CRAIG JOHNSON: CFA, CMT, MBA Joined Piper Jaffray in 1995 Managing Director and Senior Technical Research Analyst At Piper Jaffray he directs the technical research group Offers technical commentary on both the market and individual stocks Appears regularly on various national financial news networks
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CRAIG JOHNSON: CFA, CMT, MBA · 02-10-2018 · CRAIG JOHNSON: CFA, CMT, MBA Joined Piper Jaffray in 1995 Managing Director and Senior Technical Research Analyst At Piper Jaffray
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CRAIG JOHNSON: CFA, CMT, MBA
Joined Piper Jaffray in 1995
Managing Director and Senior Technical Research Analyst
At Piper Jaffray he directs the technical research group
Offers technical commentary on both the market and individual stocks
Appears regularly on various national financial news networks
Adam Turnquist, CMTTECHNICAL RESEARCH ANALYSTTel: +1 312 267-5028Email: [email protected]
October 5, 2018
Piper Jaffray does and seeks to do business with companiescovered in its research reports. As a result, investors should beaware that the firm may have a conflict of interest that could affectthe objectivity of this report. Investors should consider this report asonly a single factor in making their investment decisions. This reportshould be read in conjunction with important disclosure information,including an attestation under Regulation Analyst Certification, foundat the end of this report or at the following site:http://www.piperjaffray.com/researchdisclosures.
Piper Jaffray Technical Research
Gradient Investments | Elite Advisor Forum
PIPER JAFFRAY | 2
Disclosures for the universe* of Craig Johnson:1. I or a household member has a financial interest in the securities of the following companies: none
2. I or a household member is an officer, director, or advisory board member of the following companies: none
3. I have received compensation within the past 12 months from the following companies: none
4. Piper Jaffray or its affiliates beneficially own 1% or more of any class of common equities of the following companies: WPX
5. Piper Jaffray has received compensation for investment banking services from or has had a client relationship with the following companies within the past 12 months: BSX, DBX, PLNT, SLB, ZTS
6. Piper Jaffray expects to receive or intends to seek compensation for investment banking services from the following companies in the next 3 months: SLB, ZTS
7. Within the past 12 months Piper Jaffray was a managing underwriter of a public offering of, or dealer manager of a tender offer for,the securities of the following companies: DBX
8. Piper Jaffray has received compensation for non-investment banking services from or has had a client relationship with the following companies within the past 12 months: HTLF, TXN, UNH
9. Piper Jaffray makes a market in the securities of the following companies, and will buy and sell the securities of these companies on a principal basis: AFL, ATVI, AXP, BSX, C, CLB, COP, CRM, CTXS, ECA, FN, FWRD, GOOGL, HBAN, LOW, LULU, MPC, NBIX, NKE, NOMD, NUS, PCRX, PLAY, PXD, QCOM, SIVB, SLB, SPOT, TEVA, TS, TWTR, TXN, ULTA, UNH, WDAY, WPX, ZTS
10.Piper Jaffray usually provides bids and offers for the securities of the following companies and will, from time to time, buy and sellthe securities of these companies on a principal basis: BX, CAMP, CRS, CUB, DBX, EPAM, FE, GNRC, HTLF, ICUI, LGF/A, MA, NGVT, PLNT, SHOP, USCR, YEXT
*Represents companies in the Technical Research Model Portfolio
PIPER JAFFRAY | 3
Discussion Topics
Section I
Section II
Section III
Section IV
Section V
Section VI
Section VII
Macro Perspective
Proprietary Research
Intermarket Analysis
Foreign Markets
Actionable Ideas
Final Thoughts
Appendix
Piper Jaffray Technical Research
Macro Perspective
Source: CartoonStock.com. Reprinted by permission.
PIPER JAFFRAY | 5Source: Piper Jaffray Technical Research
Macro Perspective | LT SPX Trend
Today
SPX—The SPX index is trading near record high territory after successfully retesting the rising 40-week MA. Price momentum has climbed back into positive territory. We recommend selectively adding to positions into those stocks/sectors with improving/strong RS and technical trends.
