PP 7767/09/2010(025354)

RHB Research
Malaysia Technical Research Institute Sdn Bhd
A member of the
RHB Banking Group
Company No: 233327 -M

Da ily T rad ing S trat egy

19 May 2010
MARKET DATELINE

Market Technical Reading

More Selling Activities Likely In The Near Term...

Chart 1: FBM KLCI Daily Chart 2: FBM KLCI Intraday

Local Market Leads:

♦ The local market pared down its early losses on Tuesday, aided by an afternoon recovery in the overseas markets
amid renewed bargain-hunting supports following the recent steep corrections.

♦ But due to the continuous selling in blue chips like Maybank (-10sen), Plus (-11sen) and Genting (-8sen), the
FBM KLCI still lost 4.10 pts or 0.31% to 1,330.17 at the end of the day.

♦ In fact, the local trading sentiment stayed under pressure, despite the turnaround in the key Asian bourses in the
afternoon session.

♦ In China, the Shanghai Composite bounced back strongly from the nearly 1-year low and closed up by 1.36%.
This led to a reversal in Hang Seng Index as well to close the day up by 1.17%.

♦ For the day, turnover increased thinly to 691m shares versus the 633m shares a day earlier. Market breadth
turned positive for the first time in 3 trading days, as 336 counters up outnumbered 295 counters down.

Technical Interpretations:

♦ Instead of a rebound due to the “hammer-like” candle registered earlier, the benchmark traded in the negative
territory throughout yesterday.

♦ In fact, it broke below the 40-day SMA of 1,334 with a second negative candle to suggest further selling ahead.

♦ Dampened by the negative readings in the short-term momentum indicators, an extended downside is possible
towards the recent low of 1,315.63, and even to the 1,300 psychological level soon.

♦ Not only that, the weaknened 10-day SMA of 1,337 could cross below the 40-day SMA soon to trigger a “dead
cross”, if selling persists.

♦ That, if it occurs, will plot a medium-term bearish signal on the FBM KLCI.

Please read important disclosures at the end of this report.

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 19 May 2010

Daily Trading Strategy:

♦ Yesterday’s market performance was clearly weaker than what we had anticipated. Instead of a mild rebound, the
FBM KLCI lost hold of the key 40-day SMA.

♦ This indicates more bearish scenario likely in the near term.

♦ Without any swift recovery to above the 10-day and 40-day SMAs near 1,337 and 1,334, the FBM KLCI will likely
experience more selling activities in the near term, in our view.

♦ And, with the razor thin turnover each day amid recent volatilities in market sentiment, plus an increasing odd of
a “dead cross” signal between the SMAs, we expect investors to continue trimming their position, prior to further
retreat ahead.

♦ The benchmark sees a support at the recent low of 1,315.63, before testing its major stronghold at the 1,300
psychological level.

♦ On the upside, immediate resistances are near the 10-day and 40-day SMAs.

Table 2 : Major Indices & Commodities

Table 1 : Daily Statistics Change Change
Scoreboard 12 May 13 May 14 May 17 May 18 May Local Key Indices Closing
(Pts) (%)
Gainers 362 396 293 187 336 FBM KLCI 1,330.17 -4.10 -0.3
Losers 241 253 371 557 295 FBM 100 8,712.30 -23.79 -0.3
Unchanged 291 285 260 194 287 FBM ACE 3,985.19 -4.15 -0.1
Untraded 478 443 453 439 460
Major Overseas
Market Cap Indices
Turnover Dow Jones 10,510.95 -114.88 -1.1
(mln shares) 667 906 682 633 691 Nasdaq 2,317.26 -36.97 -1.6
Value (RM S&P 500 1,120.80 -16.14 -1.4
mln) 934 1,040 1,084 1,009 1,144 FTSE 5,307.34 44.80 0.9
Hang Seng 19,944.94 229.74 1.2
Currency Jakarta Composite 2,834.19 14.72 0.5
MYR vs US Nikkei 225 10,242.64 6.88 0.1
Dollar 3.2030 3.1950 3.1835 3.2265 3.2100 Seoul Composite 1,643.24 -8.27 -0.5
Shanghai Composite 2,594.78 34.85 1.4
Source: RHBInvest & Bloomberg SET 760.11 6.85 0.9
FT Straits Times 2,844.35 10.66 0.4
Taiwan Weighted 7,585.30 -13.42 -0.2
India Sensex 16,875.76 40.20 0.2
Major Commodities
NYMEX Crude Oil
(US$/barrel) 69.41 -0.67 -1.0
MDEX CPO – Third
Month (RM/metric ton) 2,445.00 20.00 0.8
US Interest Rate Current Last Updated
Overnight Fed Fund 27-28 Apr
0-0.25% Unch
Rate 2010
Next FOMC meeting 22-23 June 2010

