Factor Update, August 11, 2014

Note: There will not be an update next weekend. Then, there will be no update the weekend of Aug 30. Due to
personal business, I will not be focusing on the markets for the next three or so weeks. I may issue mid-week
special alerts if any particularly interesting trades show up. Because I will not be focusing on the markets, I have
taken an extremely defensive position in my holdings. I have the lightest portfolio I have held in some time.

Market review
Factor Moves are currently ongoing in Canadian Dollar, THC, EWT, X and JSP (not shown). A Factor Move was
closed in Soybeans. Factor Moves are developing in the NATI, EWY, EWS and Gold. Charts are also shown for
Soybean Meal, energy markets, the EuroFX and the S&Ps.

S&Ps
In last weeks update I commented that the decline in the S&Ps could work into the 1890 to 1900 zone to test the
lower boundary of a dominant channel (which roughly coincided with the Apr and May highs). The lows on Friday
of 1904 spot and 1890.25 futures satisfied this channel retest, as shown on the weekly graph. Where do we go
from here? I do not have a clue. As long as the channel remains intact the trend must still be considered as up.

Factor LLC Colorado Springs, CO 80903

Web: www.PeterLBrandt.com Email: plb.factorco@gmail.com

U.S. Steel (X)

The Jul 30 breakaway gap completed a 3-year H&S bottom. The entire rally since early Jul has been
accompanied by large demand (volume). The QP target was reached this past week. I will replace the QP on a
$2 reaction. The target is 47.00.

Factor LLC Colorado Springs, CO 80903

Web: www.PeterLBrandt.com Email: plb.factorco@gmail.com

EWS
A couple of Factor members have asked why some of their charts do not look like mine. The reason has to do
with how prices are back adjusted for dividends. The following charts show EWS with dividends reflected (first
chart) and then with dividends stripped out (second chart). All equity ETFs (and individual stocks that pay
dividends) have both charts available. Which chart should traders analyze? Both!

Factor LLC Colorado Springs, CO 80903

Web: www.PeterLBrandt.com Email: plb.factorco@gmail.com

Gold
The dominant technical
development in Gold is
the ongoing
construction of an
inverted H&S bottom
pattern. While my bias
is that this pattern will
become an important
launching pad for a bull
move, it is also possible
that this H&S will fail,
leading to a sharp
decline toward 1125 or
even lower. A decisive
close above 1400 is
required to complete
this bottom. The right
shoulder of the major
H&S bottom is an
arguable H&S pattern
with an up-slanted
neckline. I was
enthusiastically
constructive on Gold
this past week. But,
resistance at 1325 to 1330 could put a lid on this market. Friday was a minor reversal day and could lead to
testing of support in the 1285 to 1300 area. I was less convinced going home Friday than I was earlier in the week
that Gold would be trending higher on an immediate basis. What I believe is that the weekly Gold chart is
becoming mature meaning that the market is ready to declare its hand. A close below 1281 would negate my
bullish bias and a close below 1240 would indicate that the next trend is likely down.

Factor LLC Colorado Springs, CO 80903

Web: www.PeterLBrandt.com Email: plb.factorco@gmail.com

CAD
The Mar through Sep rally in the Canadian Dollar was a retest of the massive M top completed in Jan 2014. This
pattern has a target in the low 80s. This is where I believe the C-Dollar is headed. What I am hoping for which is
probably why we will not get it is a bounce off of the .9100 level toward .9250 to establish a multiple month H&S
top pattern. I am wrong most often when I anticipate how a chart might form. But, every once in a while I am
right, and those can be very profitable trades. I will extend short leverage if the market can rally to .9230.

Factor LLC Colorado Springs, CO 80903

Web: www.PeterLBrandt.com Email: plb.factorco@gmail.com

EWT
I continue to believe that Taiwan has experienced a major chart breakout. I am interested in extending leverage
on a retest of 14.85 to 15.00.

EWY
I really like Asian equity markets. South Korea is right on the verge of a massive breakout. A breach of 67.50 and
then 69.70 would launch a Factor Move.

Factor LLC Colorado Springs, CO 80903

Web: www.PeterLBrandt.com Email: plb.factorco@gmail.com

NATI
I really like the ascending triangle on the weekly chart. The daily chart is pausing and waiting to rock and roll. I
could probably find 100 stock charts as equally powerful if I did nothing but scroll through the global stock
markets. I just do not have time to do this. $45 is not an unrealistic target. I love it when a stock/futures contract
pauses at the boundary of a major weekly or monthly graph. This is exactly what is happening in NATI. The daily
chart is consolidating right at key resistance. I will risk up to 150 basis points on this stock.

Factor LLC Colorado Springs, CO 80903

Web: www.PeterLBrandt.com Email: plb.factorco@gmail.com

Euro FX
The Euro is locked in an
ever narrowing range on
the monthly chart (not
shown). The wide bodied
candlestick bar (WBB)
decline on Jul 22
penetrated a trendline
dating back to Jul 2012 and
completed an 8-month H&S
top on the daily graph.
While the H&S target is
near 1.300, a more likely
target is 1.3150.

THC

This stock is gradually moving higher toward its 61.34 target to qualify as a Best Dressed trade for
2014. The stock has a point and figure target of 70 or above. I may choose to let my longs in THC ride
past the target. The 16-month rectangle could provide a significant amount of upward energy, and this
stock could reach 80 will ease.

Factor LLC Colorado Springs, CO 80903

Web: www.PeterLBrandt.com Email: plb.factorco@gmail.com

Soybeans
I covered short Nov Beans for
two reasons. First, I am not a
big fan of a trade that remains
at my entry level a month after
I put a trade on. Second,
tightness in old crop Soybeans
(especially in Meal) continues
to support the market. The Aug
contract of Beans is trading at
a $2 premium to new crop Nov
Beans. I believe Nov Beans
have a long way to go on the
downside, but old crop
tightness could lead to a rally
in Nov Beans. I issued a Tweet
Friday raising the red flag on
being short Beans. Aug Beans
rallied 16 cents after my
Tweet. Nov Beans could
attempt to close the gap
starting at 1129. That would be
a super spot to short Nov
Beans. I cannot justify
remaining short new crop Beans at this time. In the meanwhile, I will look to Meal for timing the next leg down.

Soybean Meal
Dec Meal continues to form a
possible 5-week descending
triangle. I believe that Meal
must lead the Beans lower. I am
more comfortable flat Soybeans
with a sell stop in place to short
the Meal. If the Meal generates
a sell signal I will take another
look at Nov Beans for a low risk
short entry. Meal would be a
swing trade. Beans would be a
PU/QP trade.

Factor LLC Colorado Springs, CO 80903

Web: www.PeterLBrandt.com Email: plb.factorco@gmail.com

Energy markets
I am showing the monthly charts of Crude Oil, Heating Oil and RB Gas to point out the extended trading range in
these markets. While these patterns could be pauses before a price explosion, they also could become important
tops leading to a substantial decline. I do not want to be the bearer of bad news for folks in North Dakota and
western Canada, but there is no reason technically why RB Gas cannot go back to $2.50 and Crude back to $65.
Some people may say, But producers cannot make money at $65. Big deal! Whoever promised producers a
profit? Remember, Crude went to $32.50 in late 2008.

Factor LLC Colorado Springs, CO 80903

Web: www.PeterLBrandt.com Email: plb.factorco@gmail.com

10

###

Factor LLC Colorado Springs, CO 80903

Web: www.PeterLBrandt.com Email: plb.factorco@gmail.com

11