The tech-heavy NASDAQ indices (and Industrials index) are outperforming YTD.
PIPER JAFFRAY | 10Source: Piper Jaffray Technical Research
Macro Perspective | Secular Downtrend Reversed
Source: Piper Jaffray Technical Research
A double-bottom has been set.
The secular downtrend off the ’81 highs has been reversed. 10-year yields have now cleared the 3% hurdle which should provide a new base level of support for Treasuries.
PIPER JAFFRAY | 11
Macro Perspective | Over the 3% Hurdle
Source: Piper Jaffray Technical Research/FactSet
PIPER JAFFRAY | 12
Macro Perspective | Yield Curve Remains Flat
Source: Piper Jaffray Technical Research
Rates have moved higher over the last month. However, the shift was mostly parallel and the yield curve only steepened modestly.
PIPER JAFFRAY | 13Source: Piper Jaffray Technical Research
PIPER JAFFRAY | 21Source: Piper Jaffray Technical Research
Proprietary Research | 40-Week Technique Indicator
The 40-week Technique indicator issued a sell signal on the week ended 9/14/2018. A current reading shows 59.3% of our MGs are trading above their 40-week MAs vs. a 10-week MA of 64.2%.
4 Years 4 Years 4 Years 4 Years 6 Years 3 Years 4 Years
PIPER JAFFRAY | 22Source: Piper Jaffray Technical Research
Proprietary Research | 26-Week New Highs Indicator
7
The 26-week New Highs indicator issued a sell signal on the week ended 8/10/2018 (buy position since 5/4/2018). Last week, only 41 MGs posted 26-week new highs, opposed to 50 MGs that registered new lows.
PIPER JAFFRAY | 23
1.17%
-0.05%
0.62%
1.22%
-0.05%
0.69%
1.52%
0.63%
-1.05%
0.54%0.70%
1.39%
62%
53%
61%64%
58%56%
58% 58%
45%
60% 60%
74%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
-1.50%
-0.50%
0.50%
1.50%
2.50%
3.50%
4.50%
Jan Feb March April May June July Aug Sep Oct Nov Dec
With summer fading in the rear-view mirror, it means back to politics in the United States. The 2018 midterm elections are fast approaching and almost impossible to ignore amid the growing number of political ads littered throughout all forms of media. There is a lot at stake for both sides of the aisle and also a lot of uncertainty over how the electoral landscape will look come November.
Sticking to what we know, political uncertainty is building into the midterm…and with uncertainty, market volatility usually follows.
The following research highlights what some of this volatility could potentially look like for the market, seasonality trends into year-end, and a closer look at market performance under various leadership compositions in Washington.
WHAT IS UP FOR GRABS?Senate:
35 seats
The caveat: In order for Democrats to take control of the Senate, they will have to retain all 26 of their current seats and also add 2 additional Republican held seats from the 9 that are on the ballot.
The bigger caveat: 10 of the Democratic seats they need to retain are states President Trump won in 2016 (5 of which he won by double digits).
House:
Magic number: 23
Democrats will need to win at least 23 seats from Republicans in order to flip the majority in the House (and not lose any of their current seats).
PIPER JAFFRAY | 25
94
96
98
100
102
104
106
108
110
112
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Midterm Election Years | Historical Progression (1928-YTD)
Average Second Year Progression (All) Average Second Year Progression (Republican) 2018
With summer fading in the rear-view mirror, it means back to politics in the United States. The 2018 midterm elections are fast approaching and almost impossible to ignore amid the growing number of political ads littered throughout all forms of media. There is a lot at stake for both sides of the aisle and also a lot of uncertainty over how the electoral landscape will look come November.
The chart to the left depicts the progression of the S&P 500 for all midterm election years dating back to 1928. We also included the market’s performance for midterm years when a Republican was in the White House. Historically, the lows of midterm election years have usually been made in October.
PIPER JAFFRAY | 26
Proprietary Research | Back to Politics | Monthly Seasonality
Source: Piper Jaffray Technical Research
Continuing with our seasonality analysis, price action on the S&P 500 around the November midterms has historically been positive from October to February (1-month to +3-months).