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 19 May 2010

Chart 3: FKLI Daily Chart 4: FKLI Intraday

Technical Interpretations:

♦ Like the cash market, the local futures index suffered persistent selling activities on Tuesday, as traders largely
overlooked the afternoon recovery in the regional and European markets.

♦ In fact, the mild bargain-hunting support in the afternoon was overturned by the late selling activities, causing
the FKLI for May contract to dip another 2.50 pts or 0.19% to 1,330.50.

♦ As a result, it chalked up a “bearish engulfing” candle to overrule the previous “hammer-like” candle.

♦ With that, the FKLI has confirmed a bearish breakdown from the 10-day and 40-day SMAs.

♦ Moreover, the 10-day SMA of 1,334 has slightly cut to below the 40-day SMA near 1,334.50 yesterday, reflecting
a potential bearish medium-term “sell” signal ahead.

♦ Plus a “double sell” signal on the momentum indicators, we are of view that the FKLI could experience further
setbacks toward the psychological support of 1,300 soon.

♦ Losing 1,300 will further confirmed the bearish view on its medium-term outlook.

♦ Meanwhile, strong immediate hurdle is detected near the 10-day and 40-day SMAs, followed by the recent high of
1,352.50.

Daily Trading Strategy:

♦ The failure of reclaiming the 10-day and 40-day SMAs, and the “bearish engulfing” candle point to further
downside risk today.

♦ As long as it stays below the 10-day and 40-day SMAs, we will stay bearish on its outlook with a downside target
at 1,300 for the near term.

♦ The FKLI is likely to move from 1,320 and 1,330 today.

Table 3: FKLI Closings

FKLI (Month)
Contracts Open High Low Close Chg (Pts) Settle Volume Open Interest
May 10 1334.50 1335.00 1327.50 1330.50 -2.50 1330.50 5461 21477
Jun 10 1333.50 1335.00 1328.00 1330.50 -1.50 1330.50 576 1075
Sep 10 1333.00 1334.50 1328.00 1331.50 -0.50 1331.50 96 258
Dec 10 1333.00 1335.00 1329.00 1332.50 -0.50 1332.50 37 160

Source: Bursa Malaysia

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 19 May 2010

Chart 5: US Dow Jones Industrial Average (DJIA) Daily Chart 6: US Nasdaq Composite Daily

US Market Leads:

♦ US stocks renewed their selling momentum yesterday, after surging slightly in the early session, on renewed
worries on the draggy European debt crisis that may sink its economic recovery’s hope.

♦ Banking stocks led the fall on fear of further tightening of financial regulation across the Atlantic from US to
Europe.

♦ Officials in Germany added to the uncertain future for banks when they suddenly moved to ban naked short
selling in the stocks of the country's 10 most important financial institutions. Naked short selling occurs when an
investor sells shares without borrowing them first.

♦ As a result, the euro weakened again yesterday, and hit a four-year low following the news and amid ongoing
worries that deep cuts to government budgets will dampen euro-zone growth.

♦ Meanwhile, the US light sweet crude oil futures for June delivery tumbled US$0.67 or 0.96% to US$69.41/barrel.

Technical Interpretations:

Dow Jones Industrial Average (DJIA)

♦ Instead of a technical rebound, the US DJIA reversed its early gain on Tuesday, closing the day deeply in the
negative zone, losing 114.88 pts or 1.08% to 10,510.95.

♦ On the chart, it registered a huge bearish candle, suggesting a likelihood of a resumption of the previous selling
momentum.

♦ This was in line with our expectation that the index is underway for a greater slump ahead, as it recently failed to
reclaim the UTL and the 21-day SMA nearby the 10,850 important level.

♦ Immediate support is at 10,150, but a stronghold should be around 9,200 – 9,700 region.

