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 19 October 2010
Market Technical Reading
Must Reclaim The 10-day SMA Soon To Stay Bullish!

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

Local Market Leads:

♦ Taking cues from the poor regional sentiment, the local bourse extended its losing streak for a third day on
continuous profit-taking activities on Monday.

♦ Taiwan Weighted (-1.76%) and KOSPI (-1.41%) led the selldown, as investors began to lock in profit after the US
dollar staged a rebound following the comments by the US Federal Reserve chairman Ben Bernanke on Friday.

♦ Bernanke said the Fed has "a case for further action" to boost the economy, cited high unemployment and low
inflation. This increases doubt on how far the Fed would act in the next Quantitative Easing stimulus package,
possibly to be announced after the Fed’s policymakers meet in early Nov.

♦ Upon closing, the FBM KLCI lost another 9.16 pts or 0.61% to 1,480.70, dogged by selloff in big caps, MISC (-
14sen), Plus (-12sen) and Tenaga (-11sen).

♦ But selected lower liners, KBunai (+5sen), TimeCom (+1.5sen) and Malton (+2.5sen) rose on speculative buying
interests. Overall daily volume rose to 1.33bn shares, but sellers were in control with 468 counters down against
299 counters up.

Technical Interpretations:

♦ As selling momentum accelerated, the FBM KLCI continued to head lower with a third bearish candle in a row to
suggest a continuous selling momentum in the short run.

♦ In fact, the breakdown from the key short-term support of the 10-day SMA at 1,485 also increased the odds of
more downside pressure ahead.

♦ This means without any immediate recovery to above the 10-day SMA today, a further retreat to a technical gap
near 1,472.32 - 1,476.05 can be expected soon.

♦ But as long as the medium-term support level of 1,450 and the 40-day SMA near 1,453 remain firm, the uptrend
on the FBM KLCI will stay intact, in our view.
Please read important disclosures at the end of this report.

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Daily Trading Strategy:

♦ With more investors taking profit following the uninspired 2011 Budget announcement on Friday, coupled with the
weakness in the regional markets, the FBM KLCI eased lower on follow-through profit-taking momentum on
Monday.

♦ From the technical perspective the closing to below the important 10-day SMA of 1,485 and the poorer momentum
readings, are suggesting more downside risk for the FBM KLCI in the near term.

♦ And if there is no immediate rebound to above the 10-day SMA today, the index could retrace towards the recent
technical gap at 1,472.32 - 1,476.05, and even towards the key pivotal point of 1,450 next.

♦ However, as reiterated earlier, the medium- to long-term technical outlook will remain positive if the index
manages to sustain at above the 1,450 level and the 40-day SMA near 1,453.

♦ Therefore, in order for it to stay positive, the index must quickly reclaim the 10-day SMA, and to push over the
1,500 psychological level in the next few sessions to end the current profit-taking leg.

Table 2 : Major Indices & Commodities

Table 1 : Daily Statistics Change Change
Scoreboard 12 Oct 13 Oct 14 Oct 15 Oct 18 Oct Local Key Indices Closing
(Pts) (%)
Gainers 327 576 348 324 299 FBM KLCI 1,480.70 -9.16 -0.6
Losers 420 236 455 405 468 FBM 100 9,758.85 -56.82 -0.6
Unchanged 306 356 302 341 298 FBM ACE 4,166.33 -156.44 -3.6
Untraded 308 296 260 296 306 Major Overseas
Indices
Market Cap Dow Jones 11,143.69 80.91 0.7
Turnover Nasdaq 2,480.66 11.89 0.5
(mln shares) 1,169 1,200 1,274 1,021 1,331 S&P 500 1,184.71 8.52 0.7
Value FTSE 5,742.52 39.15 0.7
(RM mln) 1,901 2,027 2,042 1,647 1,610 Hang Seng 23,469.38 -288.25 -1.2
Jakarta Composite 3,566.92 -30.11 -0.8
Currency Nikkei 225 9,498.49 -1.76 0.0
MYR vs US Seoul Composite 1,875.42 -26.87 -1.4
Dollar 3.1080 3.0925 3.0820 3.0800 3.1005 Shanghai Composite 2,955.23 -15.93 -0.5
SET 984.03 -13.12 -1.3
Source: RHBInvest & Bloomberg Straits Times 3,181.27 -23.00 -0.7
Taiwan Weighted 8,060.54 -144.76 -1.8
India Sensex 20,168.89 43.84 0.2
Major Commodities
NYMEX Crude Oil
(US$/barrel) 82.84 1.59 2.0
FCPO – Third Month
(RM/metric ton) 2,889.00 -41.00 -1.4
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:

♦ Local futures market continued to experience profit-taking pressure for a second day yesterday in response to the
weak regional markets’ performance and further retreat in the cash market.

♦ But after sliding as much as 13.50 pts to the day low of 1,471.50, the FKLI for Oct contract recouped part of its
lost ground on mild bargain-hunting support in late trading.

♦ For the day, the FKLI was down 9.00 pts or 0.61% to 1,476.00.

♦ On the chart, the breakdown to below the 10-day SMA of 1,484 with a third negative candle indicates a negative
bias short-term scenario ahead.

