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

19 April 2010
MARKET DATELINE

Market Technical Reading

Short-term Technical “Sell” Mode Ahead...

Chart 1: KLCI Daily Chart 2: KLCI Intraday

Local Market Leads:

♦ Bursa Malaysia bowed to the strong selling pressure on Friday, as sentiment was depressed by a sharp fallout in
key Asian markets following China’s new measures to cool down its property sector.

♦ China government raised the minimum downpayment for second-home buyers to 50%, compared to the previous
40% in order to curb property speculation. This stoked fears that tougher moves by Beijing to control its
overheating economy and property sector might be underway.

♦ Besides, regional investors also turned cautious after the US jobless claims unexpectedly rose last week as well
as the US futures markets fell on Google’s weaker-than-expected quarterly profit.

♦ And with Nikkei 225 (-1.52%) and Hang Seng (-1.32%) leading the selldown, the FBM KLCI slid 6.06 pts or
0.45% to 1,332.77 for the day.

♦ Turnover decreased sharply to 784m shares, down from 1.05bn shares earlier. Market breadth stayed negative,
as counters down overwhelmed counters up by a ratio of 2.5 to 1.

Technical Interpretations:

♦ As sellers took charge, the FBM KLCI recorded a huge “bearish engulfing” candle on last Friday, suggesting the
current profit-taking leg is likely to continue.

♦ In fact, both the 14-day RSI and stochastic oscillators have headed lower with the latter flashing a marginal fresh
“sell” signal to mark a weaker short-term momentum going forward.

♦ More importantly, with a decisive breakdown from the 10-day SMA of 1,338, the index has fallen into a
consolidation phase with a lower short-term target near the 40-day SMA of 1,310, the 2.6-pts technical gap at
1,305 and the 1,300 psychological level.

♦ Immediate resistance is now revised to the 10-day SMA, while the next tough hurdle is at the previous high of
1,347.61.

Please read important disclosures at the end of this report.

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 19 April 2010

Daily Trading Strategy:

♦ As we warned earlier, a fall below the 10-day SMA near 1,338 would cause more selling activities on the FBM
KLCI. As such, last Friday’s selldown signalled a negative twist on the near-term technical outlook for the index.

♦ More worrying, the recent highflyers like the glovemakers, technology stocks and some automakers have also
suffered a sharp setback on Friday. This implies the market’s trading sentiment has turned bearish.

♦ Technically, with the benchmark FBM KLCI trading below the supportive 10-day SMA, the market is now trading
on a short-term “sell” mode.

♦ Not helping either, the sharp retreat on the Wall Street and European markets on last Friday and the
uncertainties in the US financial sector could dampen trading sentiment further in the local bourse.

♦ Therefore, given the current situation, we expect the FBM KLCI to consolidate further towards the 40-day SMA of
1,310, a 2.6-pts technical gap near 1,305 and the 1,300 psychological level soon.

♦ Although we maintain that the medium-term outlook for the FBM KLCI remains positive at above the 1,300 level,
we expect investors to stay sideline in the near term amid the current bearish scenario.

Table 2 : Major Indices & Commodities

Table 1 : Daily Statistics Change Change
Scoreboard 12 Apr 13 Apr 14 Apr 15 Apr 16 Apr Local Key Indices Closing
(Pts) (%)
Gainers 374 238 375 293 201 FBM KLCI 1,332.77 -6.06 -0.5
Losers 367 494 325 406 495 FBM 100 8,780.12 -53.27 -0.6
Unchanged 265 260 282 298 305 FBM ACE 4,207.32 -31.69 -0.7
Untraded 351 366 375 363 359
Major Overseas
Market Cap Indices
Turnover Dow Jones 11,018.66 -125.91 -1.1
(mln shares) 1,106 1,028 845 1,045 784 Nasdaq 2,481.26 -34.43 -1.4
Value (RM S&P 500 1,192.13 -19.54 -1.6
mln) 1,658 1,413 1,364 1,638 1,207 FTSE 5,743.96 -81.05 -1.4
Hang Seng 21,865.26 -292.56 -1.3
Currency Jakarta Composite 2,878.67 -21.86 -0.8
MYR vs US Nikkei 225 11,102.18 -171.61 -1.5
Dollar 3.2060 3.2210 3.1990 3.1925 3.1880 Seoul Composite 1,734.49 -9.42 -0.5
Shanghai Composite 3,130.30 -34.67 -1.1
Source: RHBInvest & Bloomberg SET 736.16 -24.74 -3.3
FT Straits Times 3,007.19 -9.75 -0.3
Taiwan Weighted 8,111.57 -60.37 -0.7
India Sensex 17,591.18 -48.08 -0.3
Major Commodities
NYMEX Crude Oil
(US$/barrel) 83.24 -2.27 -2.7
MDEX CPO – Third
Month (RM/metric ton) 2,518.00 8.00 0.3
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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 19 April 2010

Chart 3: FKLI Daily Chart 4: FKLI Intraday

Technical Interpretations:

♦ Blamed to the strong selling momentum across the regional markets, the local futures index pulled back further
on last Friday.

♦ Even with a positive start, the FKLI succumbed to fresh selling forces and slid as much as 10.5 pts to 1,330.50
low, before the late push-up.

♦ The late recovery, helped by the positive performance in European markets and the improvement in the US
futures markets, had narrowed the FKLI’s losses to 5.00 pts or 0.37% to 1,336.00, below the 10-day SMA of
1,341.