September once again appears as the weak spot within the data as monthly returns during all midterm years have averaged -1.2%.
PIPER JAFFRAY | 27
Proprietary Research | Back to Politics | Approval Ratings
Source: Piper Jaffray Technical Research
September October November DecemberSeptember, 1990 George H. W. Bush Republican 72% -5.12% -0.67% 5.99% 2.48%September, 2002 George W. Bush Republican 67% -11.00% 8.64% 5.71% -6.03%September, 1954 Dwight D. Eisenhower Republican 66% 8.31% -1.95% 8.08% 5.08%September, 1962 John F. Kennedy Democratic 63% -4.82% 0.44% 10.16% 1.35%September, 1970 Richard Nixon Republican 54% 3.30% -1.14% 4.74% 5.68%September, 2010 Barack Obama Democratic 45% 8.76% 3.69% -0.23% 6.53%September, 1978 Jimmy Carter Democratic 45% -0.73% -9.16% 1.66% 1.49%September, 1994 Bill Clinton Democratic 42% -2.69% 2.09% -3.95% 1.23%September, 1982 Ronald Reagan Republican 42% 0.76% 11.04% 3.61% 1.52%Source: Piper Jaffray Technical Research/Bloomberg, Approval ratings based on Gallup polls
Date President President's PartyPresidential Approval
RatingsS&P 500 Performance
We analyzed prior midterm election years for first-term Presidents to identify if approval ratings had any historical impact on stock market returns. Although the data is limited, the clearest takeaway from our analysis is that the market has historically outperformed in November when approval ratings were high going into the midterms.
PIPER JAFFRAY | 28
Proprietary Research | Back to Politics | Approval Ratings
Source: Piper Jaffray Technical Research
The scatter plot below compares first-term President approval ratings into the midterms along with how many seats in the House of Representatives were either obtained or lost in the elections. Considering the data is limited, the regression model still produced an r-squared value of 0.58, implying approval ratings have some predictive power when forecasting how many seats will be lost or gained in the midterm elections.
With President Trump’s most recent approval rating coming in at 42%, we could simply speculate Republicans could potentially lose around 50-60 seats in the House this November.
As a reminder, Democrats would need to recapture 23 seats from Republicans in order to reclaim majority of the House while also not losing any of their current seats.
Trump’s most recent approval rating: 42%
PIPER JAFFRAY | 29
Proprietary Research | Back to Politics | What if?
Source: Piper Jaffray Technical Research
The table below shows the average and median annual returns of the Dow Jones Industrial Average dating back to 1897 based on various leadership compositions in Washington. The best/worst case scenarios are outlined below.
Best Case Scenario*: President: Democrat
Including Congress: Democratic President and
Republican controlled Congress
* With a Republican President, the best case scenario for the market includes a Republican controlled Congress.
Worst Case Scenario President: Republican
Including Congress: Republican President and
divided Congress.
Piper Jaffray Technical Research
Intermarket Analysis
PIPER JAFFRAY | 31
-6.5%
-4.5%
-2.5%
-0.5%
1.5%
3.5%
5.5%
7.5%
9.5%
01/0
1/20
18
01/1
1/20
18
01/2
1/20
18
01/3
1/20
18
02/1
0/20
18
02/2
0/20
18
03/0
2/20
18
03/1
2/20
18
03/2
2/20
18
04/0
1/20
18
04/1
1/20
18
04/2
1/20
18
05/0
1/20
18
05/1
1/20
18
05/2
1/20
18
05/3
1/20
18
06/1
0/20
18
06/2
0/20
18
06/3
0/20
18
07/1
0/20
18
07/2
0/20
18
07/3
0/20
18
08/0
9/20
18
08/1
9/20
18
08/2
9/20
18
09/0
8/20
18
09/1
8/20
18
09/2
8/20
18
Intermarket Analysis / Relationships
10-Year Bond US Dollar SPX CRB
Please note: For the 10-Year bond returns, we have utilized the S&P 10 Year Treasury Note Futures Total Return Index (SPUSTTTR).