♦ On top of that, with both short-term momentum indicators pointing downward still, it is likely that the FKLI will
extend the current weakness towards the 40-day SMA of 1,453 and the key technical support level at 1,450 soon.

♦ But as we highlighted earlier, as long as it has the ability to uphold above 1,450 and the 40-day SMA, we will not
change our positive bias view on the FKLI.

♦ In fact, we expect bargain hunters to return near these supports soon, to relaunch another round of rally towards
the recent high of 1,501.

Daily Trading Strategy:

♦ The closing at below the 10-day SMA of 1,484 strongly suggests for more follow-through selling activities in the
immediate term.

♦ Having said that, traders should stay positive on the medium-term view, and hold support at 1,450 for a return of
bargain hunters soon.

♦ The trading range for the FKLI should be around 1,464 to 1,490 today.

Table 3: FKLI Closings

FKLI (Month)
Contracts Open High Low Close Chg (Pts) Settle Volume Open Interest
Oct 10 1481.00 1481.50 1471.50 1476.00 -9.00 1476.00 6565 22384
Nov 10 1482.00 1482.00 1473.00 1477.00 -11.00 1477.00 402 463
Dec 10 1482.00 1482.00 1475.00 1477.00 -8.50 1477.00 78 367
Mar 11 1476.00 1476.00 1476.00 1476.00 -10.00 1476.00 1 129

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:

♦ US stocks moved higher on Monday, on continuous buying momentum on the upbeat earnings from Citigroup.

♦ The gains lifted the benchmark Dow led by banking stocks Citigroup and JPMorgan. Financial stocks were bashed
late last week on worries on investigation over bank’s foreclosure practice.

♦ Investors also turned optimistic on the upcoming announcement of the 3Q results by major corporates and the
Dow’s seven out of the 30 components this week.

♦ Apple reported its fiscal 4Q earnings after the closing bell, beating Wall Street estimates. The company said it
earned US$4.64 per share on $20.3 billion in revenue.

♦ As the greenback bounced slightly, the US light sweet crude oil futures for Nov delivery added US$1.59 to settle
at US$82.84 a barrel, after slipping below US$81 a barrel earlier.

Technical Interpretations:

Dow Jones Industrial Average (DJIA)

♦ Instead of further downside, the DJIA added 80.91 pts or 0.73% to 11,143.69 on Monday, reversing its negative
candle on Friday with a strong positive one.

♦ It was aided with a positive cross on the the stochastic oscillators after the recent dip from the “overbought”
region, this made the rebound possible after the neutralisation of overbought momentum of late.

♦ Alongside with the uptrend on the 21-day SMA near 10,900 and a level at 10,850, the index is poised to climb
higher to test the 11,250 resistance level soon.

♦ Beyond 11,250, it will head towards the 11,750 level next.

Nasdaq Composite (Nasdaq)

♦ Denying the previous “hangman” candle that has suggested for a possible retreat, the Nasdaq Composite index
turned higher with a positive candle on Monday, gaining 11.89 pts or 0.48% to 2,480.66.

♦ The positive closing indicates a fresh breakout from the 2,470 chart resistance barrier and instantly switching the
momentum to an upbeat mode.

♦ If it manages to sustain at above 2,470, it will likely push towards the Apr’s high of 2,535.28, and the 2,630
resistance level on follow-through buying support, in our view.

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Daily Technical Watch:

Chart 7: AnnJoo Daily Chart 8: AnnJoo Intraday

Ann Joo Resources (6556)

Forming a support near the SMAs prior to any technical recovery…

♦ After touching a high of RM3.35 in Jan 2010, the share price of AnnJoo halted its previous uptrend that started off
since Mar 2009 at a low of RM1.02.

♦ Since then, the trading turned volatile and its share price slipped to a low of RM2.23 by Jun 2010.

♦ The stock tried to stabilise near RM2.40, but not until in Jul, when it secured a positive trigger from the crossover
of the 10-day SMA to above the 40-day SMA near RM2.40.

♦ Thereafter, the stock moved steadily along the uptrend and surpassed the resistance level at RM2.70 in Sep,
before piercing through a tougher resistance level of RM2.98 successfully yesterday.

♦ Chart wise, with a series of five positive candles, and a significant breakout from RM2.98, the stock is looking
good to retest the Jan high of RM3.35 level soon, in our view.

♦ As both the short-term momentum readings have turned more upbeat, the stock may attract follow-through
buying support if it manages to sustain at above the RM2.98 level in the immediate term.

♦ Going forward. a stronger resistance level is seen at RM3.38, followed by the RM3.66 level, while its immediate
support is at RM2.98 and the SMAs near RM2.89 and RM2.73 respectively.

♦ For a longer-term view, the steady uptrend will stay intact as long as it can sustain at above the RM2.70 level.

Technical Readings:

♦ 10-day SMA: RM2.89

♦ 40-day SMA: RM2.734

♦ Support: IS = RM2.98 S1 = RM2.70 S2 = RM2.40

♦ Resistance: IR = RM3.38 R1 = RM3.66 R2 = RM3.98

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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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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
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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
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
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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.

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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