♦ However, the futures index still recorded another bearish candle on the chart, indicating follow-through selling
momentum likely ahead.

♦ The clear technical breakdown from the 10-day SMA has increased its odds for further technical pullback soon.

♦ Should it fail to reclaim the 10-day SMA today, the futures index will begin a consolidation phase, in our view.

♦ Upon further consolidation, it will head lower to cover a technical gap near 1,320.50 - 1,327.50, and possibly to
revisit the key medium-term support of 1,300 next.

♦ For now, we see an immediate resistance at the 10-day SMA, followed by the tough obstacle at the recent high of
1,350.50.

Daily Trading Strategy:

♦ Last Friday’s breakdown to below the 10-day SMA of 1,341 has turned the technical picture negative.

♦ If it is unable to reclaim the key SMA today, it will head towards a technical gap near 1,320.50 - 1,327.50 soon.

♦ The trading range for the FKLI is seen between 1,321 and 1,341 today.

Table 3: FKLI Closings

FKLI (Month)
Contracts Open High Low Close Chg (Pts) Settle Volume Open Interest
Apr 10 1344.50 1344.50 1330.50 1336.00 -5.00 1336.00 4234 19098
May 10 1343.00 1343.00 1330.50 1335.50 -5.50 1335.50 286 717
Jun 10 1342.00 1342.50 1330.00 1334.00 -6.00 1335.00 124 503
Sep 10 1342.00 1342.00 1331.00 1331.00 -8.50 1335.50 29 232

Source: Bursa Malaysia

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 19 April 2010

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

US Market Leads:

♦ Slapped by the unexpected US Securities and Exchange Commission’s (SEC) fraud charges against Goldman
Sachs and some earnings disappointment news, the Wall Street snapped its recent rally on Friday.

♦ The SEC was suing Goldman Sachs and one of its vice presidents for defrauding investors regarding a financial
product tied to subprime mortgages. As a result, Goldman Sachs’ shares plunged 13%, triggering broadbased
selloff in financial sector and the overall market on fears of a similar crackdown on other financial companies, like
Morgan Stanley (-4.7%).

♦ Also, sentiment was hit further by the earnings disappointment from Google (-7.6%), Bank of America (-5.5%)
and General Electric (-2.7%), as well as a surprise drop in University of Michigan's consumers sentiment index.

♦ Dampened by the Goldman Sachs lawsuit news, the US light sweet crude oil futures for May delivery tumbled
US$2.27 or 2.7% to US$83.24/barrel.

Technical Interpretations:

Dow Jones Industrial Average (DJIA)

♦ After rallying for six straight days, the US DJIA dropped dramatically on Friday, losing 125.91 pts or 1.13% to
11,018.66 on Friday with a huge bearish candle on the chart.

♦ Coupled with the downticks on both the short-term momentum indicators, the recent rally on the US DJIA will be
reversed if the index dips to below the 21-day SMA of 10,907 today.

♦ In our view, if follow-through selling continues, it should lead the index lower to below the 11,000 psychological
level and the 21-day SMA soon. That will mean a retest to the key breakout point of 10,850.

♦ Breaching the 10,850 will derail the medium-term positive breakout in late Mar 2010, and will lead the index back
into a lower trading range from 10,150 to 10,850.

Nasdaq Composite (Nasdaq)

♦ The Nasdaq Composite Index broke its five-day gain with a 34.43 pts or 1.37% slide to 2,481.26 on Friday.

♦ Recorded with a bearish candle, plus the negative short-term momentum readings, the chart suggests a likely
retest of 2,470 and a possible covering of a technical gap near 2,463.17 soon.

♦ The overall uptrend will be jeopardised, if the index breaks to below 2,470 and the 21-day SMA of 2,425. Its
immediate resistance is seen at last Thursday’s high of 2,517.82.

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

Malaysian Airline System (3786)

Losing the 10-day SMA and RM2.20 will mean further retreat towards RM2.03…

♦ After a loss of the crucial support level of RM2.38 in Jan 2010, the share price of MAS retreated to a low of
RM1.80 in Feb 2010.

♦ Following a volatile session in Mar 2010, the stock finally smoothened its recovery path and surged above the
RM2.20 resistance level.

♦ Its momentum improved significantly when the 10-day SMA cut above the 40-day SMA to trigger a medium-term
“buy” signal on the chart.

♦ The stock rallied and touched the RM2.38 resistance level on last Thursday, but it instantly triggered a sharp
correction on the share price, forcing a retreat with a huge “bearish engulfing” candle on Friday.

♦ The fall effectively missed a good chance to remove the RM2.38 tough technical support-turn-resistance level.

♦ With the negative hook-downs on the momentum indicators, the stock is likely to retest the 10-day SMA near
RM2.24 today. Losing the 10-day SMA and the RM2.20 support level will mean further retreat to the RM2.03
lower support level.

♦ Chart wise, it must rebound quickly to overcome the RM2.38 level, before it could attract more buying support to
challenge the RM2.38 – RM2.50 resistance zone.

Technical Readings:

♦ 10-day SMA: RM2.238

♦ 40-day SMA: RM2.107

♦ Support: IS = RM2.20 S1 = RM2.03

♦ Resistance: IR = RM2.38 R1 = RM2.50 R2 = RM2.80

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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
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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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