Intermarket Analysis | CRB Commodity IndexThe CRB Commodity Index has recently reversed a ST downtrend and recaptured the 40-week MA; a retest of the ’18 highs appears to be underway.
PIPER JAFFRAY | 35Source: Piper Jaffray Technical Research
Intermarket Analysis | Gold
09 10 11 12 13 14 15 16 17 18600600
800800
1,0001,000
1,2001,200
1,4001,400
1,6001,600
1,8001,800
2,0002,000
1202.40
Courtesy of FactSet Research Systems
NY Gold (NYM $/ozt)Oct 02, 2018 1202.40
LT perspective—Gold is trending lower after violating the lower end of a multi-year ascending triangle; further downside from here leaves the December ’16 lows (~$1,125) as the next area of support.
PIPER JAFFRAY | 36Source: Piper Jaffray Technical Research
Intermarket Analysis | Copper
14 15 16 17 181.81.8
2.02.0
2.22.2
2.42.4
2.62.6
2.82.8
3.03.0
3.23.2
3.43.4
3.63.6
2.80
Courtesy of FactSet Research Systems
Copper (NYM $/lbs)Oct 02, 2018 2.80
Copper has reversed a ST downtrend after bouncing off recent lows; we suspect a retest of key overhead resistance is now underway.
Piper Jaffray Technical Research
Foreign Markets
PIPER JAFFRAY | 38
Index Price Day Week 1-month QTD YTD% from 52-week High 50-day MA 200-day MA 14-day RSI
PIPER JAFFRAY | 40Source: Piper Jaffray Technical Research
Foreign Markets | DAX Index
14 15 16 17 18 8,0008,000
9,0009,000
10,00010,000
11,00011,000
12,00012,000
13,00013,000
14,00014,000
12287.58
Courtesy of FactSet Research Systems
Germany DAX (TR)Oct 02, 2018 12287.58
LT perspective—The DAX index is trading near the neckline of a H&S top formation; reduce positions on a break below the neckline.
PIPER JAFFRAY | 41Source: Piper Jaffray Technical Research
Foreign Markets | FTSE 100 Index
14 15 16 17 18 5,5005,500
6,0006,000
6,5006,500
7,0007,000
7,5007,500
8,0008,000
7474.55
Courtesy of FactSet Research Systems
FTSE 100Oct 02, 2018 7474.55
LT perspective—The FTSE 100 has formed a bearish double-top after violating a multi-year uptrend; recent relief rally has failed at overhead resistance; reduce positions.
PIPER JAFFRAY | 42Source: Piper Jaffray Technical Research
Foreign Markets | Nikkei 225 Index
14 15 16 17 18 12,00012,000
14,00014,000
16,00016,000
18,00018,000
20,00020,000
22,00022,000
24,00024,000
26,00026,000
24110.96
Courtesy of FactSet Research Systems
Nikkei 225Oct 03, 2018 24110.96
LT perspective—The index is trading at multi-year highs after reversing a ST downtrend; add to positions, as we suspect further upside lies ahead.
PIPER JAFFRAY | 43Source: Piper Jaffray Technical Research
Foreign Markets | MSCI Emerging Markets
14 15 16 17 18 35,00035,000
40,00040,000
45,00045,000
50,00050,000
55,00055,000
60,00060,000
65,00065,000
70,00070,000
57320.01
Courtesy of FactSet Research Systems
MSCI EM (Emerging Markets)Sep 28, 2018 57320.01
LT perspective—The index has violated a LT uptrend/key support level; recent relief rally has concluded at overhead resistance; reduce positions.
Piper Jaffray Technical Research
Actionable Ideas
PIPER JAFFRAY | 45
Group is approaching the 40-week MA after reversing a multi-year downtrend; RS has bottomed and is now climbing higher; price momentum has eased but still remains in positive territory; add to positions, as we suspect more upside lies ahead.
