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Market Technical Reading - Uptrend Remains Intact… - 06/09/2010

Market Technical Reading - Uptrend Remains Intact… - 06/09/2010

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Published by Rhb Invest
Local Market Leads:
♦ After the recent upsurge, Bursa Malaysia finally took a breather and ended lower on Friday, amid profit-taking activities on the key heavyweights.
♦ Despite the ringgit hitting a fresh 13-year high at 3.1200 against the US dollar and the solid performance in the overseas markets ahead of the key US jobs data on Friday night, the FBM KLCI slipped into the negative territory as investors decided to lock in their profits on the recent rallies of the core bluechips.
Local Market Leads:
♦ After the recent upsurge, Bursa Malaysia finally took a breather and ended lower on Friday, amid profit-taking activities on the key heavyweights.
♦ Despite the ringgit hitting a fresh 13-year high at 3.1200 against the US dollar and the solid performance in the overseas markets ahead of the key US jobs data on Friday night, the FBM KLCI slipped into the negative territory as investors decided to lock in their profits on the recent rallies of the core bluechips.

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Published by: Rhb Invest on Sep 06, 2010
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09/06/2010

 
 
Page 1 of 6
A comprehensive range of market research reports by award-winning economists and analysts are exclusivelyavailable for download from
w w w .rhbinvest.com 
 
Local Market Leads:
 
 
After the recent upsurge, Bursa Malaysia finally took a breather and ended lower on Friday, amid profit-takingactivities on the key heavyweights.
 
Despite the ringgit hitting a fresh 13-year high at 3.1200 against the US dollar and the solid performance in theoverseas markets ahead of the key US jobs data on Friday night, the FBM KLCI slipped into the negative territoryas investors decided to lock in their profits on the recent rallies of the core bluechips.
 
For the day, the FBM KLCI dropped 5.40 pts or 0.37% to end at 1,435.67, dragged down by losses in the big caps,Genting (-26sen), Sime (-14sen) and Maybank (-5sen).
 
In spite of that, the second and third liners continued to outshine the heavyweights on the back of strongrotational plays. MRCB (+11sen), LMCemnt (+15sen), UEMLand (+7sen) and GenP (+13sen) were amongst thefavourites.
 
As a result, the overall market sentiment remained bullish, though the daily turnover eased to 922m shares onprofit-taking ahead of the weekend. Market breadth stayed positive with 394 gainers against 325 losers.
Technical Interpretations:
 
Following the previous two negative reversal candles, the FBM KLCI finally succumbed to a technical pullback, andended with a negative candle on Friday.
 
Plus a tick-down on the 14-day RSI, the index could head for more pullbacks in the near term.
 
Further retreat will force the stochastic oscillators to cut a fresh “sell” signal on the chart, hence leading to furtherselling on the FBM KLCI.
 
However, we continue to see solid support near the 10-day SMA of 1,415, the psychological level of 1,400 as wellas the key pivotal point of 1,390.
 
On the upside, the uptrend will resume if it cuts above the recent high of 1,441.80.
Chart 1: FBM KLCI Daily
 
Chart 2: FBM KLCI Intraday
Technical Research 
Daily Trading Strategy
Market Technical Reading
Uptrend Remains Intact…
   M  a   l  a  s  i  a
   M   A   R   K   E   T   D   A   T   E   L   I   N   E
 
   P   P    7   7   6   7   /   0   9   /   2   0   1   0   (   0   2   5   3   5   4   )
 
RHB ResearchInstitute Sdn Bhd
A member of theRHB Banking Group
Company No: 233327 -M
6 September 2010
Please read important disclosures at the end of this report.
 
 
6 September 2010
Page 2 of 6
A comprehensive range of market research reports by award-winning economists and analysts are exclusivelyavailable for download from
w w w .rhbinvest.com 
 
Daily Trading Strategy:
 
As we warned earlier, the profit-taking dip on the FBM KLCI was long overdue, and Friday’s technical pullbackhappened just ahead of the weekend. It also confirmed the previous “hangman” and “evening star” candles.
 
Sealed with a negative candle and the weakened short-term momentum readings, we see a further pullback risk inthe near term, if the key heavyweights encounter further profit-taking pressure.
 
But, in our view, the firm uptrend on the FBM KLCI is likely to stay intact, as long as it can sustain at above the10-day SMA of 1,415, the 1,400 psychological level and the trigger point at 1,390.
 
