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

3 June 2010
MARKET DATELINE

Market Technical Reading

Resumption Of The Corrective Wave Imminent...

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

Local Market Leads:

♦ In the absence of clear trading catalysts, the FBM KLCI eased lower for a second day on quiet trading on
Wednesday.

♦ The key benchmark FBM KLCI kicked off the day negatively in response to the the late selloff in the overnight US
markets, before settling at 1,276.02 with a decline of 6.95 pts or 0.54%.

♦ The overall turnover continued to shrink for the fifth day to 585m shares, with nearly a quarter of the day’s
volume contributed by Kenmark (+5.5sen) on highly speculative interest. Market breadth was mixed, as losers
slightly topped gainers by 294 to 287.

♦ Trading sentiment remained lukewarm due to external uncertainties. Investors liquidated their positions ahead of
the FIFA World Cup final due to kick off on 11 June.

♦ Elsewhere, Asian markets finished mixed. SET outperformed the rest of regional indices with a 1.18% gain, but
Nikkei 225 dropped 1.12% after Japan’s Prime Minister Yukio Hatoyama announced his resignation.

Technical Interpretations:

♦ After trading within a tight trading range throughout most of the day, the FBM KLCI ended abruptly lower at its
day low of 1,276.02 on a last-minute selloff.

♦ Registered with a negative candle on the chart, this has confirmed the earlier “hangman” candle.

♦ Again, the index failed to recapture the tough 10-day SMA near 1,278. This has enhanced the negativeness on
the near-term chart outlook.

♦ Technically, retracting to the 1,250 level and the recent low of 1,243.86 appears imminent.

♦ For now, its upside will be limited to the 10-day SMA. Further resistance will be at the technical gap at 1,290.51 –
1,300.44, and the 1,300 support-turn-resistance psychological barrier.

Please read important disclosures at the end of this report.

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 3 June 2010

Daily Trading Strategy:

♦ In line with our expectation, the FBM KLCI extended its losing streak for a second day.

♦ The failure to cross even to above the 10-day SMA and the lack of a confirmation candle for a possible negative
reversal ahead suggest a resumption of the recent corrective wave imminent.

♦ We expect a retest of the immediate support level of 1,250 and the recent low of 1,243.86 soon.

♦ Therefore, we maintain the FBM KLCI’s near- to medium-term bearish view, and stick to our correction target
region of between the 23.6% FR level at 1,229 and the 38.2% FR level near 1,154. In between these levels is a
psychological level at 1,200.

♦ In the meantime, the 10-day SMA and the 1,300 psychological barrier will act as a major resistance to any
attempt on the upside.

Table 2 : Major Indices & Commodities

Table 1 : Daily Statistics Change Change
Scoreboard 26 May 27 May 31 May 1 June 2 June Local Key Indices Closing
(Pts) (%)
Gainers 426 635 364 200 287 FBM KLCI 1,276.02 -6.95 -0.5
Losers 320 142 306 487 294 FBM 100 8,363.95 -43.27 -0.5
Unchanged 265 195 242 214 269 FBM ACE 3,750.18 11.79 0.3
Untraded 361 405 469 477 528
Major Overseas
Market Cap Indices
Turnover Dow Jones 10,249.54 225.52 2.2
(mln shares) 930 864 761 653 585 Nasdaq 2,281.07 58.74 2.6
Value (RM S&P 500 1,098.38 27.67 2.6
mln) 2,109 1,240 1,467 758 803 FTSE 5,151.32 -11.98 -0.2
Hang Seng 19,471.80 -25.15 -0.1
Currency Jakarta Composite 2,733.68 9.06 0.3
MYR vs US Nikkei 225 9,603.24 -108.59 -1.1
Dollar 3.3200 3.3105 3.2590 3.3070 3.2990 Seoul Composite 1,630.40 Closed Closed
Shanghai Composite 2,571.42 3.14 0.1
Source: RHBInvest & Bloomberg SET 748.75 7.83 1.1
FT Straits Times 2,727.57 12.13 0.4
Taiwan Weighted 7,195.71 -93.62 -1.3
India Sensex 16,741.84 169.81 1.0
Major Commodities
NYMEX Crude Oil
(US$/barrel) 72.86 0.28 0.4
MDEX CPO – Third
Month (RM/metric ton) 2,468.00 8.00 0.3
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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 3 June 2010

Chart 3: FKLI Daily Chart 4: FKLI Intraday

Technical Interpretations:

♦ In contrast to the cash market, the KL futures market bounced back on mild bargain-hunting support on
Wednesday.

♦ After retesting the key support of 1,270 on Tuesday, the FKLI staged a timely rebound and shrugged off the
overnight weakness from the US markets.

♦ For the day, the FKLI for June contract was up 7.00 pts or 0.55% to 1,279.50.

♦ This helped the futures index to end the day marginally above the 10-day SMA of 1,278, refreshing hopes for a
further recovery ahead.

♦ However, closing the day with a “positive harami” candle, it lacks confirmation for a strong follow-through buying
today.