3
Source: Piper Jaffray Technical Research
PIPER JAFFRAY | 46Source: Piper Jaffray Technical Research
APA—Shares are approaching the neckline of a multi-month inverted H&S bottom; back above the 10-/30-week WMAs; RS has formed a bullish divergence from price action and is back in positive territory; a close above $49 should open the door to a new leg higher; add to positions on a topside breakout.
PIPER JAFFRAY | 47
Group has pulled back to support near the rising 40-week MA; RS is near the midpoint of a rising channel and price momentum has faded into negative territory; wait for a breakout above the ’18 highs before adding to positions.
Source: Piper Jaffray Technical Research
PIPER JAFFRAY | 48Source: Piper Jaffray Technical Research
JPM—Shares have pulled back off overhead resistance and are currently retesting a LT uptrend support line/10-/30-week WMAs; RS has transitioned into negative territory; add to positions on a confirmed topside breakout (close above $120).
PIPER JAFFRAY | 49
Group has successfully retested the lower end of a LT rising price channel; RS has bounced higher off support and price momentum recently turned positive; add to positions, as we suspect a retest of the ‘00/’07 highs is now underway.
Source: Piper Jaffray Technical Research
PIPER JAFFRAY | 50Source: Piper Jaffray Technical Research
AXP—Major trend remains higher; shares have successfully retested support/10-week WMA after surpassing overhead resistance; RS has eased to neutral; add to positions, as we suspect a new leg higher is now unfolding.
PIPER JAFFRAY | 51
Group has successfully retested an emerging uptrend/rising 40-week MA; RS has turned higher off support while price momentum has inflected back into positive territory; add to positions, a retest of the ’15 highs appears to be underway.
Source: Piper Jaffray Technical Research
PIPER JAFFRAY | 52Source: Piper Jaffray Technical Research
MRK—Shares are trading at all-time highs after breaking out from a LT rounding bottom; above the 10-/30-week WMAs; constructive RS trend and impressive TechniGrade ranking; attractive dividend yield; maintain long positions/buy on pullbacks, as we suspect the stock has more room to run.
PIPER JAFFRAY | 53
Group has reversed a declining price channel and recaptured the 40-week MA; RS is confirming the reversal while price momentum has eased off multi-year highs; use the current pullback to add to positions.
Source: Piper Jaffray Technical Research
PIPER JAFFRAY | 54Source: Piper Jaffray Technical Research
UHS—Shares broken out from a LT descending triangle; current pullback is retesting the prior downtrend/ rising 10-week WMA; RS has eased but still remains in positive territory; use the recent weakness as a buying opportunity.
PIPER JAFFRAY | 55
Group has successfully recaptured the 40-week MA and is now approaching the upper end of a symmetrical triangle; RS and price momentum have recently inflected higher; add to positions on a confirmed topside breakout.
Source: Piper Jaffray Technical Research
PIPER JAFFRAY | 56Source: Piper Jaffray Technical Research
REGN—Shares have broken out from a ST bullish flag formation after successfully recapturing the rising 10-week WMA; RS has transitioned into positive territory and impressive TechniGrade ranking; add to positions, a retest of the upper end of the declining price channel appears to be underway.
PIPER JAFFRAY | 57
Group is ST consolidating after breaking above the ’12 highs; extended above the rising 40-week MA; RS remains directionally higher; price momentum has eased but remains in positive territory; maintain long exposure/buy on pullbacks, as we believe the Group has more room to run.
Source: Piper Jaffray Technical Research
PIPER JAFFRAY | 58Source: Piper Jaffray Technical Research
RL—Shares have broken out from a multi-year bottom; recent price action resembles a ST bullish pennant formation; RS has eased but still remains in positive territory; a close above $140 should open the door to a new leg higher; add to positions on a topside breakout.
PIPER JAFFRAY | 59
Group is trading in record high territory after surpassing key overhead resistance (’16 highs); RS remains constructive and price momentum is consolidating within positive territory; add to positions, as we suspect more upside lies ahead.
Source: Piper Jaffray Technical Research
PIPER JAFFRAY | 60Source: Piper Jaffray Technical Research
NKE—Shares are trading near all-time highs; currently retesting the rising 10-week WMA; RS remains in positive territory; use the current pullback as a buying opportunity.
