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
26 August 2010

Market Technical Reading

Losing 1,390 and 10-day SMA Will Confirm A Correction Phase…

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

Local Market Leads:

♦ Dampened by strong selldown in Asian regional markets amid more signs of a global economic slowdown, the FBM
KLCI surrendered to the sellers and ended lower at below the 1,400 psychological level on Wednesday.

♦ Investors decided to lock in their short-term profits after the overnight US DJIA posted a triple-digit loss following
a worse-than-expected slump in the US existing home sales in Jul.

♦ Also, most of the regional peers suffered further correction on growing fears that the global economy could head
into another recession. Nikkei 225 stumbled another 1.67% to a fresh year low even after the Japanese
government warned of a possible intervention on the recent spike in the yen.

♦ Back home, the FBM KLCI broke below 1,400 and closed 8.80 pts or 0.63% lower to 1,396.97.

♦ Turnover eased to 873m shares, from Tuesday’s 894m shares. Market breadth continued to deteriorate with
counters down outpacing counters up by a ratio of nearly 3 to 1.

Technical Interpretations:

♦ After enjoying a strong rally for eight consecutive days, profit taking finally stepped in with the FBM KLCI chalking
up its first negative candle in the past nine sessions.

♦ Technically, the negative candle confirmed the previous two “hangman” candles as well as the “eight-to-ten”
candle count pattern highlighted in our earlier reports.

♦ Added with the downticks in the short-term momentum indicators, a further pullback on the FBM KLCI in the
immediate term can be expected.

♦ As a result, we expect the index to retest the immediate support level at 1,390, followed by the 10-day SMA of
1,384 in sessions ahead.

♦ A stronghold support on the chart is at 1,350 and the 40-day SMA near 1,351.

Please read important disclosures at the end of this report.

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Daily Trading Strategy:

♦ Stunned by the late selling pressure on selected core heavyweights, the FBM KLCI gave up its afternoon recovery
and closed below the 1,400 psychological level with a first negative candle since it rebounded from the key 1,350
level on Aug 13.

♦ Compounded with the weakening short-term momentum indicators, this could mark the start of a short-term
profit-taking leg ahead.

♦ On follow-through selling momentum, the FBM KLCI is expected to revisit the next level of 1,390 and the 10-day
SMA of 1,384 soon.

♦ Losing these short-term supports will confirm a short-term correction mode on the index’s recent uptrend.

♦ Having said that, so long as the index sustains at above 1,350, and the 40-day SMA near 1,351, the positive
medium-term uptrend will likely stay intact, while the pullback could be seen as merely a retracement to neutralise
the recent overbought momentum.

Table 2 : Major Indices & Commodities

Table 1 : Daily Statistics Change Change
Scoreboard 19 Aug 20 Aug 23 Aug 24 Aug 25 Aug Local Key Indices Closing
(Pts) (%)
Gainers 407 316 291 206 186 FBM KLCI 1,396.97 -8.80 -0.6
Losers 321 394 465 585 585 FBM 100 9,137.26 -65.72 -0.7
Unchanged 293 327 270 241 268 FBM ACE 3,738.70 -48.14 -1.3
Untraded 352 334 345 335 328 Major Overseas
Indices
Market Cap Dow Jones 10,060.06 19.61 0.2
Turnover Nasdaq 2,141.54 17.78 0.8
(mln shares) 983 834 805 894 873 S&P 500 1,055.33 3.46 0.3
Value (RM FTSE 5,109.40 -46.55 -0.9
mln) 1,700 1,341 1,338 1,651 1,732 Hang Seng 20,634.98 -23.73 -0.1
Jakarta Composite 3,138.91 23.97 0.8
Currency Nikkei 225 8,845.39 -149.75 -1.7
MYR vs US Seoul Composite 1,734.79 -25.74 -1.5
Dollar 3.1330 3.1360 3.1310 3.1435 3.1393 Shanghai Composite 2,596.58 -53.73 -2.0
SET 884.51 -5.94 -0.7
Source: RHBInvest & Bloomberg Straits Times 2,926.55 3.70 0.1
Taiwan Weighted 7,736.98 -203.66 -2.6
India Sensex 18,179.64 -131.95 -0.7
Major Commodities
NYMEX Crude Oil
(US$/barrel) 72.52 0.47 0.7
MDEX CPO – Third
Month (RM/metric ton) 2,486.00 -24.00 -1.0
US Interest Rate Current Last Updated
10 Aug
Overnight Fed Fund Rate 0-0.25% Unch
2010
Next FOMC meeting 21 Sep 2010

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Chart 3: FKLI Daily Chart 4: FKLI Intraday

Technical Interpretations:

♦ As more profit-taking activities took place, the local futures market extended its losing leg for a second day on
Wednesday, weighed down by poor overseas sentiment following a steep fall in the US markets overnight.

♦ From a day high of 1,400, the FKLI tweaked lower on persistent profit-taking momentum.

♦ Even though the futures index staged a strong rebound in the early afternoon session, the return of a fresh selling
momentum in the late session caused the FKLI for Aug contract to lose 5.50 pts or 0.39% for the day to 1,393.50.

♦ Meanwhile, the Sep contract tumbled 8.00 pts or 0.57% to 1,390.50.

♦ Recorded with a “bearish engulfing” candle, the chart is pointing to a further retracement in the immediate term.

