P I P E R J A F F R A Y T E C H N I C A L R E S E A R C H

Craig W. Johnson, CFA, CMT Managing Director 612 303-6428 craig.w.johnson@pjc.com Leah Williams Research Analyst 312 267-5080 leah.j.williams@pjc.com

The Informed Investor Winding Our Way to SPX 2K February 25, 2014

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Disclosures for the universe of Craig Johnson*

*Represents companies in the Technical Research Model Portfolio

1. I or a household member have 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: YOKU

5. The following companies have been investment banking clients of Piper Jaffray during the past 12 months: none

6. Piper Jaffray expects to have the following companies as investment banking clients within the next three months: none

7. Other material conflicts of interest for Craig Johnson or Piper Jaffray regarding companies in my universe for which I am aware include: none

8. Piper Jaffray received non-investment banking securities-related compensation from the following companies during the past 12 months: CNA, CS, CYN, INFA, GS, MASI, PNC, RVBD, TXN

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: ALTR, BBRY, CAT, CRUS, DD, DECK, FSLR, GOOG, HRC, IBKR, INFA, JCI, JOBS, MASI, MGM, RVBD, TXN, UA, VRX, YOKU, ZNGA

10. Piper Jaffray usually provides bids and offers for the securities of the following companies and will, from time to time, buy and sell the securities of these companies on a principal basis: BA, BAC, BRFS, CFX, CNA, CNW, CS, CYN, CYNO, DHR, GS, HI, HIG, HOT, HZO, JEC, MTD, NBR, OMI, ORA, PKD, PNC, RNST, SPW, SSW, TDW, TWX, TX, USG

Fundamentalist vs. Technician | Two Approaches

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P E = $€¥£

Fundamental Analyst’s Approach

Typically follows 20-30 Stocks

Technical Analyst’s Approach Can analyze a large number of stocks

Source: Piper Jaffray Technical Research

Topics

• Major Market Trend

• Market Performance

• Attractive-Looking MicroGroups

• Weak-Looking MicroGroups

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S&P 500 | A Hop, a Drop and a Pop?

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S&P 500 Total Returns | 2014 a Good but Not Great Year

History May Not Repeat Itself, but We Suspect it will Rhyme

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?

1928-1962 1972-1992

Source: Piper Jaffray Technical Research

2000 - 2014

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Major Market Trend | Stocks Can Work in a Rising Rate Environment

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Major Market Trend | Stocks Can Work in a Rising Rate Environment

Avg S&P P/E = 15.87 Avg 10-year yield: 5.5%

Current 10-year yield: 2.73%

Source: Piper Jaffray Technical Research

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Major Market Trend | Groups Above a 40-Week MA = Sell

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Major Market Trend | Historical Perspective As of 1/24/2014, the S&P 500 is 4.5% above its 40-week MA, lower than the statistical norm of 5% (1969-2013), but well below the historically extreme readings.

A current reading shows that the S&P 500 is 4.5% above its 40-week MA, which suggests that there is more upside potential before it reaches a historically elevated reading.

Source: Piper Jaffray Technical Research

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S&P Cyclical Trends | Looking for a Drop?

Source: Piper Jaffray Technical Research

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Fed Chairmanship Changes | Looking for a Drop?

Source: Piper Jaffray Technical Research

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Major Market Trend | Post-January Barometer Years The only consecutive January Barometer years were in 1975 and 1976. On average, post-January Barometer years are flat to slightly down.

S&P 500 Historical Valuation Ranges

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Attractive-Looking MicroGroups

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Weak-Looking MicroGroups

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Analyst Certification – Craig W. Johnson, CFA, CMT, Technical Analyst

The views expressed in this report accurately reflect my personal views about the subject company and the subject security. In addition, no part of my compensation was, is, or will be directly or indirectly related to the specific recommendations or views contained in this report.

Piper Jaffray was making a market in the securities of J. C. Penney Company, Inc. at the time this research report was published. Piper Jaffray will buy and sell J. C. Penney Company, Inc. securities on a principal basis.

Piper Jaffray research analysts receive compensation that is based, in part, on overall firm revenues, which include investment banking revenues.

Other Important: The material regarding the subject company is based on data obtained from sources deemed to be reliable; it is not guaranteed as to accuracy and does not purport to be complete. This report is solely for informational purposes and is not intended to be used as the primary basis of investment decisions. Piper Jaffray has not assessed the suitability of the subject company for any person. Because of individual client requirements, it is not, and it should not be construed as, advice designed to meet the particular investment needs of any investor. This report is not an offer or the solicitation of an offer to sell or buy any security. Unless otherwise noted, the price of a security mentioned in this report is the market closing price as of the end of the prior business day. Piper Jaffray does not maintain a predetermined schedule for publication of research and will not necessarily update this report. Piper Jaffray policy generally prohibits research analysts from sending draft research reports to subject companies; however, it should be presumed that the analyst(s) who authored this report has had discussions with the subject company to ensure factual accuracy prior to publication, and has had assistance from the company in conducting diligence, including visits to company sites and meetings with company management and other representatives. This report is published in accordance with a conflicts management policy, which is available at http://www.piperjaffray.com/researchdisclosures.

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