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

21 July 2010
MARKET DATELINE

Market Technical Reading

The 10-day SMA Should Cap Short-term Downside…

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

Local Market Leads:

♦ Boosted by an extended rally in the Chinese markets, the local bourse resumed its recovery momentum and edged
higher on robust trading sentiment on Tuesday.

♦ Shanghai Composite intensified its rally for a second day, soaring 2.15% on hopes that the Government will relax
its tightening measures on property sector soon.

♦ The Chinese markets’ rally lifted the otherwise cautious sentiment in the early session, sparked by the
disappointing results from US firms, International Business Machine (IBM) and Texas Instrument (TI) overnight.

♦ Locally, market sentiment remained robust, although strong profit-taking pressure on selective lower liners like
Time (-2sen) and TimeCom (-2.5sen) trimmed their early gains in the afternoon. Partly attributing to the selling
pressure were the T+4 selling activities from last Tuesday’s 802m shares.

♦ Upon closing, the FBM KLCI added 4.32 pts or 0.32% to 1,337.67. Meanwhile, the turnover surpassed the 1.0bn
shares mark at 1.13bn shares, versus 849m shares earlier, with 466 counters up against 278 counters down.

Technical Interpretations:

♦ In line with the previous small “hammer-like” candle, the FBM KLCI opened gap-up, and headed to the day’s high
of 1,338.68 before giving up some gains on profit-taking activities.

♦ Still, it closed with a positive candle, indicating a further rebound towards the recent high of 1,341.96 can be
expected soon.

♦ Should the strong participation continue, the FBM KLCI stands a good chance to overtake 1,341.96 in bids to
trigger an extended rally towards the tough medium-term resistance barrier at 1,350.

♦ For the short term, the support level is seen firmly at the 10-day SMA of 1,329.

Please read important disclosures at the end of this report.

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Daily Trading Strategy:

♦ Chart wise, yesterday’s rebound with a positive candle has confirmed the previous day’s “hammer-like” candle
formation. The chart also suggests the current rebound momentum still has legs in the near term.

♦ In fact, if the average daily turnover can maintain at around 800m – 1.0bn shares mark, the strong rotational
interests should persist, with trading activities centred on the lower liners in sessions to come.

♦ In our opinion, the short-term trading sentiment remains bullish, as long as the index sustains at above the 10-
day SMA of 1,329.

♦ Critically, however, the FBM KLCI must continue to climb higher before the the medium-term chart outlook can
turn bullish. This means it must clear out the recent high of 1,341.96 and the solid obstacle at 1,350 soon.

♦ Failure to inch higher will dampen sentiment, hence triggering a sharper profit-taking dip ahead. This occurrence
will prompt a potential T+3 and T+4 selling pressure in sessions ahead.

♦ For the medium term, the critical support region is near the 40-day SMA of 1,307 and the psychological level of
1,300.

Table 2 : Major Indices & Commodities

Table 1 : Daily Statistics Change Change
Scoreboard 14 Jul 15 Jul 16 Jul 19 Jul 20 Jul Local Key Indices Closing
(Pts) (%)
Gainers 506 242 476 327 466 FBM KLCI 1,337.67 4.32 0.3
Losers 194 390 206 324 278 FBM 100 8,817.93 25.44 0.3
Unchanged 269 289 263 269 250 FBM ACE 3,776.62 33.21 0.9
Untraded 395 443 424 444 371 Major Overseas
Indices
Market Cap Dow Jones 10,229.96 75.53 0.7
Turnover Nasdaq 2,222.49 24.26 1.1
(mln shares) 802 620 794 849 1,126 S&P 500 1,083.48 12.23 1.1
Value (RM FTSE 5,139.46 -8.82 -0.2
mln) 1,538 1,128 1,196 1,331 1,322 Hang Seng 20,264.59 173.64 0.9
Jakarta Composite 2,995.44 19.87 0.7
Currency Nikkei 225 9,300.46 -107.90 -1.1
MYR vs US Seoul Composite 1,736.77 4.82 0.3
Dollar 3.1955 3.1975 3.2065 3.2240 3.2080 Shanghai Composite 2,528.73 53.31 2.2
SET 824.41 -5.99 -0.7
Source: RHBInvest & Bloomberg FT Straits Times 2,948.61 3.19 0.1
Taiwan Weighted 7,712.03 62.20 0.8
India Sensex 17,878.14 -50.28 -0.3
Major Commodities
NYMEX Crude Oil
(US$/barrel) 77.44 0.90 1.2
MDEX CPO – Third
Month (RM/metric ton) 2,424.00 -30.00 -1.2
US Interest Rate Current Last Updated
22-23 Jun
Overnight Fed Fund Rate 0-0.25% Unch
2010
Next FOMC meeting 10 Aug 2010

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Chart 3: FKLI Daily Chart 4: FKLI Intraday

Technical Interpretations:

♦ Due to rekindled profit-taking pressure in the afternoon session, the futures index gave up its early gains by
turning lower for a second day in a row yesterday.

♦ This has forced the FKLI to settle lower at its day low of 1,337.0, after gaining as much as 4.50 pts to 1,345.50
high in the earlier session. For the day, the FKLI fell 3 pts or 0.22%.

♦ On the chart, the “negative harami” candle and the constant weak momentum readings are pointing to further
weakness ahead on the futures market.

