8.0 - - 15 Financials 23 13 10 43% 36.8 19.7 0.53 13 Insurance 8 6 5 63% 7.9 9.4 1.20 8 Commercial Banks 6 - - 0% 23.7 - - 15 reits/real estate 4 4 2 50% 3.7 7.3 1.99 6 Health Care 2 2 2 100% 5.8 15.2 2.64 2 Industrials 11 7 5 45% 8.7 19.1 2.19 5 Information Technology 4 4 4 100% 2.3 6.1 2.64 1 Materials 16 8 5 31% 10.0 6.8 0.68 12 gold 8 4 - 0% 4.5 - - 15 base metals 4 - 3 75% 1.4 2.5 1.71 7 Chemicals 3 3 2 67% 3.8 4.3 1.15 9 Telecommunication Services 3 3 - 0% 5.3 - - 15 Utilities 5 5 2 40% 1.8 1.6 0.89 10

TSX100 bulls sector weights vs. benchmark

(1.0) (0.8) (0.6) (0.4) (0.2) - 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6

Information Technology

Consumer Staples

Health Care

Consumer Discretionary

Industrials

reits/real estate

base metals

Insurance

Chemicals

Utilities

E&P

Materials

Financials

Energy

gold

pipes/mid-stream

Telecommunication Services

Commercial Banks

S&P100

Sector ## Bull % Bull Index Bulls vs Index rank

Consumer Discretionary 13 11 85% 11.0 21.6 1.96 1 Consumer Staples 11 5 45% 12.2 8.3 0.68 9 Energy 11 - 0% 8.4 - - 12 Oil, Gas & Consumable Fuels 8 - 0% 7.0 - - 12 Energy Equipment & Services 3 - 0% 1.4 - - 12 Financials 15 5 33% 15.6 10.2 0.65 10 Insurance 3 2 67% 1.4 2.0 1.42 2 Banks 5 2 40% 7.9 7.3 0.93 6 Capital Markets 3 1 33% 1.7 0.8 0.49 11 Health Care 12 5 42% 13.0 11.5 0.88 7 Pharmaceuticals 6 2 33% 7.9 6.0 0.76 8 Industrials 14 6 43% 10.0 13.6 1.37 4 Information Technology 15 8 53% 24.0 32.4 1.35 5 Materials 4 2 50% 1.8 2.4 1.37 3 Telecommunication Services 2 - 0% 3.2 - - 12 Utilities 3 - 0% 0.8 - - 12

S&P100 bulls sector weights vs. benchmark

(1.0) (0.8) (0.6) (0.4) (0.2) - 0.2 0.4 0.6 0.8 1.0

Consumer Discretionary

Insurance

Materials

Industrials

Information Technology

Banks

Health Care

Pharmaceuticals

Consumer Staples

Financials

Capital Markets

Oil, Gas & Consumable Fuels

Energy

Utilities

Telecommunication Services

Energy Equipment & Services

Canada Tactical Star Rating: US Tactical Star Rating:





TSX100 Bulls & Bears, Sorted by sector

Recent bulls: TRQ

During the past twenty-four months, Cormark Securities Inc., either on its own or as a syndicate member, participated in the underwriting of securities

and/or provided financial advice regarding the stock market insight and financial analysis regarding potential transactions for these companies




TSX100 Bulls & Bears, Sorted by sector

Recent bears: HSE SU CPG REI.un HR.un AEM WFT ABX POT G FNV SLW


During the past twenty-four months, Cormark Securities Inc., either on its own or as a syndicate member, participated in the underwriting of securities

and/or provided financial advice regarding the stock market insight and financial analysis regarding potential transactions for these companies




S&P100 Bulls Sorted by sector

Recent bulls: CMCSA BK C AIG JPM GE GOOG





S&P100 Bears Sorted by sector

Recent bears: PEP DVN AMGN UNP ORCL MON





Performance Equal-weighted relative strength bulls vs. bears.

1-week 1-Mon 3-Mon 6-Mon YTD

Incep (12/08) 2014 2013 2012 2011 2010 2009 CAGR

Bulls -2.3% 0.4% 5.2% 6.4% -0.3% 159.9% 12.9% 12.8% 6.7% 1.2% 61.0% 57.2 16.2%Bears -2.3% 1.8% -2.6% -8.4% 0.7% 2.7% -5.0% -2.7% -2.3% -9.3% -17.1% 25.4 0.7%Spread 0.0% -1.5% 7.8% 14.8% -1.0% 157.2% 17.9% 15.6% 9.0% 10.5% 78.1% 31.8% 15.5%Success Rate: 59/74 months 79.7%

