PP 7767/09/2011(028730)

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 15 October 2010
Market Technical Reading
Extension Of Buying Momentum Upon Removal Of 1,500...

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

Local Market Leads:

♦ The FBM KLCI reversed from the early run-up to above the psychological level of 1,500 on heavy profit-taking
pressure, partly due to refreshed cautiousness ahead of the 2011 Budget announcement on Friday.

♦ Earlier, investors continued to drive the market higher, thanks to the overnight gains in the US markets amid
favourable earnings from US key corporates.

♦ But just after the FBM KLCI advanced to a high of 1,503.82, profit-taking activities began to step in, amid the
afternoon reversal in some regional markets from their early gains.

♦ At the close, the local benchmark eased by 0.59 pt or 0.04% to 1,496.38, dogged by strong selldown on
heavyweights Genting (-26sen) and CIMB (-7sen).

♦ Daily turnover continued to increase to 1.27bn shares, from the 1.20bn shares a day ago. The market breadth has,
however, turned negative, as losers outpaced gainers by 455 to 348.

Technical Interpretations:

♦ As profit-taking activities set in, the FBM KLCI pulled back from the fresh multi-year high of 1,503.82 to close with
a negative candle.

♦ Despite its ability to bounce back from a day low of 1,490.57 (-6.40 pts), the negative candle implies further
weakness likely for today.

♦ Furthermore, with the weakening trend on the short-term momentum indicators, the upward momentum is
expected to turn even slower today.

♦ Having said that, we are of the view that the current uptrend will likely stay intact as long as the index can sustain
at above the 10-day SMA of 1,481 and the medium-term breakout point of 1,450.

♦ Optimistically, it will likely resume its rally to the all-time high of 1,524.69 once the profit taking is done.

Please read important disclosures at the end of this report.

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Daily Trading Strategy:

♦ As investors turned cautious ahead of the 2011 Budget announcement due today, amid uncertainties in the
regional markets’ direction, investors locked in their profits when the FBM KLCI surpassed above the 1,500
psychological threshold at one stage yesterday.

♦ Chart wise, further weakness could be expected, judging from its failure to sustain at above 1,500 yesterday, and
the record of the weaker technical readings on the chart.

♦ Added that the weekend is just around the corner, nervous investors might opt for lesser exposure ahead of the
Budget 2011 announcement today. At the same time, the aggressive ones may continue to trade on the
speculative issues. This points to a volatile trading today.

♦ Nevertheless, we expect the downside to be limited, with the solid support seen near the supportive 10-day SMA
of 1,481 and the critical breakout point at 1,450.

♦ In fact, we do not rule out the possibility of an extension of buying momentum, if the index manages to reclaim
1,500 in the early trading today. The next target resistance is at 1,524.69.

Table 2 : Major Indices & Commodities

Table 1 : Daily Statistics Change Change
Scoreboard 8 Oct 11 Oct 12 Oct 13 Oct 14 Oct Local Key Indices Closing
(Pts) (%)
Gainers 397 479 327 576 348 FBM KLCI 1,496.38 -0.59 0.0
Losers 332 287 420 236 455 FBM 100 9,846.73 4.94 0.1
Unchanged 301 293 306 356 302 FBM ACE 4,180.77 25.16 0.6
Untraded 324 296 308 296 260 Major Overseas
Indices
Market Cap Dow Jones 11,094.57 -1.51 0.0
Turnover Nasdaq 2,435.38 -5.85 -0.2
(mln shares) 1,075 1,094 1,169 1,200 1,274 S&P 500 1,173.81 -4.29 -0.4
Value FTSE 5,727.21 -20.14 -0.4
(RM mln) 1,657 1,715 1,901 2,027 2,042 Hang Seng 23,852.17 394.48 1.7
Jakarta Composite 3,618.48 6.50 0.2
Currency Nikkei 225 9,583.51 180.00 1.9
MYR vs US Seoul Composite 1,899.76 23.61 1.3
Dollar 3.1125 3.0995 3.1080 3.0925 3.0820 Shanghai Composite 2,879.64 18.28 0.6
SET 993.72 1.12 0.1
Source: RHBInvest & Bloomberg Straits Times 3,195.02 -7.14 -0.2
Taiwan Weighted 8,215.45 108.79 1.3
India Sensex 20,497.64 -190.24 -0.9
Major Commodities
NYMEX Crude Oil
(US$/barrel) 82.69 -0.32 -0.4
FCPO – Third Month
(RM/metric ton) 2,916.00 -14.00 -0.5
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:

♦ The local futures index ended unchanged after a volatile session on Thursday, as traders liquidated their “long”
position once the FKLI broke above the 1,500 psychological barrier for the first time in 33 months.

♦ From a high of 1,501.0, the FKLI succumbed to a constant profit-taking pressure and drifted lower to 1,488.0,
before closing unchanged at 1,492.0 for the day, thanks to the slight bargain-hunting support in the late session.

♦ But, the FKLI still ended the day with a negative candle and weaker short-term momentum readings. This
indicates a possible follow-through profit-taking dip today.

♦ In other words, if there is no immediate rebound to above 1,500 in the near term, the FKLI will be set for a short-
term retreat.

