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

28 April 2010
MARKET DATELINE

Market Technical Reading

Sentiment Deteriorating...

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

Local Market Leads:

♦ Fears of further tightening measures from the Chinese government on its property sector have dampened
sentiment in the regional markets. Bursa Malaysia closed weaker on Tuesday.

♦ Apart from that, uncertainties arose from the Greek bailout deal and the upcoming US FOMC meeting kept
investors in a defensive mood. German Chancellor Angela Merkel said that the Greek bailout isn’t a done deal.

♦ Shanghai Composite slumped more than 3.5% at one point, before narrowing losses to 2.07% to end at 2,907.93.
Hang Seng index tumbled 325 pts or 1.5% to 21,261.79.

♦ Selling was strong throughout the day, but the late support on local bluechips, BAT (+50sen), Digi (+18sen) and
Genting (+3sen) saved the FBM KLCI from the day’s low. It eased 0.35pt or 0.03% to 1,339.72.

♦ Turnover increased to 975m shares from Monday’s 800m shares, but mostly dominated by the lower liners. KNM
that led the active list yesterday contributed more than 15% of the day’s turnover. It plunged 6sen or 10.3% to
RM0.525. Market breadth was bearish with decliners overwhelming advancers by a ratio of nearly 3 to 1.

Technical Interpretations:

♦ Since the opening hour, the local benchmark was constantly under strong selling pressure. It slipped to the
1,337.07 low before closing nearly unchanged at 1,339.72 with a tiny “negative harami” candle.

♦ This points to a slowdown in the recent recovery momentum.

♦ Plus the muted readings on the short-term momentum indicators, the index might retreat to retest the immediate
support at the 10-day SMA of 1,336 soon. Its next lower support is at the 40-day SMA of 1,322.

♦ But for now, as it is still hovering at above the 10-day SMA, it might continue its consolidation mode in the near
term. Higher resistance is at the recent high of 1,347.61.

Please read important disclosures at the end of this report.

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Daily Trading Strategy:

♦ Though the FBM KLCI ended at above the key supportive 10-day SMA near 1,336 on late buying support, the
candlestick pattern has shown a failure to extend Monday’s recovery momentum.

♦ This suggests follow-through selling momentum likely today.

♦ Moreover, the improvement on the daily turnover was swiftly offset by the further deterioration of the market
breadth. Most of the turnover was contributed by the strong selling activities on the lower liners, in our view.

♦ This has once again, prompted doubts over the strength and sustainability of any recovery leg ahead.

♦ Added with more than 2% plunge in overnight US and European markets amid the S&P’s rating cut on Greece
and Portugal, we expect the FBM KLCI to open weak and might even loss the key 10-day SMA upon opening.

♦ Unless the FBM KLCI can clear off the recent high of 1,347.61 on strong turnover of 1.0-1.2bn shares, any
rebound attempts are doomed to be weak and unsustainable.

♦ On the downside, losing the 10-day SMA will spark fresh selling waves, which could potentially press the index
towards the 40-day SMA near 1,322 and to revisit the 1,300 psychological level on axaggeration of selling
momentum.

Table 2 : Major Indices & Commodities

Table 1 : Daily Statistics Change Change
Scoreboard 21 Apr 22 Apr 23 Apr 26 Apr 27 Apr Local Key Indices Closing
(Pts) (%)
Gainers 399 333 305 362 178 FBM KLCI 1,339.72 -0.35 0.0
Losers 288 307 352 306 502 FBM 100 8,808.96 -15.11 -0.2
Unchanged 300 324 333 306 308 FBM ACE 4,192.73 -21.08 -0.5
Untraded 376 398 369 384 377
Major Overseas
Market Cap Indices
Turnover Dow Jones 10,991.99 -213.04 -1.9
(mln shares) 875 834 818 800 975 Nasdaq 2,471.47 -51.48 -2.0
Value (RM S&P 500 1,183.71 -28.34 -2.3
mln) 1,293 1,190 943 936 1,195 FTSE 5,603.52 -150.33 -2.6
Hang Seng 21,261.79 -325.27 -1.5
Currency Jakarta Composite 2,939.30 -5.41 -0.2
MYR vs US Nikkei 225 11,212.66 46.87 0.4
Dollar 3.1950 3.1955 3.1900 3.1810 3.1860 Seoul Composite 1,749.55 -2.65 -0.2
Shanghai Composite 2,907.93 -61.57 -2.1
Source: RHBInvest & Bloomberg SET 762 -2.34 -0.3
FT Straits Times 2,991.68 -10.94 -0.4
Taiwan Weighted 8,146.44 -11.70 -0.1
India Sensex 17,690.62 -54.66 -0.3
Major Commodities
NYMEX Crude Oil
(US$/barrel) 82.44 -1.76 -2.1
MDEX CPO – Third
Month (RM/metric ton) 2,550.00 -10.00 -0.4
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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 28 April 2010

Chart 3: FKLI Daily Chart 4: FKLI Intraday

Technical Interpretations:

♦ The local futures market resumed its selling activities on the back of poorer regional sentiment yesterday.

♦ With the poor performance in the overnight Wall Street and cautious trading tone in the Asian regional markets,
sellers made a comeback by pressing the FKLI lower from its day high of 1,341.50 since early trading hours.

