PP 7767/09/2010(025354)

RHB Research

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

Dail y Trad ing St rat eg y

MARKET DATELINE 28 September 2010
Market Technical Reading
Removing The 10-day SMA Will Spur More Buying...

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

Local Market Leads:

♦ Buoyed by the strong gain in the Wall Street on last Friday as well as the regional markets’ performance yesterday,
the local market finished sharply higher on Monday, reversing its recent consolidation.

♦ Also, the rally in the KL futures market and the strength on the ringgit restored strong buying interests in the local
equity market.

♦ For the day, the FBM KLCI shot up 13.52 pts or 0.93% to 1,464.71, led by strong gains in banking heavyweights,
CIMB (+16sen) and Maybank (+13sen).

♦ Elsewhere, Asian markets rallied on the better-than-expected US capital goods orders data, by posting strong
gains of between 0.31% (Taiwan Weighted) and 2.01% (Jakarta Composite) across the region.

♦ There were 1.16bn shares changed hands, down from last Friday’s 1.73bn shares. But market breadth stayed
positive with 469 counters up beating 292 counters down.

Technical Interpretations:

♦ As buyers returned after the recent retracement on the big caps, the index launched a sharp rebound on the chart.

♦ By recording a bullish candle on the chart, the index has confirmed the previous “dragonfly doji” candle.

♦ If it crosses the 10-day SMA of 1,467, amid further upticks on the short-term momentum indicators, the index will
kick off further rebound towards the recent high of 1,479.59.

♦ On follow-through buying support, it will march higher to cover an upper technical gap at 1,490.50 - 1,497.64,
before retesting the 1,500 level and the all-time high level of 1,524.69.

♦ For now, the resistance-turn-support level at 1,450 will continue to buffer any downside shock on the index.

Please read important disclosures at the end of this report.

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Daily Trading Strategy:

♦ In tandem with the formation of the previous day’s “dragonfly doji” candle, the FBM KLCI registered a technical
rebound yesterday with a positive candle.

♦ Given the current positive candle and the improved short-term momentum readings, the benchmark is likely to
take out the 10-day SMA of 1,467 today and head towards the recent high of 1,479.59.

♦ With the robust regional markets’ performance underpinning the local market sentiment, we expect investors to
return quickly after trimming their holdings in recent consolidation, prompting a fresh round of bargain-hunting
activities in the market.

♦ Also, with the strong healthy volume at around 1.0bn – 1.4bn shares currently, we foresee the rotational plays to
persist with the core bluechips and the speculative lower liners drawing trading attention in the near term.

♦ Our positive technical outlook will only be jeopardised if the index breaches unexpectedly to below the key 1,450
level in the near term.

Table 2 : Major Indices & Commodities

Table 1 : Daily Statistics Change Change
Scoreboard 21 Sep 22 Sep 23 Sep 24 Sep 27 Sep Local Key Indices Closing
(Pts) (%)
Gainers 368 398 221 408 469 FBM KLCI 1,464.71 13.52 0.9
Losers 345 364 523 307 292 FBM 100 9,587.55 83.16 0.9
Unchanged 319 280 254 289 276 FBM ACE 3,866.94 18.28 0.5
Untraded 322 311 354 342 309 Major Overseas
Indices
Market Cap Dow Jones 10,812.04 -48.22 -0.4
Turnover Nasdaq 2,369.77 -11.45 -0.5
(mln shares) 1,050 1,333 999 1,727 1,158 S&P 500 1,142.16 -6.51 -0.6
Value FTSE 5,573.42 -25.06 -0.4
(RM mln) 1,514 2,022 1,417 1,531 1,623 Hang Seng 22,340.84 221.41 1.0
Jakarta Composite 3,468.04 70.41 2.1
Currency Nikkei 225 9,603.14 131.47 1.4
MYR vs US Seoul Composite 1,860.83 14.23 0.8
Dollar 3.1000 3.0900 3.0950 3.0900 3.0885 Shanghai Composite 2,627.97 36.42 1.4
SET 962.47 10.57 1.1
Source: RHBInvest & Bloomberg Straits Times 3,113.46 20.78 0.7
Taiwan Weighted 8,191.54 24.92 0.3
India Sensex 20,117.38 72.20 0.4
Major Commodities
NYMEX Crude Oil
(US$/barrel) 76.52 0.03 0.0
FCPO – Third Month
(RM/metric ton) 2,735.00 34.00 1.3
US Interest Rate Current Last Updated
21 Sep
Overnight Fed Fund Rate 0-0.25% Unch
2010
Next FOMC meeting 2-3 Nov 2010

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Chart 3: FKLI Daily Chart 4: FKLI Intraday

Technical Interpretations:

♦ In response to the strong rally in the US markets last Friday, coupled with the bullish regional sentiment, the local
futures index kicked off a powerful rally on Monday.

♦ Upon closing, the FKLI for Sep contract rallied 20.0 pts or 1.38% to 1,470.50, while the Oct contract jumped
19.50 pts or 1.34% to 1,471.0.

♦ As the FKLI acquired a bullish candle yesterday to confirm last Friday’s “hammer” candle, we see a high possibility
of follow-through buying momentum today.

♦ To add to that, the short-term technical outlook of the FKLI has turned even more positive following a fresh uptick
on the fully neutralised momentum and the successful recovery of the futures index to above the 10-day SMA of
1,468 yesterday.

♦ This means the FKLI is now set to rechallenge the recent high of 1,485.50 or higher if it manages to sustain at
above the 10-day SMA.

♦ In our opinion, a penetration to above 1,485.50 will restore the rallying mode and aim the FKLI towards the upper
technical gap at 1,490 – 1,502.50 soon. Beyond that, it will retest the all-time high level of 1,536.

