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 rateg y

MARKET DATELINE 5 October 2010
Market Technical Reading
Critical Support Remains At 1,450...

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

Local Market Leads:

♦ Dragged down by the last-minute selloff in selective blue chips, the FBM KLCI halted its recent steady recovery leg
by turning lower on Monday.

♦ Also, strong profit-taking pressure hit the local and regional markets in the afternoon, after the early European
markets swung into the negative territory.

♦ As a result, regional indices trimmed most of their early gains. Hang Seng Index narrowed its gains to 260-pts or
1.17%, after rallying as much as 377-pts at one stage.

♦ On the local front, the FBM KLCI was down 4.05 pts or 0.28% to 1,462.27, sharply down from its early high of
1,474.90, mainly hit by a sharp plunge in Digi (-RM3.58) in the late hour trading.

♦ Turnover increased to 1.37bn shares, against Friday’s 974m shares. Market breadth stayed positive, with 501
gainers outpacing 295 losers.

Technical Interpretations:

♦ After trading at above the 10-day SMA of 1,464 for most of the day, the FBM KLCI lost its gain in late session.

♦ This forced it to end at below the 10-day SMA with a “bearish engulfing” candle, implying further follow-through
weakness ahead.

♦ Not helping either, both the 14-day RSI and stochastic oscillators have ticked lower to indicate a weaker
momentum today.

♦ The idnex must climb back to above the 10-day SMA today to avoid a negative turn on the trading sentiment.

♦ A lower technical gap at 1,453.99 – 1,456.30 and the critical 1,450 level will protect the downside, while its
immediate chart hurdle is set at the recent high of 1,479.59.

Please read important disclosures at the end of this report.

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Daily Trading Strategy:

♦ Due to the last-minute selldown on blue chips Digi (-RM3.58), the FBM KLCI fell to below the 10-day SMA of 1,464
to mark a possible negative twist on its short-term trading sentiment.

♦ Technically, the FBM KLCI must hold above the 10-day SMA to protect the current upbeat short-term sentiment,
as we have expected earlier.

♦ Failure to trigger any technical rebound today will lead to another round of fresh selling activities, hence reaiming
the index to the lower technical gap at 1,453.99 – 1,456.30 and even to the key pivotal point at 1,450 soon.

♦ Moreover, given the weakening trend on the 10-day SMA and the downtick on the short-term momentum
indicators, this could further undermine the overall technical outlook on the FBM KLCI going forward.

♦ Nevertheless, we remain bullish on the medium-term outlook as long as the index can sustain at above the 1,450
strong critical level.

Table 2 : Major Indices & Commodities

Table 1 : Daily Statistics Change Change
Scoreboard 28 Sep 29 Sep 30 Sep 1 Oct 4 Oct Local Key Indices Closing
(Pts) (%)
Gainers 244 430 329 422 501 FBM KLCI 1,462.27 -4.05 -0.3
Losers 493 283 399 327 295 FBM 100 9,609.85 -8.54 -0.1
Unchanged 289 306 280 267 258 FBM ACE 3,979.36 28.28 0.7
Untraded 327 330 346 338 299 Major Overseas
Indices
Market Cap Dow Jones 10,751.27 -78.41 -0.7
Turnover Nasdaq 2,344.52 -26.23 -1.1
(mln shares) 977 905 1,052 974 1,369 S&P 500 1,137.03 -9.21 -0.8
Value FTSE 5,555.97 -36.93 -0.7
(RM mln) 1,351 1,449 1,718 1,469 1,707 Hang Seng 22,618.66 260.49 1.2
Jakarta Composite 3,569.50 22.38 0.6
Currency Nikkei 225 9,381.06 -23.17 -0.2
MYR vs US Seoul Composite 1,879.29 2.56 0.1
Dollar 3.0930 3.0835 3.0835 3.0855 3.0910 Shanghai Composite 2,655.66 Closed Closed
SET 964.22 -14.36 -1.5
Source: RHBInvest & Bloomberg Straits Times 3,157.45 26.55 0.8
Taiwan Weighted 8,246.10 1.92 0.0
India Sensex 20,475.73 30.69 0.2
Major Commodities
NYMEX Crude Oil
(US$/barrel) 81.47 -0.11 -0.1
FCPO – Third Month
(RM/metric ton) 2,666.00 -67.00 -2.5
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:

♦ Bashed down by the unexpected late selloff in the cash market as well as the negative leads from the early
European markets, the local futures index made a late negative reversal on Monday.

♦ Earlier, the FKLI enjoyed an extended recovery to the 1,478.50 high (+5.50 pts), but strong profit-taking pressure
emerged in the late session to turn its direction.

♦ For the day, the FKLI for Oct contract dropped 8.50 pts or 0.58% to 1,464.50. It recorded a negative candle to
deny any positive sign from the previous days’ positive candles.

♦ Despite that, the FKLI still managed to uphold the 10-day SMA of 1,464, suggesting that its positive short-term
outlook remains intact.

♦ However, the current positive short-term outlook could be at risk if the momentum readings fail to show any
improvement today.

♦ Therefore, a quick rebound from the SMA is needed to prolong the recent recovery attempt.