Model Portfolio Holding
PIPER JAFFRAY | 61
Group has pulled back off recent highs and is currently retesting the rising 40-week MA; RS is consolidating in positive territory while price momentum has slipped into negative territory; wait for support to be confirmed before buying the pullback.
3
Source: Piper Jaffray Technical Research
PIPER JAFFRAY | 62Source: Piper Jaffray Technical Research
XLNX—Shares have broken above the upper end of a multi-month consolidation range after retesting the rising 10-week WMA; RS is confirming the breakout; impressive TechniGrade ranking; add to positions, as we suspect more upside lies ahead.
PIPER JAFFRAY | 63
Group is approaching the upper end of a secular consolidation range after breaking out from a multi-year descending triangle; above the rising 40-week MA; both RS and price momentum trends are confirming the bullish price action; add to positions.
Source: Piper Jaffray Technical Research
PIPER JAFFRAY | 64Source: Piper Jaffray Technical Research
CSCO—Shares are trading at multi-year highs after breaking out from a consolidation range; above the 10-/30-week WMAs (recent bullish crossover); RS has turned higher off recent lows; impressive TechniGraderanking and attractive dividend yield; add to positions, as we suspect further upside lies ahead.
PIPER JAFFRAY | 65
Group has surpassed overhead resistance after successfully retesting the rising 40-week MA; RS has broken out from a symmetrical triangle while price momentum has climbed back into positive territory; add to positions, as we suspect a new leg higher is now underway.
Source: Piper Jaffray Technical Research
PIPER JAFFRAY | 66Source: Piper Jaffray Technical Research
QCOM—Shares appear poised to retest support/10-week WMA after breaking out from a LT consolidation range; RS remains in positive territory; impressive TechniGrade ranking and attractive dividend yield; we see an upside measured price objective near $90; add to positions.
PIPER JAFFRAY | 67
Group is trading near record high territory; ST extended above the rising 40-week MA; RS is trending higher; price momentum has eased off recent highs but still remains in positive territory; use pullbacks toward support as buying opportunities.
Source: Piper Jaffray Technical Research
PIPER JAFFRAY | 68Source: Piper Jaffray Technical Research
GOOGL—Shares have pulled back off recent highs and are now retesting key support/10-/30-week WMAs; RS has transitioned back into positive territory; use the current pullback as a buying opportunity.
Piper Jaffray Technical Research
Final Thoughts
Source: Shutterstock. Reprinted by permission.
PIPER JAFFRAY | 70Source: Piper Jaffray Technical Research
Final Thoughts | Breakout or Fake Out Shots continue to fire in the ongoing trade war with China and based on the forward progress of the broader market’s
front line, U.S. equities are managing the battle relatively well. Strong fundamentals have been the cornerstone of equity market resilience along with optimistic expectations over how tariffs will eventually culminate. While trade wars dominate front page news, another round of interest rate tightening is also looming along with a midterm election. We believe this backdrop of building unknowns will lead to higher volatility over the coming months.
The secular uptrend for the broader market remains intact. After a 7-month wait, the SPX has broken out above its January highs and is currently trading near record high territory. However, momentum and market breadth have not confirmed the recent breakout. For example, our 40-week Technique indicator has deteriorated over the last several weeks and recently joined our 26-week New Highs indicator in a sell position. Based on the lack of validation supporting the rally to new highs, we continue to question whether recent price action is either a breakout or fake out.
Alpha generation continues to be a growth story and despite stretched outperformance to value, we see few signs of a mean reversion at this juncture. Technology is also outperforming although volatility within the space has picked up as several sector-heavyweights recently pulled back off overbought levels. We continue to favor pullbacks in Technology over new money buys and reiterate our Overweight rating on the sector. Based on deteriorating relative strength and underlying commodity-related weakness, we have downgraded the Basic Materials sector from a Neutral to Underweight rating. In addition, we believe the risk/reward profile for the Utilities sector is mostly balanced at this time and we have upgraded the sector to Neutral from Underweight.