As such, we believe that any pullback is likely to be shortlived. And once the index neutralises its overboughtmomentum, the upward momentum will resume.
 
Nonetheless, given the extended rally on the US DJIA on late Friday, the buying support on the local benchmarkmay even resume today. We see its next resistance at 1,450, followed by the all-time high of 1,524.69.
 
On the trading sentiment, we expect the second and third liners to lead trading course this week, on healthyrotational plays and robust daily turnover.
Source: RHBInvest & Bloomberg
Table 2 : Major Indices & CommoditiesLocal Key Indices ClosingChange(Pts)Change(%)
FBM KLCI 1,435.67 -5.40 -0.4FBM 100 9,381.76 -18.38 -0.2FBM ACE 3,749.36 32.93 0.9
Major OverseasIndices
 Dow Jones 10,447.93 127.83 1.2Nasdaq 2,233.75 33.74 1.5S&P 500 1,104.51 14.41 1.3FTSE 5,428.15 57.11 1.1Hang Seng 20,971.50 102.58 0.5Jakarta Composite 3,164.28 42.13 1.3Nikkei 225 9,114.13 51.29 0.6Seoul Composite 1,780.02 4.29 0.2Shanghai Composite 2,655.39 -0.39 0.0SET 929.9 9.36 1.0Straits Times 3,002.56 15.90 0.5Taiwan Weighted 7,830.21 109.39 1.4India Sensex 18,221.43 -16.88 -0.1
Major Commodities
NYMEX Crude Oil(US$/barrel) 74.60 -0.42 -0.6MDEX CPO – ThirdMonth (RM/metric ton) 2,570.00 28.00 1.1
US Interest Rate Current Last Updated
Overnight Fed Fund Rate 0-0.25% Unch10 Aug2010Next FOMC meeting 21 Sep 2010
 Table 1 : Daily StatisticsScoreboard 27 Aug 30 Aug 1 Sep 2 Sep 3 Sep
Gainers 286 334 307 511 394Losers 405 377 476 256 325Unchanged 285 281 270 258 291Untraded 389 372 312 341 352
Market Cap
Turnover(mln shares) 762 769 949 1,075 922Value (RMmln)1,532 1,760 2,077 1,873 1,718
Currency
MYR vs USDollar3.1420 3.1380 3.1290 3.1260 3.1200
 
6 September 2010
Page 3 of 6
A comprehensive range of market research reports by award-winning economists and analysts are exclusivelyavailable for download from
w w w .rhbinvest.com 
 
Technical Interpretations:
 
Local futures market ended lower for the first time in six trading days on Friday, in tandem with the weaker cashmarket’s performance.
 
After opening higher on a further rebound in the overnight US markets, the FKLI turned lower on continued sellingactivities.
 
But as the mild bargain-hunting support returned in the late session, the FKLI for Sep contract bounced back fromthe intraday low of 1,430.50. For the day, it closed down by 4.50 pts or 0.31% to 1,432.50.
 
Still, the futures index ended the day with a second negative candle, indicating further weakness in the immediateterm.
 
Compounded with the weakened short-term momentum readings, it should see further pullback towards the 10-day SMA of 1,414 soon.
 
Having said that, we are confident that the 10-day SMA, the 1,400 psychological level and the breakout point of 1,390 will keep sellers in check and will protect the overall uptrend on the futures index.
 
Instead, for the FKLI to restore its upbeat momentum, it only needs to remove last Thursday’s high of 1,444.
 
Immediate resistance is at 1,450, followed by the all-time high resistance at 1,536.
Daily Trading Strategy:
 
With last Friday’s retreat, further weakness is still possible, unless it can retake the recent high of 1,444.
 
However, traders should only turn bearish if it loses the 10-day SMA of 1,414, 1,400 and 1,390.
 
We expect the futures index to swing from 1,427 to 1,440 today.
Table 3: FKLI ClosingsFKLI (Month)Contracts Open High Low Close Chg (Pts) Settle Volume Open Interest
Sep 10 1440.00 1441.00 1430.50 1432.50 -4.50 1432.50 5455 18743Oct 10 1442.00 1442.00 1431.00 1431.50 -5.50 1431.50 307 222Dec 10 1440.00
 
1440.00 1430.00 1431.00 -5.50 1430.50 202 415Mar 11 1439.50
 
1439.50 1429.00 1429.00 -6.50 1429.50 102 154
Source: Bursa Malaysia
 
Chart 3: FKLI DailyChart 4: FKLI Intraday

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