♦ As both the short-term momentum indicators are pointing downward, the FKLI is poised to dip below the 1,390
support level and the 10-day SMA of 1,382 soon, in our view.

♦ If it loses these levels, it will turn the short-term outlook into a negative mode and pave way for a sharper
retracement towards the 40-day SMA of 1,352 and the 1,350 key technical level.

♦ On the flip side, the FKLI must retake the recent high of 1,403 to reboost its bullish sentiment and to reaim to the
next upside target at 1,450.

Daily Trading Strategy:

♦ Based on yesterday’s “bearish engulfing” candle, it is poised to undergo more short-term pullbacks.

♦ And if 1,390 and the 10-day SMA fail to curb selling, traders should be ready to turn more defensive in the near
term.

♦ The trading range for the FKLI is between 1,379 and 1,395 today.

Table 3: FKLI Closings

FKLI (Month)
Contracts Open High Low Close Chg (Pts) Settle Volume Open Interest
Aug 10 1399.00 1400.00 1390.00 1393.50 -5.50 1393.50 6879 15916
Sep 10 1399.00 1400.00 1388.50 1390.50 -8.00 1390.50 4400 2909
Dec 10 1396.50 1399.50 1387.50 1390.00 -8.00 1391.50 253 456
Mar 11 1399.50 1399.50 1390.00 1393.50 -4.50 1392.50 35 178

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:

♦ After encountering a sharp selloff in the early session, the US major gauges kicked off a strong technical rebound
by ending positively on renewed bargain-hunting activities on Wednesday.

♦ Earlier, investors continued to pound the markets lower after new home sales unexpectedly dropped 12.4% to a
record low of adjusted annual rate of 276,000 in Jul and orders for durable goods increased by merely 0.3%.

♦ But soon after that, fresh bargain-hunting support reemerged on expectations that the recent selloff was
overdone and the poor new home sales data could mark the worst in housing sector is over.

♦ In response, homebuilders led by Toll Brothers (+5.8%) bounced back, after it reported its first quarterly profit in
three years. Also, tech stocks rose on news that Apple (+1.2%) will unveil new products on Sep 1.

♦ Following the recent 5-day losing streak, the US light sweet crude oil futures for Oct delivery bounced back by
47cents or 0.7% to US$72.52/barrel on strong recovery in the equity markets.

Technical Interpretations:

Dow Jones Industrial Average (DJIA)

♦ After breaching to below the 10,000 psychological level to a low of 9,937.98, the US DJIA staged a surprise
comeback and ended the day with a 19.61 pts or 0.20% gain to 10,060.06 yesterday.

♦ Chart wise, it recorded a “positive harami” candle to suggest a reduction in the recent selling momentum.
Coupled with its ability to hold at above 10,000, there could be a possibility of a further rebound today.

♦ Nevertheless, any rebound attempt could face immediate resistance near 10,150 and the 21-day SMA of 10,428.

♦ On the downside, the 10,000 psychological level will act as an immediate support. Losing this level, however, will
trigger more downside risk towards 9,700 and the Jul low of 9,614.32.

Nasdaq Composite (Nasdaq)

♦ In line with the previous “star” candle, the Nasdaq Composite index jumped 17.78 pts or 0.84% to end at
2,141.54 on Wednesday.

♦ In fact, it formed a huge “bullish engulfing” candle to suggest further rebound ahead. Therefore, it could try to
cover the recent technical gap near 2,159.44 and to retest 2,190 soon.

♦ But until it can retake these levels, it is still vulnerable to downside risk to 2,100 and Jul’s low of 2,061.14.

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Daily Technical Watch:

Chart 7: Jetson Daily Chart 8: Jetson Intraday

Kumpulan Jetson (9083)

Medium-term outlook remains bearish…

♦ After a sustainable rally to a decade high of RM3.10 in Nov 2009, the share price of Jetson has rolled into a
technical downtrend.

♦ The share price attempted to rebound to above the RM2.11 important level in Feb 2010, but failed to surpass the
Downtrend Resistance Line (DRL) nearby.

♦ In fact, given the fresh weakness on the crossing of the 10-day SMA to below the 40-day SMA, the stock turned
even more bearish and headed sharply lower in weeks ahead.

♦ It staged another sharp rebound in Jul, after flooring a low of RM1.11 but upside was again capped by the heavy
DRL. Since then, it began to drift lower and reached a low of RM1.12 in early this week.

♦ The stock recovered slightly to a day high of RM1.38 yesterday, but ended the day at RM1.276, with a moderate
positive candle.

♦ Technically, as the stock failed to remove the 40-day SMA of RM1.395, nearer to the key resistance level of
RM1.51 and the DRL nearby, its medium-term outlook has remained bearish.

♦ If the momentum fails to pick up, the stock could pullback to the low of RM1.11 and threatens the support of
RM1.10 soon.

♦ In our view, only with a convincing breakout to above the DRL and both the SMAs will the technical picture turn
condusive for a long-awaited technical rebound.

Technical Readings:

♦ 10-day SMA: RM1.274

♦ 40-day SMA: RM1.395

♦ Support: IS = RM1.10 S1 = RM0.80 S2 = RM0.50

♦ Resistance: IR = RM1.51 R1 = RM1.80 R2 = RM2.11

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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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