♦ Both the FKLI for Apr and May contracts lost 4.50 pts each, ending at 1,338.50 and 1,339.00 respectively. In
fact, the closing on the FKLI’s Apr contract was just marginally above the 10-day SMA of 1,338.

♦ Closed with another negative candle, the futures index has high risk of breaching the 10-day SMA soon.

♦ In addition, a marginal “sell” signal on the stochastic oscillators yesterday could intensify the selling activities, if it
loses the critical 10-day SMA today.

♦ Below the 10-day SMA, the futures index could ease further on follow-through selling momentum to the 1-pt
technical gap near 1,326 and the 40-day SMA of 1,324 in the near term.

♦ The recent peak of 1,350.50 remains as a clear resistance on the upside.

Daily Trading Strategy:

♦ The resumption of selling activities on Tuesday confirmed our worries of a potential pullback following the
previous “hangman” candle on the chart.

♦ Given the weak readings on the chart, the FKLI is vulnerable to a fresh breakdown from the 10-day SMA today.

♦ Traders should prepare to turn negative and reaim the near-term target at the 1-pt gap near 1,326 or even the
40-day SMA of 1,324 upon the breaching of the 10-day SMA.

♦ Meanwhile, the trading band for the FKLI is expected at between 1,327 and 1,340.

Table 3: FKLI Closings

FKLI (Month)
Contracts Open High Low Close Chg (Pts) Settle Volume Open Interest
Apr 10 1341.00 1341.50 1337.00 1338.50 -4.50 1338.50 7062 18271
May 10 1343.00 1343.00 1337.00 1339.00 -4.50 1339.00 6242 4548
Jun 10 1337.50 1338.50 1336.00 1338.00 -4.00 1338.00 22 512
Sep 10 1337.00 1338.00 1336.00 1338.00 -4.00 1338.00 5 236

Source: Bursa Malaysia

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 28 April 2010

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

US Market Leads:

♦ Wall Street suffered its biggest one-day loss in nine months on Tuesday, after the international rating agency
Standard & Poor’s downgraded the credit rating of Greece and Portugal.

♦ Not helping too, the congressional testimonial of Goldman Sachs Group in Washington also put selling pressure
on the financial sector in view that the congressional hearing will increase the possibility of a financial reform.

♦ S&P cut Greece's debt rating to "junk" status, and lowered Portugal's long-term rating by two notches. The
downgrade came after German officials insisted Greece must outline more steps to cut its budget deficit before
releasing the US$60bn rescue package.

♦ Dampened by S&P’s downgrades, the US light sweet crude oil futures for June delivery tumbled another US$1.76
or 2.1% to US$82.44/barrel.

♦ After the close, the US Senate Republicans once again blocked debate on the Democrats’ bank reforms bill by a
vote of 41 – 57.

Technical Interpretations:

Dow Jones Industrial Average (DJIA)

♦ After enjoying six days of gains, the US DJIA took a dramatic setback, plummeted 213.04 pts or 1.90% to
10,991.99 on Tuesday.

♦ Closed with a huge bearish candle, added with the breakdown of the 21-day SMA of 11,017, this suggests a fast
deteriorating near-term technical outlook.

♦ In our view, the Dow is set to expand the current bearish momentum towards the next crucial resistance-turned-
support level of 10,850 soon, unless it can quickly recover to above the 21-day SMA.

♦ Should 10,850 fail, this could put it back into the wide trading zone at between 10,150 and 10,850.

Nasdaq Composite (Nasdaq)

♦ As the bears returned, the Nasdaq Composite Index plunged 51.48 pts or 2.04% to 2,471.47 on Tuesday.

♦ With a huge bearish candle on the chart, combined with the sharp downtick in the short-term momentum
indicators, a quick retest of the 2,470 and the 21-day SMA near 2,461 can be expected today.

♦ Cautiously, losing these crucial supports will mean a steeper correction to 2,330 could be on the cards.

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

KNM Group (7164)

Stay away, pending share price stabilisation…

♦ The share price of KNM triggered a significant uptrend in Apr 2009, when the 10-day SMA cut to above the 40-
day SMA near RM0.385.

♦ The stock reached a high of RM1.09 in Jun 2009, but triggered a steep correction to the support region near
RM0.69.

♦ Since then, the stock traded sideways between RM0.69 and RM0.85 for most of the time from Jul 2009 to Apr
2010.

♦ But in mid-Apr 2010, the stock plunged to below the RM0.69 support level with a huge 4sen technical gap,
indicating a clear technical derating signal on the chart.

♦ Yesterday, the stock registered a huge bearish candle and closed at the day’s low at RM0.525, with bearish signs
in most of the indicators.

♦ Registered with seven negative candles in the last nine trading days, the stock is certainly trading in a very
bearish scenario.

♦ As the next support region is only seen at the RM0.385 - RM0.50 region, we expect investors to stay away from
the current volatility. Its share price needs to stabilise, before it could gain back signs of a potential technical
rebound.

Technical Readings:

♦ 10-day SMA: RM0.619

♦ 40-day SMA: RM0.725

♦ Support: IS = RM0.50 S1 = RM0.385

♦ Resistance: IR = RM0.69 R1 = RM0.85 R2 = RM1.00

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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
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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.

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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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