PP 7767/09/2010(025354



Technical Research
Da ily T rad ing S trat egy

RHB Research Institute Sdn Bhd A member of the RHB Banking Group
Company No: 233327 -M


10 March 2010

Market Technical Reading
Outlook Remains Positive If It Sustains At Above 1,300…
Chart 2: KLCI Intraday

Chart 1: KLCI Daily

Local Market Leads:

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Led by profit-taking activities on key blue chips, the FBM KLCI took a breather, closing lower on Tuesday after the recent bullish chart breakout. Also, given the lacklustre sentiment in the regional markets, amid lack of trading catalysts, investors decided to lock in profit on the rallied big-cap stocks like Maybank (-11sen) and Genting (-15sen). For the day, the FBM KLCI settled down at 1,317.94, losing 6.28 pts or 0.47%. Savvy investors turned sideline again yesterday, forcing the turnover to dwindle back to 798m shares, versus Monday’s 1.16bn shares. Disappointedly, losers topped gainers again by 455 to 253. Other Asian counterparts closed nearly flat. Hang Seng inched up 0.05%, while Nikkei 225 eased 0.17%.

Technical Interpretations:

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As sellers resumed control, the FBM KLCI encountered sustained profit-taking pressure throughout the day. As a result, the index registered a “negative harami” candle, implying a reduction in the recent bullish momentum. Coupled with mixed short-term momentum indicators, the benchmark could extend yesterday’s fall today. However, based on the recent bullish technical breakout from the 1,300 psychological level, we remain bullish on the short- to medium-term outlook on the FBM KLCI. As such, we only expect a shallow retracement ahead, before seeing the return of bargain-hunting activities. Immediate upside target upon the resumption of bullish buying momentum could lead the index towards the upper technical gap near 1,354.79. On the downside, we expect the 1,300 psychological level to buffer any immediate profit-taking pressure.
Please read important disclosures at the end of this report.

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10 March 2010 Daily Trading Strategy:

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Instead of heading higher towards the upper technical gap near 1,354.79, the FBM KLCI took a breather on strong profit-taking pressure yesterday. Though the selling is expected to persist today based on the short-term weakness on the technical picture, the index could just go lower to cover a technical gap at the 1,300.74 - 1,312.18 region. In other words, the 1,300 psychological level should cap further downside. We keep our bullish short- to medium-term technical outlook on the FBM KLCI, so long as it sustains at above 1,300. While the underlying market sentiment is expected to cool down slightly and the trading volume dwindles again in the next few sessions, we foresee the bargain-buying support to return as soon as the index can form a solid base near 1,300.

Table 1 : Daily Statistics Scoreboard 3 Mar Gainers 294 Losers 402 Unchanged 270 Untraded 370 Market Cap Turnover (mln shares) Value (RM mln) Currency MYR vs US Dollar

4 Mar 281 385 282 388

5 Mar 547 194 236 359

8 Mar 583 194 256 304

9 Mar 253 455 258 375

864 1,511

727 1,268

942 1,564

1,161 2,259

798 1,453






Source: RHBInvest & Bloomberg

Table 2 : Major Indices & Commodities Change Change Local Key Indices Closing (Pts) (%) FBM KLCI 1,317.94 -6.28 -0.5 FBM 100 8,619.92 -39.45 -0.5 FBM ACE 4,277.31 -33.91 -0.8 Major Overseas Indices Dow Jones 10,564.38 11.86 0.1 Nasdaq 2,340.68 8.47 0.4 S&P 500 1,140.45 1.95 0.2 FTSE 5,602.30 -4.42 -0.1 Hang Seng 21,207.55 10.68 0.1 Jakarta Composite 2,657.17 30.72 1.2 Nikkei 225 10,567.65 -18.27 -0.2 Seoul Composite 1,660.83 0.79 0.0 Shanghai Composite 3,069.14 15.91 0.5 SET 718.77 -1.52 -0.2 FT Straits Times 2,839.54 4.97 0.2 Taiwan Weighted 7,770.59 8.32 0.1 India Sensex 17,052.54 -50.06 -0.3 Major Commodities NYMEX Crude Oil (US$/barrel) 81.49 -0.38 -0.5 MDEX CPO – Third Month (RM/metric ton) 2,650.00 -59.00 -2.2 US Interest Rate Current Last Updated Overnight Fed Fund 26-27 Jan 0-0.25% Unch Rate 2010 Next FOMC meeting 16 Mar 2010

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10 March 2010

Chart 3: FKLI Daily

Chart 4: FKLI Intraday

Technical Interpretations:

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In the absence of clear trading leads from the overseas markets, the local futures market ended lower on Tuesday following the recent strong run-up. The FKLI experienced a sharp pullback as much as 7.5 pts to 1,316.00 low, but staged a rebound in late session. This helped to narrow the early losses, and lifted the FKLI for March contract off low with 2.50 pts or 0.19% loss to 1,321.00. But with a negative candle on the chart, the possibility of a near-term pullback remains. Compounded with the mixed short-term momentum readings, the futures index could ease towards a lower gap near 1,305 - 1,311 soon. Nevertheless, we are convinced that the recent bullish technical breakout from the 1,300 psychological hurdle could protect the current trading sentiment. In fact, we foresee a return of buying momentum once the FKLI covers the lower technical gap near the 1,300 pcyshological support. Upside target near the upper technical gap of 1,348 remains to be challenged soon.

