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 23 September 2010
Market Technical Reading
Rotational Interests And Healthy Volume To Sustain Trading Sentiment...

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

Local Market Leads:

♦ Bursa Malaysia reversed its early gains by turning lower on Wednesday on heavy profit-taking activities
throughout the day on most of the core bluechips.

♦ However, construction stocks and the lower liners outshined the broader market amid strong rotational play, with
more investors jumping onto the bandwagon on hopes of follow-through rally on the FBM KLCI.

♦ Gamuda was the biggest market mover, surging 13 sen on optimism over the announced MRT plan for Malaysia,
while other lower liners, KNM (+1.5sen), Zelan (+3sen) and E&O (+4sen) ended higher on strong volume.

♦ The FBM KLCI ended at 1,474.75 with a loss of 1.24 pts or 0.08%. Turnover expanded further to 1.33bn shares
from Tuesday’s 1.05bn shares. Market breadth remained positive with 398 counters up against 364 counters down.

♦ Elsewhere, the regional markets finished in a mixed note after the US Federal Reserve indicated that it was ready
to take further action to boost the US economy.

Technical Interpretations:

♦ As the bull and bear struggled on, the FBM KLCI was stucked within a tight trading range amid constant profit-
taking pressure throughout yesterday.

♦ The index settled the day with a small negative candle, indicating a possible setback in the near term.

♦ But any pullback, if it occurs, will still be supported by the immediate support level at the 10-day SMA of 1,460
and the recent breakout point of 1,450.

♦ In fact, with the trading volume sustaining high at above the 1.0bn shares mark, we foresee a possibility of the
FBM KLCI removing last Friday and Tuesday’s high of 1,479.59 soon.

♦ Upon clearance of 1,479.59, it will resume its rally by heading to the upper technical gap at 1,490.50 - 1,497.64,
before putting the 1,500 psychological level and the all-time high level of 1,524.69 to test.

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Daily Trading Strategy:

♦ Dampened by the ongoing profit-taking pressure on the core blue chips, the FBM KLCI extended its profit-taking
leg yesterday instead of chalking a fresh year high after successfully tested last Friday’s high of 1,479.59.

♦ The negative candlestick registered and the overbought momentum readings suggest continuous selling pressure
likely for today.

♦ Nevertheless, we remain confident that the benchmark’s recent uptrend will still be underpinned by the rising 10-
day SMA near 1,460 and the 1,450 important support level.

♦ Not only that, the growing bullish sentiment amongst retail and institutional investors of late will keep check on
selling activities in the near term, in our view.

♦ As such, we remain optimistic that should the buying momentum expand soon, the FBM KLCI will restore its rally
with a closure of the technical gap at 1,490.50 - 1,497.64, before charging towards the all-time high level of
1,524.69.

♦ Trading wise, the increased rotational interests on midcaps as well as the lower liners will keep the trading
sentiment robust and maintain the healthy trading volume at around 1.0–1.2bn shares in the near term.

Table 2 : Major Indices & Commodities

Table 1 : Daily Statistics Change Change
Scoreboard 15 Sep 17 Sep 20 Sep 21 Sep 22 Sep Local Key Indices Closing
(Pts) (%)
Gainers 299 446 316 368 398 FBM KLCI 1,474.75 -1.24 -0.1
Losers 416 296 417 345 364 FBM 100 9,639.09 -8.68 -0.1
Unchanged 301 268 269 319 280 FBM ACE 3,806.72 -36.47 -0.9
Untraded 349 350 359 322 311 Major Overseas
Indices
Market Cap Dow Jones 10,739.31 -21.72 -0.2
Turnover Nasdaq 2,334.55 -14.80 -0.6
(mln shares) 725 968 851 1,050 1,333 S&P 500 1,134.28 -5.50 -0.5
Value FTSE 5,551.91 -24.28 -0.4
(RM mln) 1,436 1,906 1,382 1,514 2,022 Hang Seng 22,047.71 45.12 0.2
Jakarta Composite 3,343.34 -21.70 -0.6
Currency Nikkei 225 9,566.32 -35.79 -0.4
MYR vs US Seoul Composite 1,832.63 Closed Closed
Dollar 3.1150 3.1010 3.1015 3.1000 3.090 Shanghai Composite 2,591.55 Closed Closed
SET 945 7.79 0.8
Source: RHBInvest & Bloomberg Straits Times 3,096.10 0.71 0.0
Taiwan Weighted 8,196.40 Closed Closed
India Sensex 19,941.72 -59.83 -0.3
Major Commodities
NYMEX Crude Oil
(US$/barrel) 74.71 -0.26 -0.3
FCPO – Third Month
(RM/metric ton) 2,673.00 -1.00 0.0
US Interest Rate Current Last Updated
21 Sep
Overnight Fed Fund Rate 0-0.25% Unch
2010
Next FOMC meeting 2-3 Nov 2010

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Chart 3: FKLI Daily Chart 4: FKLI Intraday

Technical Interpretations:

♦ After a brief rebound from near the 10-day SMA and the 1,450 level, profit-taking activties returned and dragged
the FKLI lower yesterday.

♦ Not helping either, the regional markets faced waves of selling activities in the afternoon session on poor European
markets start, forcing key indices to pare down their early gains to close the day mixed to negative.

