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

5 August 2010
MARKET DATELINE

Market Technical Reading

Upside Will Resume Once Consolidation Is Done…

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

Local Market Leads:

♦ After struggling for a few days, the local market gave way to fresh profit-taking pressure on Wednesday after the
overnight US markets fell on poor economic data and some earnings disappointment.

♦ Also, mild T+4 forced-selling pressures from last Thursday’s 1.0bn shares transacted at one stage put great
pressure on the market sentiment.

♦ But thanks to the afternoon rebound in the China markets, fresh bargain-hunting support resurfaced in view of a
mild recovery in the regional sentiment.

♦ Shanghai Composite reversed the early setback by ending up 0.44%, while Hang Seng added 0.43% for the day.

♦ Despite the FBM KLCI easing by 1.09 pts or 0.08% to 1,362.74 on profit-taking activities, selective lower liners
outshined on steady bargain-hunting activities. Lower liners like Zelan (+17.5sen), TimeCom (+4sen) and
MTDACPI (+4sen) finished higher on strong renewal of buying support.

♦ But as some investors remained cautious, overall turnover shrank to 811m shares. Market breadth remained
negative, as 363 counters down exceeding 322 counters up.

Technical Interpretations:

♦ In line with the formation of previous “star-like” candles, the FBM KLCI finally succumbed to profit-taking activities
and declined to 1,359.19 low yesterday. But the index registered a “hammer-like” candle on the chart.

♦ The candlestick pattern suggests a technical rebound could be in the making today.

♦ However, any rebound attempts could still meet challenges on poorer short-term momentum readings and
turnover, unless it can overcome the recent high of 1,370.52 decisively.

♦ Nonetheless, as we reiterated, as long as the FBM KLCI can hold at above the 10-day SMA of 1,355 and the key
resistance-turned-support level at 1,350, the chart’s short-term outlook will remain intact.

Please read important disclosures at the end of this report.

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Daily Trading Strategy:

♦ Yesterday’s weakness was in line with our expectation that the FBM KLCI was ready to take a pause on the recent
rally following the formation of two “star-like” candles earlier.

♦ While the slower daily turnover and weaker momentum readings point to a possible weakness ahead, any short-
term consolidation on the current rally will still be viewed as a healthy correction. Upward momentum should
resume once consolidation is over.

♦ In addition, we are also encouraged by yesterday’s formation of a “hammer-like” candle and the return of bargain
hunters in the late session, which proves that the underlying market tone remains bullish.

♦ Therefore, so long as the FBM KLCI can stay above the 10-day SMA of 1,355 and the recent breakout point of
1,350 with average daily volume at 800m – 1.0bn shares, we will stick to our bullish view on the market’s near-
and medium-term direction.

♦ In other words, the recent uptrend towards the next upside target at 1,390 remains intact.

Table 2 : Major Indices & Commodities

Table 1 : Daily Statistics Change Change
Scoreboard 29 Jul 30 Jul 2 Aug 3 Aug 4 Aug Local Key Indices Closing
(Pts) (%)
Gainers 386 348 494 250 322 FBM KLCI 1,362.74 -1.09 -0.1
Losers 345 378 280 479 363 FBM 100 8,971.31 -4.82 -0.1
Unchanged 279 274 243 270 286 FBM ACE 3,822.54 7.53 0.2
Untraded 355 365 348 367 399 Major Overseas
Indices
Market Cap Dow Jones 10,680.43 44.05 0.4
Turnover Nasdaq 2,303.57 20.05 0.9
(mln shares) 1,000 918 964 1,106 811 S&P 500 1,127.24 6.78 0.6
Value (RM FTSE 5,386.16 -10.32 -0.2
mln) 1,481 1,422 1,284 1,463 1,188 Hang Seng 21,549.88 92.22 0.4
Jakarta Composite 2,983.25 9.59 0.3
Currency Nikkei 225 9,489.34 -204.67 -2.1
MYR vs US Seoul Composite 1,789.26 -1.34 -0.1
Dollar 3.1820 3.1790 3.1580 3.1590 3.1660 Shanghai Composite 2,638.52 11.52 0.4
SET 867.34 2.86 0.3
Source: RHBInvest & Bloomberg Straits Times 3,001.87 -12.90 -0.4
Taiwan Weighted 7,972.66 15.13 0.2
India Sensex 18,217.44 102.61 0.6
Major Commodities
NYMEX Crude Oil
(US$/barrel) 82.47 -0.08 -0.1
MDEX CPO – Third
Month (RM/metric ton) 2,590.00 28.00 1.1
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:

♦ As fresh bargain-hunting support stepped in, the local futures market managed to recover from the early selldown
on Wednesday.

♦ After covering a technical gap near 1,361 to a low of 1,360.50 (-2.0 pts) amid the overnight weakness in Wall
Street, the FKLI slowly made its way back to the uptrend in response to a steady afternoon rebound in the China
markets.

♦ Upon closing, the FKLI for Aug contract added 2.50 pts or 0.18% to 1,365.00.

♦ On the chart, the closing with a positive candle indicates further rebound ahead.

♦ Aided by a mild improvement on the momentum indicators, we expect the FKLI to retest the recent high of
1,374.50 soon, on the back of solid support near the 10-day SMA of 1,358.

♦ For it to restore its bullish uptrend towards the next upside target at 1,390, the futures index must hike beyond
1,374.50 to regenerate follow-through buying momentum.