♦ This could mean a revisit of the 10-day SMA near 1,332, should selling activities persist today.

♦ Importantly, the futures index must not break below the supportive 10-day SMA.

♦ Otherwise, the short-term technical outlook will turn negative, forcing the FKLI to revisit the lower supports near
the 40-day SMA of 1,308 and the 1,300 psychological barricade.

♦ On the upside, a quick clearance of the recent high of 1,347.50 is required to restore fresh buying momentum,
before the FKLI can retake the medium-term hurdle near May’s high of 1,352.50.

Daily Trading Strategy:

♦ The weak closing yesterday suggests a possible retest on the crucial downside support at the 10-day SMA of
1,332, which could determine the short-term outlook of the FKLI going forward.

♦ Nevertheless, traders should go “long”, as long as the FKLI remains at above the 10-day SMA.

♦ Losing the SMA will force a further retreat to another support near 1,300 and 1,308 (40-day SMA).

♦ We expect the FKLI to swing from 1,327 to 1,343 today.

Table 3: FKLI Closings

FKLI (Month)
Contracts Open High Low Close Chg (Pts) Settle Volume Open Interest
Jul 10 1338.50 1344.50 1337.00 1337.00 -3.00 1337.00 4733 18737
Aug 10 1338.00 1344.00 1337.00 1337.00 -2.00 1337.00 402 1114
Sep 10 1337.50 1343.00 1336.00 1337.00 -1.50 1337.00 129 511
Dec 10 1337.00 1342.00 1337.00 1338.50 1.00 1337.00 55 255

Source: Bursa Malaysia

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

US Market Leads:

♦ US stocks reversed the early slump by launching a powerful comeback on Tuesday amid a rebound in commodity
stocks and speculations that the US Federal Reserve may announce new measures to boost economic tonight.

♦ Earlier, selling activities took stage in reaction to the poor earnings news from Goldman Sachs, IBM and Texas
Instrument as well as poor US housing starts data. Goldman Sachs’s quarterly earnings plunged 82%.

♦ But fresh bargain-hunting activities resurfaced after copper and crude oil prices bounced back. US light sweet
crude oil futures for August delivery jumped 90cents or 1.2% to US$77.44/barrel. The recovery momentum was
strengthened further on talks that the Fed may take steps to spur lending by eliminating interest paid on excess
bank reserves held at the Fed.

♦ After the close, Apple rose 3.2% on impressive earnings results, but Yahoo tumbled 6.3% on weaker revenue.

Technical Interpretations:

Dow Jones Industrial Average (DJIA)

♦ After suffering a sharp setback to near the 10,000 psychological threshold in the early session, the US DJIA
bounced back and ended up by 75.53 pts or 0.74% to 10,229.96.

♦ By chalking up another positive candle near the key technical support of 10,150 and the 21-day SMA of 10,108,
the index stands a good chance of extending its current recovery mode in the near term.

♦ Not only that, the 14-day RSI has issued a fresh “buy” signal yesterday, while the downward pace in the
stochastic oscillators has moderated.

♦ This should pave way for a rechallenge of the recent high of 10,407.82 soon. Going forward, a critical support is
seen near the 10,000 psychological level.

Nasdaq Composite (Nasdaq)

♦ The Nasdaq Composite index also kicked off a strong recovery from the early selloff. At the close, it finished
higher for a second day with a 24.26 pts or 1.10% rally to 2,222.49 yesterday.

♦ This resulted in a “bullish engulfing” candle on the chart, plus a “buy” signal on the 14-day RSI. As such, more
upside towards last Wednesday’s high of 2,260.33 looks promising.

♦ A further removal of 2,260.33 will repoint the index to 2,330, while its solid supports stay firm at 2,190 near the
21-day SMA of 2,192.

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Daily Technical Watch:

Chart 7: MyEG Daily Chart 8: MyEG Intraday

My E.G. Services (0138)

Retesting RM0.875 likely if it sustains at above RM0.80…

♦ The share price of MyEG broke out from a tough resistance level of RM0.56 in May 2010, but congested near that
level almost immediately.

♦ It resumed its rally in Jun and surpassed another tough resistance level of RM0.695 on follow-through buying
support.

♦ On persistent buying momentum, the stock pierced through the RM0.80 level and touched an all-time high of
RM0.875 on 22 Jun 2010.

♦ Then only it settled with a profit-taking consolidation, losing the RM0.80 level and trimmed towards the RM0.695
resistance-turn-support level in Jul.

♦ However, leveraged from the strong support level, the stock blasted off again with another round of rally.

♦ The stock surpassed the key RM0.80 level again on Monday, and added another 1sen yesterday to close the day
at RM0.825.

♦ Technically, it recorded a “doji” candle indicating a pause on the recent run-up.

♦ But, given the still upbeat momentum readings and the recent uptick on the 10-day SMA, the short-term outlook
remains positive and this implies that the stock may resume its rally in the near term.

♦ Optimistically, investors may see a retest of the previous high of RM0.875 soon, if buying support resumes near
RM0.80, after a swift profit-taking dip.

Technical Readings:

♦ 10-day SMA: RM0.7655

♦ 40-day SMA: RM0.6946

♦ Support: IS = RM0.80 S1 = RM0.695 S2 = RM0.62

♦ Resistance: IR = RM0.875

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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
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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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