♦ Besides the 10-day SMA, the 1,450 level will continue to support the current recovery leg.

Daily Trading Strategy:

♦ By recovering above the 10-day SMA, the FKLI regained a chance to resume its previous rally to a higher level in
the near term.

♦ Technically, a crossover of the recent high of 1,485.50 will confirm another rally.

♦ We expect the FKLI to swing from 1,468 to 1,490 today.

Table 3: FKLI Closings

FKLI (Month)
Contracts Open High Low Close Chg (Pts) Settle Volume Open Interest
Sep 10 1456.50 1473.50 1455.50 1470.50 20.00 1470.50 11184 20906
Oct 10 1459.50 1474.50 1456.50 1471.00 19.50 1471.00 7574 1204
Dec 10 1459.00 1472.00 1457.00 1470.00 20.50 1470.00 167 363
Mar 11 1460.00 1471.00 1458.00 1467.50 17.50 1470.00 65 140

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:

♦ Wall Street ended down in the late selling on Monday, as concerns on the European banks outweighed a flurry of
merger & acquisition deals.

♦ Investors sold financial stocks, Bank of America (-2.7%) and JPMorgan Chase (-1.7%) after Moody's Investors
Service cut the debt rating of Anglo Irish Bank on expectation that the bank will need more government help.

♦ Also, speculation that the merger talks between MT&T Bank Corp and Spain’s Banco Santander may have stalled
dampened the market sentiment further.

♦ On the M&A news, Unilever said it will acquire hair care group Alberto Culver for US$3.7bn, while Wal-Mart Stores
announced its plan to buy South Africa's third-largest retailer Massmart for US$4.3bn. Separately, Southwest
Airlines offered to buy AirTran Holdings for US$1.4bn.

♦ Meanwhile, the US light sweet crude oil futures for Nov delivery inched up 3 cents or 0.04% to US$76.52/barrel.

Technical Interpretations:

Dow Jones Industrial Average (DJIA)

♦ As the US DJIA failed to secure follow-through buying support, it broke below the 10,850 key technical level by
losing 48.22 pts or 0.44% to 10,812.04 on Monday.

♦ And with a “negative harami” candle on the chart, this indicates a slowdown in the recent bullish momentum.

♦ Nevertheless, its immediate downside risk should be well capped by the rising 21-day SMA of 10,488.

♦ But if it can regain 10,850 quickly in the immediate term, a breakout rally towards 11,250 in the near term is still
possible. Otherwise, it will fall back into the rangebound consolidation of between 10,150 and 10,850.

Nasdaq Composite (Nasdaq)

♦ After enjoying a strong rally last Friday, the Nasdaq Composite index turned down by 11.45 pts or 0.48% to
2,369.77 yesterday on mild profit-taking activities.

♦ By closing with a “negative harami” candle, this points to possible follow-through weakness today.

♦ Having said that, judging from the recent bullish breakout from 2,330, we believe this immediate support will
likely buffer any extended weakness in the near term.

♦ And so long as 2,330 can hold, it is still possible for the Nasdaq to resume its rally towards 2,470.

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Daily Technical Watch:

Chart 7: AirAsia Daily Chart 8: AirAsia Intraday

AirAsia (5099)

Stay bullish until and unless the stock eases back to below RM2.15…

♦ The share price of AirAsia turned positive after reversing from a low of RM1.21, near the RM1.28 level in late Jun
2010.

♦ Its upward momentum intensified after it broke out from the RM1.40 level in late Jul. The breakout confirmed its
medium-term bullish outlook following a successful crossover of the 10-day SMA over the 40-day SMA near
RM1.28.

♦ Since then, the stock began to climb higher and trended steadily at above the 10-day SMA in most of the period.

♦ When the stock surpassed the strong resistance zone near RM1.80 – RM1.90 region, trading momentum reached
its overbought region and implicated a likelihood of an overstretched situation on the share price movement.

♦ However, as it closed into the RM2.15 all-time high level, buying momentum failed to ease despite stiff profit-
taking pressure.

♦ As a result, the stock blasted off with another fresh bullish candle on the chart yesterday, and chalked up a fresh
high of RM2.26, before ending the day at RM2.25.

♦ Yesterday’s rally marks a renewed buying momentum that could lead the stock higher even though the
momentum indicators are trading in the “grossly overbought” region.

♦ We stay bullish on the chart outlook and foresee the buying to continue to push the stock higher into the
uncharted territory, until and unless it eases back to below the key RM2.15 resistance-turn-support level.

Technical Readings:

♦ 10-day SMA: RM2.081

♦ 40-day SMA: RM1.771

♦ Support: IS = RM2.15 S1 = RM1.90 S2 = RM1.80

♦ Resistance: IR = RM2.26

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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
any liability for any loss or damage arising out of the use of all or any part of this report.

RHBRI and the Connected Persons (the “RHB Group”) are engaged in securities trading, securities brokerage, banking and financing activities as well as providing
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
securities or loans of any company that may be involved in this transaction.

“Connected Persons” means any holding company of RHBRI, the subsidiaries and subsidiary undertaking of such a holding company and the respective directors,
officers, employees and agents of each of them. Investors should assume that the “Connected Persons” are seeking or will seek investment banking or other
services from the companies in which the securities have been discussed/covered by RHBRI in this report or in RHBRI’s previous reports.

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
information known to, professionals in other business areas of the “Connected Persons,” including investment banking personnel.

The research analysts, economists or research associates principally responsible for the preparation of this research report have received compensation based
upon various factors, including quality of research, investor client feedback, stock picking, competitive factors and firm revenues.

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.

This report may not be reproduced or redistributed, in whole or in part, without the written permission of RHBRI and RHBRI accepts no liability whatsoever for the
actions of third parties in this respect.

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