TSX 100 Relative Strength - equal weighted

70

90

110

130

150

170

190

210

230

250

Jan/

09

Mar

/09

May

/09

Jul/0

9

Sep

/09

Nov

/09

Jan/

10

Mar

/10

May

/10

Jul/1

0

Sep

/10

Nov

/10

Jan/

11

Mar

/11

May

/11

Jul/1

1

Sep

/11

Nov

/11

Jan/

12

Mar

/12

May

/12

Jul/1

2

Sep

/12

Nov

/12

Jan/

13

Mar

/13

May

/13

Jul/1

3

Sep

/13

Nov

/13

Jan/

14

Mar

/14

May

/14

Jul/1

4

Sep

/14

Nov

/14

Jan/

15

Mar

/15

Bulls Bears

TSX100 Relative Strength Bulls less Bears

95

115

135

155

175

195

215

235

Jan

/09

Ma

r/0

9

May

/09

Jul/0

9

Sep

/09

No

v/0

9

Jan

/10

Ma

r/1

0

May

/10

Jul/1

0

Sep

/10

No

v/1

0

Jan

/11

Ma

r/1

1

May

/11

Jul/1

1

Sep

/11

No

v/1

1

Jan

/12

Ma

r/1

2

May

/12

Jul/1

2

Sep

/12

No

v/1

2

Jan

/13

Ma

r/1

3

May

/13

Jul/1

3

Sep

/13

No

v/1

3

Jan

/14

Ma

r/1

4

May

/14

Jul/1

4

Sep

/14

No

v/1

4

Jan

/15

Ma

r/1

5

Bulls less Bears

Long-term Model

Since Incep (Sep.26/14)

Bulls 5.9%

Bears -8.0%

Spread 13.9%Success Rate: 3/5 months

Bulls vs. Bears:

Equal-weighted portfolio of Bulls / Bears. Changes are made only after we publish and the models are also rebalanced when we publish the weekly report. Transaction costs are not considered.



I, Mark Deriet, hereby certify that the views expressed in this research report accurately reflect my personal views about the subject company(ies) and its (their) securities. I also certify that I have not been, and will not be receiving direct or indirect compensation in exchange for expressing the specific recommendation(s) in this report. Due to the nature of quantitative/technical analysis, the securities recommended or discussed in this report are not continuously covered and my opinions may change without notice. Investors should regard this report as providing stand-alone analysis and should not expect continuing analysis relating to the referenced issuers and/or securities. The observations of this quantitative/technical analysis may not be consonant with the views of Cormark Securities Inc.’s fundamental analysts.

A full list of our disclosure statements as well as our research dissemination policies and procedures can be found on

our web-site at: www.cormark.com

RECOMMENDATION TERMINOLOGY

Cormark’s recommendation terminology is as follows: Top Pick our best investment ideas, the greatest potential value appreciation Buy expected to outperform its peer group Market Perform expected to perform with its peer group Reduce expected to underperform its peer group Our ratings may be followed by "(S)" which denotes that the investment is speculative and has a higher degree of risk associated with it.

Additionally, our target prices are set based on a 12-month investment horizon.

For Canadian Residents: This report has been approved by Cormark Securities Inc. (“CSI”), member IIROC and CIPF, which takes responsibility for this report and its dissemination in Canada. Canadian clients wishing to effect transactions in any security discussed should do so through a qualified salesperson of CSI. For US Residents: Cormark Securities (USA) Limited (“CUSA”), member FINRA and SIPC, accepts responsibility for this report and its dissemination in the United States. This report is intended for distribution in the United States only to certain institutional investors. US clients wishing to effect transactions in any security discussed should do so through a qualified salesperson of CUSA. Every province in Canada, state in the US, and most countries throughout the world have their own laws regulating the types of securities and other investment products which may be offered to their residents, as well as the process for doing so. As a result, some of the securities discussed in this report may not be available to every interested investor. This report is not, and under no circumstances, should be construed as, a solicitation to act as securities broker or dealer in any jurisdiction by any person or company that is not legally permitted to carry on the business of a securities broker or dealer in that jurisdiction. This material is prepared for general circulation to all clients and does not have regard to the particular circumstances or needs of any specific person who may read it. This report is provided for information purposes only and does not constitute an offer or solicitation to buy or sell any securities discussed herein.

The information and any statistical data contained herein have been obtained from sources believed to be reliable as of the date of publication, but the accuracy or completeness of the information is not guaranteed, nor in providing it does CSI or CUSA assume any responsibility or liability. All opinions expressed and data provided herein are subject to change without notice. The inventories of CSI or CUSA, its affiliated companies and the holdings of their respective directors, officers and companies with which they are associated may have a long or short position or deal as principal in the securities discussed herein. A CSI or CUSA company may have acted as underwriter or initial purchaser or placement agent for a private placement of any of the securities of any company mentioned in this report, may from time to time solicit from or perform financial advisory, or other services for such company. The securities mentioned in this report may not be suitable for all types of investors; their prices, value and/or the income they produce may fluctuate and/or be adversely affected by exchange rates.

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Documents

TSX/S&P 100 Relative Strength US$ only back to its LT avg