Nasdaq Composite (Nasdaq)

♦ The Nasdaq Composite Index also fell 36.97 pts or 1.57% to 2,317.26 on Tuesday, and recorded a “bearish
engulfing” candle to overwhelm the “dragonfly doji” candle registered earlier.

♦ The fall pressed the index back to below the 2,330 important support level, hence dragging it into an extension
period of the short-term negative trend.

♦ Near-term target is at 2,190, while 2,330 becomes its immediate-term resistance.

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Daily Technical Watch:
Chart 7: SapCres Daily Chart 8: SapCres Intraday

SapuraCrest Petroleum (8575)

Could see an extended selldown in the near term…

♦ Sapcres began its uptrend since Mar 2009, when the 10-day SMA cut across the 40-day SMA near the RM0.73
region, and the stock has seen trending along and above the 10-day and 40-day SMAs.

♦ After a successful removal of the important resistance level at RM1.70 in Sep 2009, the stock’s upward
momentum accelerated as it pierced through few more resistances to above the RM2.10 tough technical
resistance level.

♦ The uptrend continued until it hit a more-than-two-year high of RM2.58 in late Dec 2009.

♦ Since then, the stock’s buying support dwindled and its trend direction began to reverse.

♦ After struggling for a few months, the stock gave up a support at RM2.30, just after the 10-day SMA has cut
below the 40-day SMA in Apr 2010.

♦ It registered its second bearish candle yesterday and lost the important support level at RM2.10, which was also
a key breakout level back in Oct last year.

♦ Technically, with a loss of RM2.10, coupled with the bearish momentum readings and the recent cut of the 10/40-
day SMAs, the stock could see an extended selldown in the near term, in our opinion.

♦ Upon follow-through selling momentum, the stock could revisit a support near RM1.90 soon, before retracting
another breakout point support at RM1.70.

Technical Readings:

♦ 10-day SMA: RM2.203

♦ 40-day SMA: RM2.313

♦ Support: IS = RM1.90 S1 = RM1.70 S2 = RM1.40

♦ Resistance: IR = RM2.10 R1 = RM2.30 R2 = RM2.60

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IMPORTANT DISCLOSURES

This report has been prepared by RHB Research Institute Sdn Bhd (RHBRI) and is for private circulation only to clients of RHBRI and RHB Investment Bank Berhad
(previously known as RHB Sakura Merchant Bankers Berhad). It is for distribution only under such circumstances as may be permitted by applicable law. The
opinions and information contained herein are based on generally available data believed to be reliable and are subject to change without notice, and may differ or
be contrary to opinions expressed by other business units within the RHB Group as a result of using different assumptions and criteria. This report is not to be
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may from time to time have an interest in the securities mentioned by this report.

This report does not provide individually tailored investment advice. It has been prepared without regard to the individual financial circumstances and objectives
of persons who receive it. The securities discussed in this report may not be suitable for all investors. RHBRI recommends that investors independently evaluate
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The research analysts, economists or research associates principally responsible for the preparation of this research report have received compensation based
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Technical recommendation framework for stocks and sectors are as follows: -

Technical Recommendation:
Trading Buy = Short-term positive opportunity spotted. It is an aggressive trading recommendation with a book to sellers’ price for short-term technical upside.
Bargain Buy = Short-term positive but technical signals have yet to trigger a rally. Traders can park and queue for their desired entry level within a small range.
Buy on Weakness = Short- to Medium-term positiveness anticipated, but technical readings are still negative. Traders can pick-up the stock for future rally.
Sell on Strength = Short-term momentum still positive, Traders are advice to lock in profit base on current strength.
Take Profit = Short-term target achieved. Traders are advice to exit before the technical readings turn bearish.
Avoid = Risky situation in the short-term and high volatility expected on the share price. Traders’ best strategy is staying away until it stabilises.

Technical Time Frame:

Immediate-term = short time frame within a contra period.
Short-term = moderate time frame within two to three contra periods. For tracking purposes, we refer to 10 trading days.
Medium-term = medium time frame usually refers to two to three weeks period. For tracking purposes, we refer to 20 trading days.

Technical recommendations are generally short-term in nature and may differ from RHBRI’s equity fundamental view and recommendation on the same company.

RHBRI is a participant of the CMDF-Bursa Research Scheme and will receive compensation for the participation. Additional information on recommended
securities, subject to the duties of confidentiality, will be made available upon request.

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actions of third parties in this respect.

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