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

31 March 2010
MARKET DATELINE

Market Technical Reading

The Weaker Turnover May Cause A Short-term Pullback...

Chart 1: KLCI Daily Chart 2: KLCI Intraday

Local Market Leads:

♦ Due to disappointment on the lack of positive surprises in the New Economic Model (NEM) announced by the
Prime Minister Najib Tun Razak in the InvestMalaysia conference, the local market gave up most of its early gains
at the close on Tuesday, ending up 0.14 pts or 0.01% to 1,319.35.

♦ Earlier in the morning, Bursa Malaysia opened its session at 9.30am due to a technical glitch at the Exchange,
while the FBM KLCI soared 4.49-pts ahead of the opening speech by the PM.

♦ The PM said under the announced NEM, Malaysia’s GDP growth is expected to reach 6.5% per annum until 2020.
He also said that Petroliam Nasional has identified two of its units to be floated in Bursa Malaysia, while adding
that Khazanah Nasional would dispose of its 32% stake in Pos Malaysia Holdings.

♦ Upon closing, the FBM KLCI ended in the positive territory, thanks to the last minute push-up on selective
heavyweight stocks. Overall sentiment stayed cautious as investors were busy digesting the potential impact from
the announcement of the NEM. They also ignored the steady regional markets and US index’s futures
performance.

♦ Overall daily turnover eased further to 1.05bn shares from Monday’s 1.14bn shares. Market breadth turned
negative for the first time in six sessions with decliners beating advancers by 486 to 279.

Technical Interpretations:

♦ From a day high of 1,323.70, the FBM KLCI trended into the negative territory, before ending the day flat with a
“doji” candle on the chart, pointing to more uncertainties ahead.

♦ Given a marginal “sell” signal on the stochastic oscillators in the “very overbought” regioin, the index could begin
retreating if the daily volume participation drops further today.

♦ However, we expect the 10-day SMA of 1,307 and the psychological level of 1,300 to limit downside pressure.

♦ To resume the recent bullish momentum, the index must recapture yesterday’s high of 1,323.70 soon.

Please read important disclosures at the end of this report.

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 31 March 2010

Daily Trading Strategy:

♦ Based on yesterday’s sluggish closing on the chart, the FBM KLCI is facing a high risk to kick-start a profit-taking
leg after the recent run-up.

♦ Clearly, this was due to the weak “doji” candle on the chart, and the weakening momentum readings from the
“overbought” region. The shrinking daily turnover added to the negative feel on the market’s near-term
sentiment.

♦ If the FBM KLCI fails to resume its rally today beyond yesterday’s high of 1,323.70, a revisit to the previous high
of 1,334.34 may take a longer while from now, in our view.

♦ Nevertheless, the market is expected to stay resilient, unless the index breaches the supports near the 10-day
SMA of 1,307 and the solid breakout point at the 1,300 psychological level.

♦ Meanwhile, we reiterate that the longer-term outlook on the FBM KLCI remains firmly intact. Any pullback is likely
to be brief with the medium-term uptrend target pegged at 1,390.

Table 2 : Major Indices & Commodities

Table 1 : Daily Statistics Change Change
Scoreboard 24 Mar 25 Mar 26 Mar 29 Mar 30 Mar Local Key Indices Closing
(Pts) (%)
Gainers 453 461 517 472 279 FBM KLCI 1,319.35 0.14 0.0
Losers 255 303 238 308 486 FBM 100 8,686.53 11.40 0.1
Unchanged 295 247 261 239 225 FBM ACE 4,250.05 -26.35 -0.6
Untraded 346 336 330 327 357
Major Overseas
Market Cap Indices
Turnover Dow Jones 10,907.42 11.56 0.1
(mln shares) 1,136 1,244 1,251 1,139 1,047 Nasdaq 2,410.69 6.33 0.3
Value (RM S&P 500 1,173.27 0.05 0.0
mln) 1,689 1,846 1,706 1,499 1,331 FTSE 5,672.32 -38.34 -0.7
Hang Seng 21,374.79 137.36 0.6
Currency Jakarta Composite 2,798.27 3.50 0.1
MYR vs US Nikkei 225 11,097.14 110.67 1.0
Dollar 3.3155 3.3180 3.3050 3.2700 3.2670 Seoul Composite 1,700.19 8.20 0.5
Shanghai Composite 3,128.47 4.67 0.1
Source: RHBInvest & Bloomberg SET 788.8 17.40 2.3
FT Straits Times 2,933.39 4.25 0.1
Taiwan Weighted 7,962.22 14.77 0.2
India Sensex 17,590.17 -121.18 -0.7
Major Commodities
NYMEX Crude Oil
(US$/barrel) 82.37 0.20 0.2
MDEX CPO – Third
Month (RM/metric ton) 2,545.00 25.00 1.0
US Interest Rate Current Last Updated
Overnight Fed Fund 16 Mar
0-0.25% Unch
Rate 2010
Next FOMC meeting 27-28 Apr 2010

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 31 March 2010

Chart 3: FKLI Daily Chart 4: FKLI Intraday

Technical Interpretations:

♦ Despite the overnight gain in US markets and the firmer regional markets’ performances, the FKLI staged a sharp
negative reversal and finished lower for the first time in six trading days on Tuesday.