♦ On the downside, the 10-day SMA and the resistance-turn-support level of 1,350 will be able to buffer any
unexpected pullback risk, in our view.

Daily Trading Strategy:

♦ Instead of taking a breather, the FKLI made a timely rebound to ensure the recent uptrend is still intact.

♦ But a quick penetration of the recent high of 1,374.50 with a stronger volume is needed for it to launch a
sustainable recovery towards 1,390.

♦ Day-to-day basis, the FKLI should trend from 1,361 to 1,378 today.

Table 3: FKLI Closings

FKLI (Month)
Contracts Open High Low Close Chg (Pts) Settle Volume Open Interest
Aug 10 1361.50 1367.00 1360.50 1365.00 2.50 1365.00 3897 19724
Sep 10 1362.00 1367.00 1360.50 1367.00 4.00 1365.50 357 588
Dec 10 1360.00 1365.00 1359.00 1363.50 1.00 1364.00 239 290
Mar 11 1360.50 1366.00 1360.50 1366.00 1.00 1365.50 75 43

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:

♦ Overnight US markets staged a rebound on Wednesday, as investors responded positively to the better-than-
expected reading in service sector and private jobs data.

♦ The Institute for Supply Management’s (ISM) services sector index rose to 54.3 from 53.8 in Jun, against
expectation of a decline to 53.

♦ Meanwhile, ADP Employer Services said the US private employers added 42,000 workers in Jul, exceeding market
consensus of 30,000 jobs. This eased worries over the upcoming US government’s jobs reports on Friday.

♦ On earnings news, Priceline.com’s share price skyrocketed 22% after posting stronger-than-expected quarterly
earnings and outlook.

♦ After the recent rallies, the US light sweet crude oil futures for Sep delivery took a breather by easing 8cents or
0.1% to US$82.47/barrel as a rebound in the greenback outweighed a decline in the weekly crude inventories.

Technical Interpretations:

Dow Jones Industrial Average (DJIA)

♦ Led by renewed bargain-hunting support, the US DJIA gained 44.05 pts or 0.41% to 10,680.43 on Wednesday.

♦ As it acquired a positive candle to offset the previous “negative harami” candle, it seems that it has resumed its
uptrend to suggest more follow-through buying momentum in the near term.

♦ In addition, both short-term momentum indicators also ticked higher to imply stronger upward momentum ahead.

♦ As such, a rechallenge of 10,850 can be expected soon, with a solid support at the recent breakout point at the
Jun’s high of 10,594.16.

Nasdaq Composite (Nasdaq)

♦ After taking a mild setback, the bulls quickly returned by driving the Nasdaq Composite index higher last night.
For the day, it rose 20.05 pts or 0.88% to 2,303.57.

♦ By ending up with a positive candle, aided by the improved momentum readings, we expect the current upswing
momentum to expand further.

♦ Therefore, its prospect of rechallenging the recent high of 2,307.60 and the next strong resistance at 2,330 is
turning brighter. Upon clearance of these hurdles, the Nasdaq’s technical outlook will turn bullish.

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Daily Technical Watch:

Chart 7: TimeCom Daily Chart 8: TimeCom Intraday

Time dotCom (5031)

The next major resistance zone is at RM0.705 - RM0.80…

♦ The share price of TimeCom hit a strong resistance at RM0.54 in Apr 2010, and kicked off a decent correction
thereafter.

♦ It was pressed lower to RM0.375 in May, but almost immediately, it launched a technical rebound.

♦ The stock surpassed both the 10-day and 40-day SMAs and broke the RM0.47 hurdle, before rechallenging the
tough RM0.54 resistance in mid Jul 2010.

♦ With the help of an increased turnover and short-term momentum, the stock accelerated across the RM0.54 level
and continued to head higher.

♦ It congested near the resistance of RM0.60 for days, but in recent trading, the stock pierced through the level
with constant bargain-hunting support.

♦ Sealed with a powerful “bullish engulfing” candle and the upticks on the momentum indicators, the stock is poised
to extend its rally towards the RM0.705 level soon.

♦ Given the supportive 10-day SMA also traded at RM0.605, the RM0.60 level should provide a firm support to the
current upswing.

♦ As such, we expect trading momentum to turn more aggressive in the immediate term until the next major
resistance zone near RM0.705 – RM0.80.

Technical Readings:

♦ 10-day SMA: RM0.6045

♦ 40-day SMA: RM0.5031

♦ Support: IS = RM0.60 S1 = RM0.54 S2 = RM0.47

♦ Resistance: IR = RM0.705 R1 = RM0.80 R2 = RM0.94

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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
construed as an offer, invitation or solicitation to buy or sell the securities covered herein. RHBRI does not warrant the accuracy of anything stated herein in any
manner whatsoever and no reliance upon such statement by anyone shall give rise to any claim whatsoever against RHBRI. RHBRI and/or its associated persons
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
particular investments and strategies, and encourages investors to seek the advice of a financial adviser. The appropriateness of a particular investment or
strategy will depend on an investor’s individual circumstances and objectives. Neither RHBRI, RHB Group nor any of its affiliates, employees or agents accepts
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investment banking and financial advisory services. In the ordinary course of its trading, brokerage, banking and financing activities, any member of the RHB
Group may at any time hold positions, and may trade or otherwise effect transactions, for its own account or the accounts of customers, in debt or equity
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“Connected Persons” means any holding company of RHBRI, the subsidiaries and subsidiary undertaking of such a holding company and the respective directors,
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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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