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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


27 April 2010

Market Technical Reading
Sustainability Of This Recovery Remains Questionable...
Chart 2: FBM KLCI Intraday

Chart 1: FBM KLCI Daily

Local Market Leads:

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The local market staged a mild rebound on Monday, as bargain-hunting support picked up in the afternoon session following Asian markets’ positive closing and a rally in European markets amid easing concerns on Greece’s debt problem. Regional investors scooped up stocks on the view that Greece's activation of EU-IMF bailout plan on last Friday would shrug off near-term worries of a possible serious debt default by the country. Also, another rally on the US DJIA on last Friday, to a fresh 19-month high aided spice to the trading sentiment. Nikkei 225 rallied the most by soaring 2.31%, followed by Taiwan Weighted (+1.91%) and Hang Seng (+1.61%). In fact, investors also ignored news that China might introduce an annual property tax to cool down surging prices in the property sector. Upon closing, the FBM KLCI was up 3.29 pts or 0.25% to 1,340.07, closer to its day high of 1,340.37. Despite that, the overall sentiment appeared dull with 800m shares transacted. Market breadth turned positive with 362 gainers leading 306 losers for the day.

Technical Interpretations:

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Despite the intermittent profit-taking activities, the FBM KLCI gradually recovered from the 1,336.49 low and headed higher in late session to close near the day’s high. Closed with a positive candle, it has acquired the much-needed confirmation candle for a technical rebound going forward. Plus the upbeat momentum readings, it could gear up its rally towards the recent high of 1,347.61 soon. But technically, it must remove 1,347.61 with a healthy daily volume of between 1.0 – 1.2bn shares mark to secure a sizeable technical rebound ahead, in our view. Otherwise, sellers will likely return sooner to threaten the 10-day and 40-day SMAs near 1,335 and 1,320.
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27April 2010 Daily Trading Strategy:

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Technically, yesterday’s recovery with a positive candle and upbeat short-term momentum readings has reinforced the view of a potential technical rebound ahead. If the buying support continues, the index will be poised to revisit the recent high of 1,347.61 soon. But due to the prevailing slow turnover of late, the sustainability of this recovery leg remains questionable. Therefore, without a convincing breakout of 1,347.61 and a strong increment of daily turnover to 1.0-1.2bn shares mark, we are maintaining our cautious view on the local market direction. Further resistance is seen at 1,390, but the immediate supports are at the 10-day and 40-day SMAs near 1,335 and 1,320. Moreover, with a 2-day US FOMC meeting and the pending Senate vote on the US financial reforms this week, most investors are likely to stay sideway, pending more clue of the near-term market direction, in our view.

Table 1 : Daily Statistics Scoreboard 20 Apr Gainers 456 Losers 230 Unchanged 293 Untraded 384 Market Cap Turnover (mln shares) Value (RM mln) Currency MYR vs US Dollar

21 Apr 399 288 300 376

22 Apr 333 307 324 398

23 Apr 305 352 333 369

26 Apr 362 306 306 384

Table 2 : Major Indices & Commodities Change Local Key Indices Closing (Pts) FBM KLCI 1,340.07 3.29 FBM 100 8,824.07 19.01 FBM ACE 4,213.81 39.46 Major Overseas Indices Dow Jones Nasdaq S&P 500 FTSE Hang Seng Jakarta Composite Nikkei 225 Seoul Composite Shanghai Composite SET FT Straits Times Taiwan Weighted India Sensex Major Commodities NYMEX Crude Oil (US$/barrel) MDEX CPO – Third Month (RM/metric ton) US Interest Rate Overnight Fed Fund Rate Next FOMC meeting

Change (%) 0.2 0.2 0.9

797 1,218

875 1,293

834 1,190

818 943

800 936






Source: RHBInvest & Bloomberg

11,205.03 2,522.95 1,212.05 5,753.85 21,587.06 2,944.71 11,165.79 1,752.20 2,969.50 764.34 3,002.62 8,158.14 17,745.28 84.20 2,560.00 Current

0.75 -7.20 -5.23 30.20 342.57 19.98 251.33 15.17 -14.04 9.76 14.13 153.25 51.08 -0.92

0.0 -0.3 -0.4 0.5 1.6 0.7 2.3 0.9 -0.5 1.3 0.5 1.9 0.3 -1.1

20.00 0.8 Last Updated 16 Mar 0-0.25% Unch 2010 27-28 Apr 2010

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27April 2010

Chart 3: FKLI Daily

Chart 4: FKLI Intraday

Technical Interpretations:

