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

25 June 2010
MARKET DATELINE

Market Technical Reading

Expect Another Sideway Trading Today...

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

Local Market Leads:

♦ Share price in Bursa Malaysia traded lower on Thursday, on steady selling pressure throughout the day, partly on
account of the T+3 selling activities from Monday’s high volume delivery.

♦ The benchmark FBM KLCI, however, rallied sharply to an intraday high of 1,333.49 in mid-day, but the
momentum failed to sustain.

♦ As a result, the index ended the day 3.83 pts or 0.29% lower to 1,325.87.

♦ Key heavyweight stocks like PetDag (-54sen), BAT (-48sen) and DIGI (-26sen) lost on constant selling pressure
from institutional investors.

♦ Overall turnover increased slightly to 749m shares from 685m shares on Wednesday, but market breadth has
returned to negative, with losers topped gainers by 332 to 318.

Technical Interpretations:

♦ As the FBM KLCI closed significantly off its intraday high, it recorded a “shooting star-like” candle on the chart.
This suggests a likely retreat today.

♦ Furthermore, with the weaker readings on the momentum indicators, the BM KLCI is poised to head lower today.

♦ Technically, it will resume its downswing to cover the technical gap at 1,317.69, before revisit the 10-day and 40-
day SMAs near 1,313 and 1,310.

♦ As a firmer support level is seen at the psychological level of 1,300, we expect a mild retreat with slower volume
participation ahead.

♦ All in, we maintain that the index should remain stuck within the 1,300 to 1,350 range in the near term.

Please read important disclosures at the end of this report.

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Daily Trading Strategy:

♦ In line with our expectation, the FBM KLCI sustained its trading range at between 1,300 and 1,350, amid
persistent rangebound trading activities of late.

♦ Also, investors will continue to “wait-and-see”, pending clearer technical signals before making fresh investment
decision ahead of the weekend.

♦ With a mild T+4 force-selling pressure expected today due to the heavy volume transacted on Monday, plus the
weaker momentum readings on the chart, investors will likely stay at bay today.

♦ As a result, the FBM KLCI will likely trend sideways today, with a solid support seen at 1,300 and the 10-day and
40-day SMAs near 1,313 and 1,310.

Table 2 : Major Indices & Commodities

Table 1 : Daily Statistics Change Change
Scoreboard 18 June 21 June 22 June 23 June 24 June Local Key Indices Closing
(Pts) (%)
Gainers 416 591 226 360 318 FBM KLCI 1,325.87 -3.83 -0.3
Losers 193 161 434 275 332 FBM 100 8,728.89 -18.52 -0.2
Unchanged 278 208 255 271 294 FBM ACE 3,912.04 -8.66 -0.2
Untraded 481 401 446 456 418 Major Overseas
Indices
Market Cap Dow Jones 10,152.80 -145.64 -1.4
Turnover Nasdaq 2,217.42 -36.81 -1.6
(mln shares) 538 921 673 685 749 S&P 500 1,073.69 -18.35 -1.7
Value (RM FTSE 5,100.23 -78.29 -1.5
mln) 1,160 1,515 1,100 1,118 1077 Hang Seng 20,733.49 -123.12 -0.6
Jakarta Composite 2,914.10 -10.70 -0.4
Currency Nikkei 225 9,928.34 4.64 0.0
MYR vs US Seoul Composite 1,739.87 14.05 0.8
Dollar 3.2490 3.1965 3.1990 3.2335 3.2310 Shanghai Composite 2,566.75 -3.13 -0.1
SET 793.19 -13.33 -1.7
Source: RHBInvest & Bloomberg FT Straits Times 2,847.61 -23.44 -0.8
Taiwan Weighted 7,589.89 7.74 0.1
India Sensex 17,730.24 -25.70 -0.1
Major Commodities
NYMEX Crude Oil
(US$/barrel) 76.51 0.16 0.2
MDEX CPO – Third
Month (RM/metric ton) 2,390.00 6.00 0.3
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:

♦ Due to the afternoon selling on the regional markets, the local futures market eased to close the day near its day
low.

♦ The FKLI for Jun contract ended 10.5 pts or 0.79% lower to 1,321.50, and registered an “engulfing bearish”
candle on the chart.

♦ The bearish candle suggests further retreat today, to possibly cover the entire technical gap at 1,320, and to
retest the supports at the 10-day and 40-day SMAs near 1,316 and 1,309.

♦ As indicated in the momentum indicators, its trading momentum could ease today, hence pressuring the index to
lose the 10-day and 40-day SMAs. The next solid support is at the psychological level of 1,300.

♦ Optimistically, the futures index may consolidate near 1,300, before forming a support base for a technical
rebound.

