You are on page 1of 6

PP 7767/09/2010(025354)

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

Da ily T rad ing S trat egy

17 March 2010

Market Technical Reading

A Potential Technical Rebound Ahead!

Chart 1: KLCI Daily Chart 2: KLCI Intraday

Local Market Leads:

♦ The local market gave up its early rebound by extending its recent losing streak for a fourth consecutive day on

♦ Earlier, the market experienced a brief rebound to above the 1,300 psychological level, as the FBM KLCI rose to a
high of 1,304.43 on fresh bargain-hunting supports.

♦ The recovery, however, hit a snag following the resumption of selling activities on key blue chips, like Maxis
(-6sen) and CIMB (-12sen) in the afternoon.

♦ Also, investors turned cautious ahead of the US FOMC meeting outcome on Tuesday.

♦ Upon closing, the FBM KLCI managed to narrow its losses by easing 0.81 pt or 0.06% to 1,298.86, thanks to the
last-minute buying in key blue chip, Sime (+7sen).

♦ Turnover reduced further to 679m shares from Monday’s 765m shares. Market breadth remained under stress
with decliners outpacing advancers by 361 to 290.

Technical Interpretations:

♦ After hitting 1,304.43 high, the rebound momentum ran out of steam in the afternoon with the FBM KLCI dipping
back into the negative territory.

♦ Despite another closing at below the 1,300 psychological level, the benchmark recorded a potential “morning
star” candle to suggest a possible positive trend reversal ahead.

♦ Therefore, a retest of the 1,300 level and the 10-day SMA of 1,307 could be in the pipeline.

♦ Breaking beyond these two key supports will confirm a technical rebound is underway.

♦ Its downside supports are still pegged near the lower technical gap of 1,287.78 and the 40-day SMA of 1,281.

Please read important disclosures at the end of this report.

A comprehensive range of market research reports by award-winning economists and analysts are exclusively Page 1 of 6
available for download from
17 March 2010

Daily Trading Strategy:

♦ The formation of a “morning star” candle suggests a potential technical rebound ahead, even as it failed to
sustain its early rebound momentum at above the crucial psychological support level of 1,300 yesterday.

♦ More importantly, the FBM KLCI started to show some stabilisation signs nearer the 1,300 support region after
correcting more than 35-pts in the past four trading days.

♦ In fact, the recent overbought situation has largely been corrected with the daily stochastic oscillators and 14-day
RSI falling into the “very oversold” and “neutral” region respectively, from the recent “very overbought” and
“overbought” region.

♦ All these encouraging technical signs as well as the overnight US gains should pave way for a technical rebound

♦ Once bargain-hunting supports pick up, it will attempt to reclaim the 1,300 level and the 10-day SMA of 1,307 in
bids to resume the recent bullish breakout momentum towards the recent high of 1,334.34.

Table 2 : Major Indices & Commodities

Table 1 : Daily Statistics Change Change
Scoreboard 10 Mar 11 Mar 12 Mar 15 Mar 16 Mar Local Key Indices Closing
(Pts) (%)
Gainers 451 274 247 211 290 FBM KLCI 1,298.86 -0.81 -0.1
Losers 292 440 436 461 361 FBM 100 8,492.33 -6.39 -0.1
Unchanged 270 276 272 240 293 FBM ACE 4,189.68 -15.91 -0.4
Untraded 330 354 389 432 401 Major Overseas
Market Cap Dow Jones 10,685.98 43.83 0.4
Turnover Nasdaq 2,378.01 15.80 0.7
(mln shares) 934 792 716 765 679 S&P 500 1,159.46 8.95 0.8
Value (RM FTSE 5,620.43 26.58 0.5
mln) 1,619 1,347 1,336 1,098 1,060 Hang Seng 21,022.93 -56.17 -0.3
Jakarta Composite 2,669.61 Closed Closed
Currency Nikkei 225 10,721.71 -30.27 -0.3
MYR vs US Seoul Composite 1,648.01 -1.49 -0.1
Dollar 3.3180 3.3170 3.3055 3.3165 3.3185 Shanghai Composite 2,992.84 15.90 0.5
SET 752.2 17.37 2.4
Source: RHBInvest & Bloomberg FT Straits Times 2,896.43 22.10 0.8
Taiwan Weighted 7,695.63 60.71 0.8
India Sensex 17,383.18 218.19 1.3
Major Commodities
NYMEX Crude Oil
(US$/barrel) 81.70 1.90 2.4
MDEX CPO – Third
Month (RM/metric ton) 2,569.00 -21.00 -0.8
US Interest Rate Current Last Updated
Overnight Fed Fund 16 Mar
0-0.25% Unch
Rate 2010
Next FOMC meeting 27-28 Apr 2010

A comprehensive range of market research reports by award-winning economists and analysts are exclusively Page 2 of 6
available for download from
17 March 2010

Chart 3: FKLI Daily Chart 4: FKLI Intraday

Technical Interpretations:

♦ Buoyed by a turnaround in the Asian and European markets as well as the emergence of fresh bargain-hunting
supports, the FKLI snapped the recent pullback by ending higher on Tuesday.

♦ From a low of 1,302, the futures index worked its way up to 1,311.50 high before paring down its gain to end at

♦ Still, the FKLI for Mar contract was up 2.50 pts or 0.19% for the day.

♦ Ended with a “negative harami” candle, this implies a slowdown in the recent bearish momentum.

♦ This means if it can gather more bargain-hunting supports from here, it will stand a good chance of extending its
rebound momentum in the near term.

♦ In other words, 1,300 will become its launching pad for a new rebound leg.