♦ The FKLI must collect another positive candle to lure back buying confidence, and it must at least stay above the
1,270 support level in the immediate term.

♦ Failing to do so will jeopardise any attempt for a technical rebound.

♦ Immediate hurdles stay at the technical gap of 1,292.5 – 1,296 and the key psychological level of 1,300.

♦ Immediate downside support below 1,270 is at the recent low of 1,240.50, followed by 1,200.

Daily Trading Strategy:

♦ The timely surge to above the 10-day SMA yesterday keeps hopes alive for a potential rebound ahead.

♦ But, we remain negative on the outlook and believe that it will fail its attempt to retake 1,300.

♦ The futures index is projected to swing from 1,269 to 1,283 today.

Table 3: FKLI Closings

FKLI (Month)
Contracts Open High Low Close Chg (Pts) Settle Volume Open Interest
Jun 10 1273.50 1282.00 1273.00 1279.50 7.00 1279.50 8509 14892
Jul 10 1272.00 1281.00 1272.00 1280.00 9.00 1280.00 300 66
Sep 10 1271.50 1280.00 1271.50 1278.00 7.50 1278.00 84 468
Dec 10 1273.00 1281.50 1273.00 1279.00 8.00 1279.00 20 241

Source: Bursa Malaysia

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 3 June 2010

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

US Market Leads:

♦ Led by fresh bargain-hunting support on energy and other recent battered down stocks, the US major gauges
recouped almost the entire loss of the previous days by launching a powerful technical rebound on Wednesday.

♦ Energy stocks rallied the most, after Halliburton (+12%) said the offshore oil industry had plenty of work even as
the US government imposed a six-month moratorium on deep-water drilling.

♦ Apart from that, investors also cheered the better-than-expected US pending home sales and auto sales, which
boosted optimism over the US economic recovery prospects.

♦ Homes sales rose 6% in Apr, hitting its highest level since Oct as buyers took advantage on tax credit. While Ford
Motor Co. (+4%), General Motors and Chrysler Group all reported double-digit yoy sales increases in May.

♦ On the NYMEX, the US light sweet crude oil futures for July delivery added US$0.28 or 0.4% to US$72.86/barrel.

Technical Interpretations:

Dow Jones Industrial Average (DJIA)

♦ Instead of extending its losing leg, the US DJIA made a surprise comeback on Wednesday, rallying 225.52 pts or
2.25% to 10,249.54.

♦ It has again reclaimed the important technical support level of 10,150 with a huge bullish candle, suggesting
possible follow-through recovery ahead.

♦ However, it still needs to overcome the 21-day SMA of 10,435 to boost its short-term momentum.

♦ Otherwise, there is still risk for a pullback on the back of poorer momentum readings. Losing 10,150 again will
lead to another selldown to the recent low of 9,774.48, near the lower target at the 9,200 – 9,700 region.

Nasdaq Composite (Nasdaq)

♦ The Nasdaq Composite Index also soared 58.74 pts or 2.64% to 2,281.07 on Wednesday, and reclaimed more
than the recent lost ground with a huge bullish candle on the chart.

♦ But the short-term momentum readings have turned mixed with the stochastic oscillators issuing a marginal
“sell” signal. Therefore, this suggests a further penetration of the 21-day SMA of 2,304 is rather difficult for this
week.

♦ For now, the index should range between 2,190 and 2,330.

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

Ann Joo Resources (6556)

RM2.40 and the 10-day SMA will become the immediate resistance levels…

♦ The share price of AnnJoo reversed its nine-month old uptrend after touching a high of RM3.35 in Jan 2010.

♦ The stock retreated to a low of RM2.40 on profit-taking move, but eventually stabilised at above the supportive
level of RM2.70.

♦ However, after a failed attempt to retake the RM2.98 level in Apr 2010, the stock turned lower again and this
time round, with a stronger selling momentum.

♦ The stock formed two technical gaps on the chart before losing the key level of RM2.70 and confirmed a bearish
switch for the medium-term outlook with a cut of the 10-day SMA to below the 40-day SMA.

♦ Yesterday, it registered its third bearish candle in a row, indicating a “three black crows” pattern after losing the
RM2.40 level recently. This pattern suggests more bearish outcome in the near term.

♦ Given the latest fallout and the fresh negative readings on the momentum indicators, we foresee a test to the
RM2.17 support level soon.

♦ Should it lose this level quickly, a steeper fall ahead can be anticipated towards the RM1.42 – RM1.70 support
region next.

♦ The support-turn-resistance level of RM2.40 and the 10-day SMA near RM2.42 will be the immediate resistance
levels for the stock from now on.

Technical Readings:

♦ 10-day SMA: RM2.424

♦ 40-day SMA: RM2.73

♦ Support: IS = RM2.17 S1 = RM1.70 S2 = RM1.42

♦ Resistance: IR = RM2.40 R1 = RM2.70 R2 = RM2.98

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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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This report has been prepared by the research personnel of RHBRI. Facts and views presented in this report have not been reviewed by, and may not reflect
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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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