♦ Otherwise, selling momentum will increase and hence prompting another test to the 1,450 technical level soon.

Daily Trading Strategy:

♦ Yesterday’s late setback was a clear disappointment and it implies a possibility of the resumption of selling
activities.

♦ Therefore, traders must be vigilant and prepare to cut loss if the futures index dips to below the 10-day SMA and
1,450 level soon.

♦ Meanwhile, we expect the FKLI to trade from 1,458 to 1,470 today.

Table 3: FKLI Closings

FKLI (Month)
Contracts Open High Low Close Chg (Pts) Settle Volume Open Interest
Oct 10 1473.00 1478.50 1463.00 1464.50 -8.50 1464.50 5686 20352
Nov 10 1474.00 1478.00 1464.00 1464.00 -9.00 1464.00 99 0
Dec 10 1471.50 1478.00 1463.50 1464.00 -9.00 1464.00 64 395
Mar 11 1475.00 1475.00 1465.00 1465.00 -7.00 1465.00 4 153

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:

♦ Wall Street finished broadly lower on Monday, as investors locked in profits ahead of the earnings reporting
season later this week.

♦ Also, investors were jittery on brokers’ downgrades on some stocks, including Alcoa (-2.5%) and Microsoft (-
1.9%). Deutsche Bank lowered its rating on the aluminum maker to “sell” ahead of its earnings announcement on
Thursday, while Goldman Sachs removed its “buy” calls on Microsoft, JC Penney and Macy’s.

♦ Apart from that, news that the US Justice Department has filed an antitrust lawsuit against American Express also
weighed down sentiment. American Express, the biggest dragger on the Dow, fell 6.5%. However, its rivals,
MasterCard and Visa’s share prices narrowed losses after settling their charges with the US goverment.

♦ After the recent strong rally, the US light sweet crude oil futures for Nov delivery ended easier on profit-taking
activities. It eased 11cents or 0.1% to US$81.47/barrel.

Technical Interpretations:

Dow Jones Industrial Average (DJIA)

♦ After failing to clear the 10,850 resistance barrier, sellers returned and pressed the US DJIA down by 78.41 pts or
0.72% to 10,751.27 yesterday.

♦ Technically, with a bearish candle on the chart, plus the downtick on both the short-term momentum indicators,
this could point to further follow-through selling today.

♦ While the risk of retreating further towards the 21-day SMA in the near term has risen, we believe that the SMA
should be able to hold up the recent uptrend.

♦ On the upside, the tough resistance at 10,850 will continue to cap its upside momentum.

Nasdaq Composite (Nasdaq)

♦ The Nasdaq Composite index also lost its recent bullish momentum by pulling back to near the resistance-turn-
support level of 2,330 at one stage, before ending 26.23 pts or 1.11% lower to 2,344.52 on Monday.

♦ And as it recorded a fifth negative candle in the past six trading days, this indicates further weakness ahead.

♦ Ideally, 2,330 must be sustained in order to ensure the recent chart bullish breakout is still intact. Otherwise,
losing 2,330 and the 21-day SMA of 2,307 would reverse our bullish view on the Nasdaq and trigger a steeper
correction in the near term.

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Daily Technical Watch:

Chart 7: Tebrau Daily Chart 8: Tebrau Intraday

Tebrau Teguh (1589)

Medium-term outlook remains firmly positive…

♦ The share price of Tebrau rallied from below the RM0.40 level in Mar 2009 to touch a high of RM1.00 in Jun 2009,
but the stock staged a sharp reversal and plunged into a consolidation mode almost immediately after touching
the high.

♦ It then began a downtrend that drifted slowly and convincingly to below the RM0.70 key support level in Mar
2010. The stock then traded within a range from RM0.60 to RM0.70 before touching a low of RM0.58 in May
2010.

♦ It built a base near RM0.60 and relaunched its recovery leg when its 10-day SMA regained momentum and cut to
above the 40-day SMA in Jul.

♦ When it finally removed the tough resistance level at RM0.70 in Sep, it refreshed the positive uptrend on the 10-
day and 40-day SMAs and highlighted yet another potential sharp rally ahead.

♦ As a result, the stock soared to a higher resistance level at RM0.835 on last Friday. However, as profit-taking
activities set in, the stock registered a negative candle on the chart on Monday.

♦ Added with downticks on the momentum indicators, the stock could ease slightly from the RM0.835 technical
hurdle, towards the 10-day SMA near RM0.76 before it could see a tough support. Further support is at RM0.70.

♦ For the medium term, the stock’s technical outlook remains firmly positive so long as it can sustain at above the
10-day and 40-day SMAs near the RM0.70 level.

♦ But as a positive note, breaching of RM0.835 immediate technical level will turn the stock higher towards the
RM1.00 level in the near term.

Technical Readings:

♦ 10-day SMA: RM0.7635

♦ 40-day SMA: RM0.7109

♦ Support: IS = RM0.70 S1 = RM0.60 S2 = RM0.51

♦ Resistance: IR = RM0.835 R1 = RM1.00 R2 = RM1.10

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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
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“Connected Persons” means any holding company of RHBRI, the subsidiaries and subsidiary undertaking of such a holding company and the respective directors,
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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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