♦ The lower trading range from 1,270 to 1,300 will be revisited if it loses the critical 1,300 support.

♦ Upside resistance is at the recent high of 1,342, followed by the 1,350 level and the early May high of 1,352.5.

♦ In our view, the FKLI should remain rangebound between 1,300 and 1,350.

Daily Trading Strategy:

♦ The immediate-term outlook for the FKLI is negative.

♦ But due to the supportive levels near 10-day and 40-day SMAs as well as the critical 1,300 level support, we keep
our flatish rangebound outlook on the FKLI.

♦ Meanwhile, we expect the Futures index to swing from 1,310 to 1,325 today.

Table 3: FKLI Closings

FKLI (Month)
Contracts Open High Low Close Chg (Pts) Settle Volume Open Interest
Jun 10 1331.50 1337.50 1321.00 1321.50 -10.50 1321.50 5783 16946
Jul 10 1331.50 1338.00 1319.00 1319.00 -14.00 1319.00 1875 1304
Sep 10 1335.00 1337.00 1321.00 1322.00 -9.00 1321.50 171 479
Dec 10 1331.00 1336.00 1321.50 1322.00 -8.00 1321.00 45 201

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:

♦ US stocks closed lower on Thursday on further economic woes over the mixed economic reports and a weakened
European markets.

♦ The Fed issued a cautious growth outlook on Wednesday on the back of the weak new home sales report. The
caution suggests that the economic recovery is losing steam.

♦ The jobless new claims figure fell to 457,000 last week, matching street’s forecasts, but durable goods orders fell
1.1% in May, the commerce department reported. In Apr, the same orders rose 3%.

♦ In the commodity market, the US light sweet crude oil futures for August delivery rebounded US$0.16 to
US$76.51/barrel.

Technical Interpretations:

Dow Jones Industrial Average (DJIA)

♦ The US DJIA resumed its selling pressure and was dragged down by another 145.64 pts or 1.4% to 10,152.80 on
Thursday.

♦ The bearish candle registered on the chart, following a “doji” candle earlier, suggests sellers overwhelmed again.
It has pulled down the index to below the 21-day SMA of 10,188 and closed on the dot of the support of 10,150.

♦ Critically, losing these supports will spell a bearish breakthrough and will threaten a potential crash to below the
10,000 psychological level.

♦ The next support region is only seen at the 9,200 to 9,700 region.

Nasdaq Composite (Nasdaq)

♦ The Nasdaq Composite index sealed with a fourth bearish candle in a row yesterday, as it lost 36.81 pts or 1.63%
to 2,217.42.

♦ The fall also marks the losing of the 21-day SMA at 2,248, coupled with the negative readings on the momentum
indicators, the index is poised to retest the lower support at 2,190 soon.

♦ If it loses the critical support of 2,190, it will spell a fresh medium-term bearish sign, leading towards a lower
support region of 2,000 – 2,100 in the medium term.

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Daily Technical Watch:

Chart 7: HLBank Daily Chart 8: HLBank Intraday

Hong Leong Bank (5819)

Potential negative turn on the near-term sentiment…

♦ The share price of HLBank turned aggressively bullish after removing the RM5.90 and RM6.40 resistance levels in
Sep 2009.

♦ The stock leveraged on the support of RM6.40 and propelled to a level above RM7.78 in early Nov 2009.

♦ After seesawing between RM7.78 and RM8.40 region for months, the stock ventured into a higher trading range
of RM8.40 – RM8.96 region on strong follow-through buying momentum.

♦ Thereafter, buying forces subsided as the stock began its sideways consolidation on sustained profit-taking
activities.

♦ After slipping briefly below RM8.40 in early Jun 2010, the stock rebounded in recent trading back to above
RM8.40, but ended Thursday at RM8.55, with a “bearish engulfing” candle.

♦ The candlestick pattern suggests a potential negative turn on the near-term sentiment and a possible fall to
below the 10-day and 40-day SMAs near RM8.48 and RM8.54.

♦ Coupled with the weaknesses registered on the momentum indicators, the stock could plunge towards RM7.78
and RM7.22 lower support levels if it loses RM8.40 soon.

♦ That, if it happens, will mark a sharp correction on the share price, and potentially could only stabilise near the
RM5.90 – RM6.40 lower support range.

♦ On the other hand, to revive its upward momentum, it must break above the current sideways range of RM8.40 –
RM8.96 quickly and powerfully, in our view.

Technical Readings:

♦ 10-day SMA: RM8.48

♦ 40-day SMA: RM8.539

♦ Support: IS = RM8.40 S1 = RM7.78 S2 = RM7.22

♦ Resistance: IR = RM8.96

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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
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may from time to time have an interest in the securities mentioned by this report.

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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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