♦ Having said so, we are still looking forward for the 10-day SMA of 1,481 to cap its near-term downside.

♦ Should it build a base near the 10-day SMA, buying may still resume promptly, in our view.

♦ Higher up, its immediate resistance is at the technical gap end at 1,502.5. Upon closure of the gap, the FKLI will
likely gear up for a challenge of the all-time high level of 1,536.

Daily Trading Strategy:

♦ With a negative candle and the weaker momentum readings, the FKLI could see more retreat today.

♦ But as long as the 10-day SMA of 1,481 can hold, traders should stay positive and be ready to relaunch their
“long” call.

♦ All in, we remain bullish on the current uptrend.

♦ The FKLI is projected to move from 1,485 to 1,505 today.

Table 3: FKLI Closings

FKLI (Month)
Contracts Open High Low Close Chg (Pts) Settle Volume Open Interest
Oct 10 1497.50 1501.00 1488.00 1492.00 Unch 1492.00 4972 23237
Nov 10 1497.50 1501.00 1491.00 1492.50 0.50 1492.00 221 189
Dec 10 1497.00 1500.00 1490.00 1491.00 -1.50 1492.50 87 375
Mar 11 1494.50 1495.00 1494.50 1495.00 2.50 1492.50 3 129

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:

♦ Weighed down by the selldown in financial stocks amid concerns over banks’ foreclosure practice, Wall Street
ended lower on profit-taking activities.

♦ Investors sold financial stocks as all 50 US states are investigating the mortgage industry, as the authority
suspected that banks used false documents and signatures to justify hundreds and thousands of foreclosures.

♦ Dow components, Bank of America (-5.2%) and JPMorgan & Chase (-2.8%) led the downside, after both banks
temporarily halted home foreclosure to review their foreclosure practice. But after falling over 70-pts at one time,
the Dow slowly pared down its losses on late bargain-hunting supports.

♦ On the NYMEX, the US light sweet crude oil futures for Nov delivery eased 32cents or 0.4% to US$82.69/barrel.

♦ After the close, Google and AMD rallied more than 9% and 7% respectively on stronger-than-expected earnings.

Technical Interpretations:

Dow Jones Industrial Average (DJIA)

♦ Thanks to the late bargain-hunting activities, the DJIA trimmed down its decline by easing only 1.51 pts or 0.01%
to 11,094.57 on yesterday.

♦ But as it ended with a “doji” candle, plus easing short-term momentum readings, this still paints uncertainties in
the immediate direction.

♦ Having said that, as long as the 11,000 level can hold, the near-term upswing leg towards the next resistance
target at 11,250 and the Apr’s high of 11,258.01 will likely stay intact, in our view.

♦ Besides, the lower supports at 11,000 and the breakout point at 10,850 near the 21-day SMA are likely to protect
the current uptrend.

Nasdaq Composite (Nasdaq)

♦ After enjoying a decent rally, the Nasdaq Composite index succumbed to mild profit-taking pressure yesterday. It
slipped 5.85 pts or 0.24% to 2,435.38 for the day.

♦ With a “negative harami” candle on the chart, it points to a slowdown in the recent bullish momentum.

♦ This means it could ease to cover the recent technical gap at 2,421.79 and even the 21-day SMA of 2,371 soon.
But we stay bullish as it remains at above 2,330, and foresee a target at 2,470 and the Apr’s high of 2,535.28.

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Daily Technical Watch:

Chart 7: TimeCom Daily Chart 8: TimeCom Intraday

Time dotCom (5031)

A successful breakout of RM0.705 will trigger further rally in the near term…

♦ After a downtrend in Apr and May, the share price of TimeCom found a support near the RM0.41 level.

♦ It regenerated its upward momentum and turned positive when the 10-day SMA cut above the 40-day SMA near
RM0.42 in Jun.

♦ When it finally rallied across the RM0.47 level in Jul, it triggered a sharp rally with a strong follow-through buying
momentum and surpassed the resistances at RM0.54 and RM0.60.

♦ However, after touching an intraday high of RM0.725, the stock fell instantly to below the RM0.705 tough
resistance level and kick-started a steep correction. It fell back into the RM0.47 – RM0.54 range.

♦ On a technical rebound triggered in early Sep, the stock surpassed the RM0.60 level and it has been forming a
base at above the key RM0.60 support for the past few weeks.

♦ Yesterday, the stock registered a huge bullish candle to close positively at RM0.68, with fresh positive crossover
on the momentum indicators.

♦ Technically, the stock has broken out of the RM0.65 congestion level and is undergoing a fresh bullish upswing.

♦ Given the positive uptick on the 10-day SMA from the 40-day SMA recently, the stock could trigger another
breakout signal if it crosses the key resistance level at RM0.705 on follow-through buying support soon.

♦ Upon a successful breakout, it will likely head towards the RM0.80 and RM0.94 region in the near term.

♦ Its medium-term support is seen at RM0.60.

Technical Readings:

♦ 10-day SMA: RM0.645

♦ 40-day SMA: RM0.6101

♦ Support: IS = RM0.60 S1 = RM0.54 S2 = RM0.47

♦ Resistance: IR = RM0.705 R1 = RM0.80 R2 = RM0.94

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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
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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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