♦ This prompted local futures traders to turn cautious, thus a negative reversal on the FKLI’s closing. The FKLI for
Sep contract fell 2.50 pts or 0.17% to 1,476.00 yesterday.

♦ On the chart, the futures index registered a “bearish engulfing” candle to implicate further weakness today.

♦ However, we still expect the 10-day SMA of 1,462 and the 1,450 resistance-turn-support level to cap any
immediate pullback on the futures index.

♦ In short, its downside is likely to be limited, as buyers are expected to return near those support levels soon.

♦ For now, last Friday’s high of 1,485.50 will continue to resist any upside attempt.

♦ But once this level is cleared, the FKLI will rally towards the upper technical gap at 1,490 – 1,502.50, before
recharging further to the all-time high level of 1,536.

Daily Trading Strategy:

♦ Despite the poor daily chart pattern, we stay bullish and are optimistic of a swift resumption on the recent buying
momentum.

♦ In our view, any retreat should be viewed as an opportunity to rebuild “long” position.

♦ Today, the futures index should fluctuate between 1,472 and 1,490.

Table 3: FKLI Closings

FKLI (Month)
Contracts Open High Low Close Chg (Pts) Settle Volume Open Interest
Sep 10 1480.50 1484.50 1473.00 1476.00 -2.50 1476.00 3234 20645
Oct 10 1480.50 1484.50 1473.50 1476.00 -3.00 1476.00 327 782
Dec 10 1483.00 1484.00 1474.00 1476.00 -1.50 1476.00 34 361
Mar 11 1480.50 1481.00 1475.00 1475.00 -1.00 1475.00 16 134

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:

♦ Dragged down by disappointed earnings news in tech stocks, and the fresh concerns over the Federal Reserve’s
recent signal of possible new measures to boost economic growth, Wall Street turned lower yesterday.

♦ Adobe Systems tumbled 19% after its sales forecast fell short of expectations, while Microsoft was knocked down
by 2.2%, as it fell short of investors’ expectations with a smaller-than-expected dividend announcement.

♦ Also, financial stocks, Morgan Stanley and Goldman Sachs were hit by Deutsche Bank’s downgrade on bank
earnings forecasts.

♦ Investors also turned cautious on the US economic prospects after the Fed’s hint of potential new stimulus.

♦ Due to a surprise increase in crude inventories, the US light sweet crude oil futures for Nov delivery eased 26
cents or 0.4% to US$74.71/barrel.

Technical Interpretations:

Dow Jones Industrial Average (DJIA)

♦ As profit-taking activities continued, the US DJIA slipped 21.72 pts or 0.20% to 10,739.31 on Wednesday.

♦ The pullback was in line with the previous “star” candle which had suggested a negative trend reversal. And by
accumulating a second “star” candle, the risk of a further retreat is increasing.

♦ Therefore, it is possible for it to stage a further pullback towards the 21-day SMA of 10,381 soon. But judging
from its recent bullish breakout momentum, we still hold to our bullish view on the DJIA.

♦ In fact, once a mild technical pullback is done, we expect it to renew its rally to above the 10,850 hurdle in bids
to end the more than 4-month old major range-bound trading zone from 10,150 to 10,850.

Nasdaq Composite (Nasdaq)

♦ Likewise, the Nasdaq Composite index fell 14.80 pts or 0.63% to end at 2,334.55, and ended the day with a
“star” candle to indicate a further pullback risk soon.

♦ It is likely to retest the 2,330 support level today. Importantly, this key support must hold to ensure the recent
chart breakout remains valid.

♦ Otherwise, the index will likely fall back into a consolidation mode and correct further towards a lower technical
gap at 2,246.60 – 2,263.69 near the 21-day SMA of 2,232.

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Daily Technical Watch:

Chart 7: Sunrise Daily Chart 8: Sunrise Intraday

Sunrise (6165)

Penetrating RM2.25 will accelerate its upward momentum…

♦ The share price of Sunrise reversed its previous uptrend after hitting a high of RM2.65 in Oct 2009.

♦ The stock retreated and stabilised at around RM2.10 to RM2.25 region in Nov 2009 to Apr 2010, but its technical
momentum deteriorated sharply when it lost RM2.10 in May.

♦ However, after touching a low of RM1.72, its selling momentum disappeared and the stock began a recovery leg.

♦ It pierced through the RM2.10 level and tested the resistance of RM2.25 in Aug, but retreated to below RM2.10 in
Sep.

♦ This week, its upward momentum improved significantly and tested a high of RM2.26 again before closing at
RM2.20 yesterday.

♦ On the chart, it registered a “positive harami” candle, suggesting a reduced momentum on the previous day’s
selling.

♦ This coupled with the positive uptick on the 10-day SMA, which is likely to recut above the 40-day SMA soon,
implies a potential positive turn on the medium-term technical outlook.

♦ A penetration above RM2.25 in the near term will accelerate its upward momentum, hence pushing it higher to
the RM2.39 and RM2.54 hurdles next.

♦ To stay bullish, it has to sustain at above RM2.10 and the 10-day and 40-day SMAs.

Technical Readings:

♦ 10-day SMA: RM2.067

♦ 40-day SMA: RM2.072

♦ Support: IS = RM2.10 S1 = RM1.93 S2 = RM1.70

♦ Resistance: IR = RM2.25 R1 = RM2.39 R2 = RM2.54

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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
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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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