♦ But first, it must overcome the immediate resistance at the 10-day SMA near 1,309 in order to stage a
meaningful technical rebound.

♦ Thereafter, it will lead to the next upside target at the recent high of 1,337.

♦ On the downside, its lower supports are pegged near a technical gap at 1,288 and the 40-day SMA of 1,280.

Daily Trading Strategy:

♦ We expect a further rebound today, as bargain-hunting activities are likely to pick up in the near term.

♦ A further removal of the 10-day SMA near 1,309 will renew hopes for a short-term rebound towards the recent
high of 1,337.

♦ The FKLI is expected to swing from 1,303 to 1,316 today.

Table 3: FKLI Closings

FKLI (Month)
Contracts Open High Low Close Chg (Pts) Settle Volume Open Interest
Mar 10 1308.00 1311.50 1302.00 1305.50 2.50 1305.50 6392 19698
Apr 10 1306.50 1311.00 1301.00 1306.00 4.00 1306.00 467 827
Jun 10 1307.00 1310.00 1301.00 1306.00 3.50 1306.00 88 567
Sep 10 1304.00 1308.50 1302.00 1302.50 1.00 1305.00 16 176

Source: Bursa Malaysia

A comprehensive range of market research reports by award-winning economists and analysts are exclusively Page 3 of 6
available for download from
17 March 2010

Chart 5: US Dow Jones Industrial Average (DJIA) Daily Chart 6: US Nasdaq Composite Daily

US Market Leads:

♦ Wall Street continued to head higher on Tuesday, as investors cheered the US Federal Reserve’s decision to keep
its key interest rate near zero for an extended period.

♦ The Fed in the FOMC statement said low interest rates are still needed for an extended period, while the US
economy is improving.

♦ Sentiment improved further after Standard & Poor's ended its review for a downgrade of Greece’s debt rating,
due to the Greece government’s recent deficit-reduction measures.

♦ Financial stocks rallied the most on the Fed’s interest rate decision, while Intel (+4.0%) led a rally in the
technology sector on speculation that the company will announce a positive guidance for the current quarter.

♦ Meanwhile, the US light sweet crude oil for Apr delivery regained the US$80 psychological level by rallying
US$1.90 or 2.4% to US$81.70/barrel.

Technical Interpretations:

Dow Jones Industrial Average (DJIA)

♦ The US DJIA extended its recent winning streak by rising another 43.83 pts or 0.41% to 10,685.98 on Tuesday.

♦ And by accumulating another positive candle, the index is poised to extend its recent rally.

♦ However, with the short-term momentum readings turning mixed, it could face tough resistance near the Jan
high of 10,729.89.

♦ The next higher resistance hurdle is seen at the heavy 10,850 hurdle, while its immediate support stays near the
21-day SMA of 10,454.

Nasdaq Composite (Nasdaq)

♦ After taking a breather recently, the Nasdaq Composite Index resumed its upward momentum by climbing 15.80
pts or 0.67% to 2,378.01 yesterday.

♦ By chalking up a fresh year high with a positive candle on the chart, we expect the current rally to accelerate
towards the next immediate resistance target at 2,470.

♦ In the meantime, the resistance-turn-support of 2,330 will continue to underpin the current uptrend.

A comprehensive range of market research reports by award-winning economists and analysts are exclusively Page 4 of 6
available for download from
Daily Technical Watch:
Chart 7: CIMB Daily Chart 8: CIMB Intraday

CIMB Group Holdings (1023)

A “hammer-like” candle points to a potential technical rebound soon …

♦ The share price of CIMB bowed to heavy profit-taking momentum after topping at RM13.404 high in mid-Jan

♦ Selling pressures intensified when it lost the RM12.75 support level and as the 10-day SMA cut below the 40-day
SMA in early Feb.

♦ But immediately after testing its crucial support level of RM12.00 on Feb 9, it launched a powerful upswing leg.

♦ Aided with a “bullish crossover” in the 10-day and 40-day SMAs, the stock rallied to an all-time high of RM14.32
on last Thursday.

♦ Thereafter, a steep correction stepped in, pulling it down sharply to a low of RM13.40 yesterday, before settling
12sen lower at RM13.56.

♦ But with a “hammer-like” candle on the chart, this signals a potential technical rebound soon, as long as it can
sustain at above its resistance-turned-support level of RM13.50.

♦ Once a rebound takes shape, the stock will retest the 10-day SMA near RM13.75, before gearing up itself for
another upswing towards its all-time high of RM14.32.

♦ But in the event if RM13.50 fails, its bearish momentum will intensify towards the 40-day SMA of RM12.98 and
the next downside support at RM12.75.

Technical Readings:

♦ 10-day SMA: RM13.748

♦ 40-day SMA: RM12.981

♦ Support: IS = RM13.50 S1 = RM12.75 S2 = RM12.00

♦ Resistance: IR = RM14.32

A comprehensive range of market research reports by award-winning economists and analysts are exclusively Page 5 of 6
available for download from

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
any liability for any loss or damage arising out of the use of all or any part of this report.

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
securities or loans of any company that may be involved in this transaction.

“Connected Persons” means any holding company of RHBRI, the subsidiaries and subsidiary undertaking of such a holding company and the respective directors,
officers, employees and agents of each of them. Investors should assume that the “Connected Persons” are seeking or will seek investment banking or other
services from the companies in which the securities have been discussed/covered by RHBRI in this report or in RHBRI’s previous reports.

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.

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.

A comprehensive range of market research reports by award-winning economists and analysts are exclusively Page 6 of 6
available for download from