♦ As sellers locked in their profits, the FKLI for Mar contract dropped 6.50 pts or 0.49% to 1,318.00, off its day
high of 1,326.00. The Apr contract also slipped 7.00 pts or 0.53% to 1,320.00.

♦ Sealed with a bearish candle, the FKLI could swing into a negative trend if profit-taking pressure continues today.

♦ Not helping either, both short-term momentum indicators have tweaked lower with the stochastic oscillators
cutting a fresh “sell” signal to suggest further selling momentum ahead.

♦ This, in our view, could lead to a temporary setback on the futures index’s recent uptrend.

♦ However, we expect the 10-day SMA of 1,310 and 1,300 to provide a strong support to the FKLI. In fact, we
expect bargain hunters to return as soon as the futures index reaches near the support levels, if it retreats.

♦ On the upside, the recent high of 1,337 will continue to cap its upward momentum, should it remove yesterday’s
high of 1,326 on a surprise revival of the buying momentum.

♦ A higher resistance level is at 1,348, where the FKLI may reach to cover the previous technical gap of 1,314 –
1,348.

Daily Trading Strategy:

♦ The risk of further technical pullback will increase dramatically if the futures index fails to launch a technical
rebound today.

♦ But, we expect firm support at the 10-day SMA of 1,310 and 1,300.

♦ The FKLI’s trading band is likely to be around 1,312 to 1,324 today.

Table 3: FKLI Closings

FKLI (Month)
Contracts Open High Low Close Chg (Pts) Settle Volume Open Interest
Mar 10 1323.50 1326.00 1315.00 1318.00 -6.50 1318.00 5853 14403
Apr 10 1326.00 1329.00 1317.50 1320.00 -7.00 1320.00 6452 14075
Jun 10 1324.00 1326.00 1315.50 1315.50 -9.00 1317.00 226 454
Sep 10 1324.00 1324.00 1313.50 1313.50 -9.50 1315.50 54 189

Source: Bursa Malaysia

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 31 March 2010

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

US Market Leads:

♦ As another stream of better-than-expected economic news pointed to a sustainable economic recovery, the
overnight US stocks reversed early losses by edging higher on Tuesday.

♦ It was reported that the 20-city home price index unexpectedly surge for the eighth straight month by gaining
0.3% in Jan, while the Conference Board’s sentiment gauge climbed to 52.5 in Mar from 46.4 in Feb.

♦ This successfully shrugged off negative news flow, such as news that Greece’s 7-year bonds attracted less-than-
expected demand.

♦ However, overall trading appeared lacklustre ahead of the Good Friday holiday as well as the key non-farm
employment report for Mar on Friday.

♦ On the NYMEX, the US light sweet crude oil futures for May delivery added US$0.20 or 0.2% to US$82.37/barrel.

Technical Interpretations:

Dow Jones Industrial Average (DJIA)

♦ After floating between the positive and negative territories, the US DJIA gained 11.56 pts or 0.11% to 10,907.42
on Tuesday.

♦ Inspite of that, it formed a “star-like” candle, indicating a possible negative reversal in the immediate term.

♦ Profit-taking leg could kick in, with a possible retest of the resistance-turn-support level of 10,850 if it registers a
negative candle today. A lower support is seen near the 21-day SMA near 10,680.

♦ However, a push from the current level will reaim the index towards the next resistance level at 11,250.

Nasdaq Composite (Nasdaq)

♦ The Nasdaq Composite Index also turned around from the early decline by adding 6.33 pts or 0.26% 2,410.69
yesterday.

♦ With a “star-like” candle on the chart, plus the mixed short-term momentum readings, the chart signals a
possible profit-taking dip ahead.

♦ Still, it is expected to find a solid support at the 21-day SMA near 2,365 and the 2,330 level.

♦ Its immediate hurdle stays at the recent high of 2,432.25, followed by the technical hurdle at 2,470.

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

KUB Malaysia (6874)

Hopeful for a breakout of RM0.535 resistance level soon…

♦ After enjoying a rally from Apr (RM0.30 region) to Jun 2009 (intraday high of RM0.66), the share price of KUB
turned into a consolidation mode.

♦ Though it managed to recover after surviving above the RM0.44 support level, its share price was stuck near the
resistance level of RM0.535 for many months.

♦ In recent months, the stock swung violently from support to resistance levels, but still kept within RM0.44 and
RM0.535 for most of the days.

♦ Of late, the stock regained its upward momentum and revisited the RM0.535 resistance level.

♦ But, until yesterday, it was still capped at below the immediate resistance level of RM0.535, and registered a
“doji” candle on the chart. The pattern points to more uncertainties ahead.

♦ Nevertheless, as the volume and short-term momentum readings remain upbeat, we remain hopeful for a
breakout of RM0.535 soon.

♦ Next resistance is seen at RM0.65, if it removes RM0.535 soon.

♦ In contrast, failure to remove RM0.535 will trigger profit-taking activities, hence dragging it to cover a technical
gap near RM0.49 – RM0.51 region in the near term.

Technical Readings:

♦ 10-day SMA: RM0.502

♦ 40-day SMA: RM0.4789

♦ Support: IS = RM0.44 S1 = RM0.37 S2 = RM0.30

♦ Resistance: IR = RM0.535 R1 = RM0.65

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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
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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