To conclude, we subscribe to the well-known fundamental theme and see limited risk to the broader market’s secular uptrend. However, the recent breakout lacks confirmation and we do not believe the reward of chasing stocks into a building trade war warrants the risk. Other potential hurdles are also coming down the track and we believe a better entry point into this bull market lies ahead. We reiterate our year-end 2,850 price target on the S&P 500.
Sectors Overweight—Consumer Cyclicals, Energy, and Technology
Sectors Underweight—Basic Materials, Consumer Staples, and Industrials
Piper Jaffray Technical Research
Appendix
PIPER JAFFRAY | 72
Stock Charts Guide:
Source: Piper Jaffray Technical Research
PIPER JAFFRAY | 73
MicroGroup (MG) Guide:
MG components along with their most recent TechniGrade rating.
MG name: ‘Primary’ equates to large-caps, ‘Secondary’ equates to mid-caps, and ‘Micro’ equates to small-caps
MG #
MG price with 40-week MA (dashed).
MG Relative and Absolute Ratings.
MG relative strength (RS) using total return comparisons between the MG and broader market.
MG price momentum based on a 26-week period.
Source: Piper Jaffray Technical Research
PIPER JAFFRAY | 74
TechniGrade Overview:
TechniGrade Concept:
Quantitative process used to identify the relative performance of each Sector, MicroGroup, and stock over time.
Ratings use a 1-20 scale (lower is better).
Source: Piper Jaffray Technical Research
Stock performance is compared to the performance of the entire MG Index, comprised of all participating stocks within the War Plan universe.
The process is then repeated until a ratio has been calculated over the last six-month period. A heavier weighting is also applied to the most recent data.
Based on these calculations, a TechniGrade rating from 1 to 20 is automatically assigned to each stock on an ongoing basis*.
*The same process is repeated for MicroGroups (MGs) and sectors. They are also assigned TechniGrade ratings using the same 1-20 scale.
PIPER JAFFRAY | 75
MACE: Moving Average Cycle Evaluation Used to identify the precise position of each MG/stock based on a
short-term, intermediate-term, and longer-term moving average (MA).
Short-Term (S)= 4-week MA Intermediate-Term (M)= 13-week MA Longer-term (L)= 26-week MA
Source: Piper Jaffray Technical Research
U1 Possible uptrend (L > S > M)U2* Confirmed uptrend (S > L > M)U3* Well-defined uptrend (S > M > L)D1 Possible downtrend (M > S > L)D2 Confirmed downtrend (M > L > S)D3 Well-defined downtrend (L > M > S)* Historically outperform
MACE Overview:
PIPER JAFFRAY | 76
1 2 3 4 5 6 7 8 9
Quick GuideSector/MicroGroup name and number/underlying stock information. Note: the Unweighted (“Unwtd’) and Weighted (“Wtd”) versions of the sector are also included.
MACE Information. Includes the current MACE evaluation for each sector, MicroGroup, and underlying stock along with the number of weeks it has been in the listed cycle. For example, EGN transitioned to a U3 this week (“U3 1”) while its MicroGroup has been in a D2 for 5 straight weeks.
Indicates the position of each sector/MicroGroup/underlying stock relative to its respective 40-week MA. For example, MicroGroup 103 is trading below its rising 40-week indicated by the “- +”. Note : “+ +” =above a rising 40-week MA, “+ -” =above a falling 40-week MA , “- +”=below a rising 40-week MA, “- -” =below a falling 40-week MA
Notable improvement (+) or deterioration in the sector, MicroGroup, or underlying stock. For example, RSPP has a “+” due to its improving TechniGrade rating over the last several weeks.
Technigrade information listed with the most recent data on the left (read from right to left). You can compare the trend of a stock to its MicroGroupand/or sector over the last several months. For example, RSPP has been outperforming the Energy sector and its MicroGroup amid a strengthening TechniGrade trend.
Sector/MicroGroup index levels and price along with the weekly close of each underlying stock.
Market-capitalization of each underlying stock.