Daily Trading Strategy:

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We remain bullish on the FKLI’s overall technical outlook, though we do not discount the possibility of a shallow retracement towards a lower gap near 1,305 - 1,311 and 1,300. Traders can prepare to reposition their “long” calls, when the futures index reaches the 1,300 support again. For today, its trading band is expected to be around 1,311 to 1,326.

Table 3: FKLI Closings FKLI (Month) Contracts Open Mar 10 1324.50 Apr 10 1321.00 Jun 10 1317.00 Sep 10 1313.00 Source: Bursa Malaysia

High 1325.00 1321.00 1317.00 1313.00

Low 1316.00 1313.00 1310.00 1310.00

Close 1321.00 1318.50 1315.50 1312.00

Chg (Pts) -2.50 -3.00 -2.50 -5.50

Settle 1321.00 1318.50 1316.00 1315.00

Volume 5146 369 70 32

Open Interest 17214 581 597 183

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10 March 2010

Chart 5: US Dow Jones Industrial Average (DJIA) Daily

Chart 6: US Nasdaq Composite Daily

US Market Leads:

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Wall Street ended slightly higher on the anniversary of the 2009 bear-market bottom on Tuesday, driven by gains in telecommunication and financial stocks. Telecommunication stocks, including AT&T (+1.1%) and Verizon Communications (+0.9%) climbed higher after Cisco Systems unveiled a higher capacity router. Also, financial stocks led by American International Group Inc (AIG) and Citigroup were in the market spotlight. AIG’s share leapt 12.6% on speculation that the company will sell more assets, while the latter jumped 7.3% on talks that the US government is discussing to sell its 27% stake in the bank. Weighed down by a stronger US dollar, the US light sweet crude oil for Apr delivery fell off from the recent 8week high. It eased US$0.38 or 0.5% to settle at US$81.49/barrel, but off its day low of US$80.16.

Technical Interpretations: Dow Jones Industrial Average (DJIA)

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Due to the late profit-taking activities, the US DJIA pared down its early gains from the 10,612.60 high to end at 10,564.38 with a 11.86 pts or 0.11% gain. As it registered a “shooting star” candle, coupled with the mixed short-term momentum indicators, the risk of staging a pullback is increasing. In our view, unless it can create a fresh year high by breaking beyond 10,612.60, it is likely to turn lower in coming days. Still, we see a strong support near the 21-day SMA of 10,316. The next upper challenge remains at the Jan high of 10,729.89, followed by the 10,850 level.

Nasdaq Composite (Nasdaq)

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The Nasdaq Composite Index extended its gains for a fourth winning streak, gaining 8.47 pts or 0.36% to 2,340.68. With its fourth positive candle on the chart, this has confirmed a bullish technical breakout from the heavy 2,330 barrier. This in turn, could prepare the index for another extended rally towards the next resistance target of 2,470 in the near term. Its immediate support is near a technical gap at 2,293.16.

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Daily Technical Watch:
Chart 7: Faber Daily Chart 8: Faber Intraday

Faber Group (1368) Poised to head higher towards RM2.10 and RM2.29 soon…

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In early Nov 2009, the share price of Faber kicked off a surprise rally with a strong breakout from the tough RM1.25 resistance hurdle and moved above the RM1.40 level. Backed by continuous follow-through buying momentum, the stock charged ahead in Dec 2009, and pierced through the Rm1.65 tough hurdle in Jan 2010. But, after topping a high at RM1.81 in the same month, the stock registered a “shooting star” candle and settled for a consolidation phase. The stock built a base near RM1.54 – RM1.65 region, near the support of the 10-day and 40-day SMAs, and blasted across the key RM1.65 resistance level in early Mar. As the buying momentum charged higher, the stock has successfully penetrated its two-and-a-half years high of RM1.86 and a technical resistance of RM1.85 recently, marking another important technical breakthrough. Ended with a huge “bullish engulfing” candle at above the RM1.85 barrier yesterday, the chart is pointing to a possible acceleration of the bullish momentum soon. In our view, it is poised to trend higher towards the next technical stop at RM2.10, before rechallenging the RM2.29 resistance level, where it had lost since Jul 1997.

Technical Readings:

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10-day SMA: 40-day SMA: Support: Resistance:

RM1.803 RM1.672 IS = RM1.85 IR = RM2.10 S1 = RM1.65 R1 = RM2.29 S2 = RM1.54

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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 upon various factors, including quality of research, investor client feedback, stock picking, competitive factors and firm revenues. 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. 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