Performance information for the sector, MicroGroup, and underlying stock.
Relative and Absolute ratings for the sector and MicroGroup.
1
2
3
4
5
6
7
8
9
Source: Piper Jaffray Technical Research
War Plan Application | Quick Guide
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Piper Jaffray Technical ResearchContact us for more information about our products:
Piper Jaffray Technical Research studies the market through the use of its proprietary MicroGroup charts and intermarket analysis for the purpose of forecasting future price trends in the broader market and individual equities. Through a disciplined study of price action via charts, the Piper Jaffray Technical Research team identifies emerging trends and themes as well as key support and resistance levels in the market.
We believe the Piper Jaffray MicroGroup Project is the most definitive group work on Wall Street, comprised of 12 economic sectors, over 500 MicroGroups and more than 6,000 stocks.
Our proprietary analysis tools:The Piper Jaffray Technical Research team identifies emerging trends and themes in the market through a disciplined study of price action and three proprietary tools.• M.A.C.E.• 40-week Technique• Total Return Relative Strength
Technical analysts specifically study the following:• Volume • Advance• Decline• Momentum (Rate of Change)• New Highs/Lows• Chart Patterns• Divergences
The premise of technical research is:• Market action discounts everything.• Prices move in trends.• History repeats itself.• Price action should reflect shifts in supply and
demand; if prices are rising, demand must exceed supply and the fundamentals must be improving. If prices fall, the fundamentals must be weakening.
Our proprietary products include:• Monthly Informed Investor • Weekly Updates• Model Portfolio Changes• War Plan (available online) • Color TechniGrade • MicroLites/Timely Charts• Technical Morning Comments • Weekly War Plan/Pano/Ratings• Custom Portfolio Analysis• Annual Seasonality Report• Piper Jaffray Chart Services Chart books
(AMEX, NYSE, OTC I, II & III)• Weekly Homework Grids
Source: Piper Jaffray Technical Research
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Craig W. Johnson, CFA, CMT is a managing director and Chief Market Technician of Piper Jaffray's technical research group. Johnson joined Piper Jaffray in 1995 as an analyst in the firm's private client research department. He offers frequent technical commentary on the broader market and individual stocks.
Johnson earned his B.S. degree with an emphasis in finance and marketing and his M.B.A. from Drake University. Johnson holds the Chartered Financial Analyst and Chartered Market Technician designations and is an active member of the Twin Cities Society of Securities Analysts and co-chapter chair of the Minnesota Chapter Market Technician Association. He is also the President of the Market Technicians Association and leads its Board of Directors.
Adam Turnquist, CMTAssistant Vice President, Technical Research Analyst
Adam Turnquist, CMT is a research analyst at Piper Jaffray focusing on technical analysis. Prior to joining Piper Jaffray in 2016, he worked in the fixed income market trading various types of debt instruments. Turnquist holds the Chartered Market Technician designation along with a bachelor’s degree in finance from the University of Minnesota-Duluth and an MBA from the University of St. Thomas.
1895George B. Lane Commercial paper is established, later merging with Piper, Jaffray Co.
1931Lane, Piper & Jaffray merges with Hopwood Investment Co. and gains a seat on the NYSE
1987Piper Jaffray establishes a presence in London, expanding business into Europe
1998U.S. Bancorp acquires Piper Jaffray in a cash transaction valued at $730 million
2003Piper Jaffray becomes independent, publicly held company following spin-off from U.S. Bancorp
2015Piper Jaffray acquires Simmons & Company and River Branch Holdings, bolstering its sector coverage in energy and financial institutions respectively, and grows its fixed income services group with the acquisition of BMO Capital Markets GKST
2006Private client services division is sold to UBS Financial Services, allowing Piper Jaffray to redirect business strategy toward building a leading investment bank
2010Piper Jaffray acquires Advisory Research, Inc. to grow asset management capabilities
2013Seattle-Northwest Securities Corporation acquisition significantly expands the firm’s municipal business
Source: Piper Jaffray Technical Research
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Piper Jaffray Technical Research | Historical Price Objectives