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Taking leads from the regional rebounds, the FKLI turned higher on Monday on the back of fresh bargain-hunting support. In spite of that, the FKLI’s gains were limited due to the lukewarm trading sentiment in the local cash market. At the close, the FKLI for Apr contract rose 3.00 pts or 0.22% to 1,343.00. Meanwhile, the May contract gained 4.00 pts or 0.30% to 1,343.50. Though the FKLI recovered mildly from the 10-day SMA of 1,337 yesterday, the formation of a potential “hangman-like” candle has thwarted the positive recovery view in the near term. In other words, unless the futures index manages to collect another positive candle today, the risk of a fall to retest its immediate support at the 10-day SMA has increased. As such, any rebound from the current level will unlikely to be as strong as earlier thought. The fear is in fact on whether the futures index would lose the 10-day SMA soon. Lower supports are only near the technical gap of 1,326 and the 40-day SMA of 1,323. And, until the recent peak of 1,350.50 is surpassed, the current cautious sentiment will persist, in our view.

Daily Trading Strategy:

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Despite yesterday’s mild rebound, the FKLI’s upside potential remains unclear. In fact, the “hangman-like” candle suggests a pullback risk ahead. Given the current uncertainties on the technical front, traders are expected to stay cautious. Meanwhile, we expect the FKLI to trade from 1,337 to 1,346 today.

Table 3: FKLI Closings FKLI (Month) Contracts Open Apr 10 1344.50 May 10 1344.50 Jun 10 1343.00 Sep 10 1342.00 Source: Bursa Malaysia

High 1345.50 1345.00 1344.00 1344.00

Low 1339.00 1339.00 1337.00 1336.50

Close 1343.00 1343.50 1342.00 1342.50

Chg (Pts) 3.00 4.00 4.00 4.50

Settle 1343.00 1343.50 1342.00 1342.00

Volume 5382 3194 69 16

Open Interest 18751 1883 505 227

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27April 2010

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

Chart 6: US Nasdaq Composite Daily

US Market Leads:

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US stocks gave up their early gain on Monday, led by the selling in banks on fears that the proposed reforms in the financial sector would hurt the sector’s profit. This overshadowed the upbeat quarterly earnings and the stronger 2010 outlook from Caterpillar (+4.2%). Banks, including JP Morgan (-2.3%) and Bank of America (-2.1%) took a hit as the proposed legislation from Senate Democrats containing new rules for derivatives market which would hurt bank revenue. Separately, Citigroup shed 5.1% after the US Treasury said it would begin to sell part of its 27% stake in the bank. Meanwhile, the US light sweet crude oil futures for June delivery fell US$0.92 or 1.1% to US$84.20/barrel. After the close, US Senate Republicans successfully blocked debate on the Democrats’ bank reforms bill by a vote of 41 – 57, the Democratics need to secure 60 votes to start a debate.

Technical Interpretations: Dow Jones Industrial Average (DJIA)

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As a result, the US DJIA ended flat by inching up only 0.75 pt or 0.01% to 11,205.03, after retesting its immediate resistance target of 11,250 with an intraday high of 11,258.01. With the profit-taking activities, this resulted in a formation of a “doji” candle, implying uncertainties ahead. If it fails to extend its gains today to remove 11,250 or yesterday’s high of 11,258.01, the odds are high that it could suffer mild setback towards the immediate support at the 21-day SMA of 11,010 soon. On the other hand, breaking from 11,250 will lead to a rechallenge of the next barrier at 11,750.

Nasdaq Composite (Nasdaq)

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The Nasdaq Composite Index snapped the recent winning streak by dropping 7.20 pts or 0.28% to 2,522.95 yesterday. Ended with a “negative harami” candle, this shows the recent bullish momentum is faltering. It, therefore, could slip into a technical pullback soon, should a swift removal of yesterday’s high of 2,535.28 fail to take place for a further rally towards 2,630, in our view. Strong supports are still pegged at the breakout point of 2,470 and the 21-day SMA near 2,458.

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

Measat Global (3875) Poised to stage further run-down in the near term…

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The share price of Measat broke out from the congestion of RM1.76 – RM2.15 region in mid-Mar 2010, and rallied steeply across the resistance levels of RM2.40 and RM3.00 in less than two weeks. The stock hit its first bump after touching RM3,47 intraday high, and retreated to a resistance-turn-support level of RM3.00. Swiftly, the stock turned around and blasted to a multi-year high of RM3.72. However, the push triggered a strong selling pressure and led to sustained profit-taking activities on the stock. It fell to below the RM3.00 level last week and collected a huge bearish candle on the chart yesterday, losing 17sen or 5.8% for the day. As the fall also broke the 40-day SMA near RM2.816, coupled with the muted momentum readings on the indicators, the stock is poised to stage further run-down in the near term. We expect a solid support zone from RM2.15 to RM2.40. Lower support is at RM1.76. To return its positive chart outlook, the stock must surpass the RM3.00 key level and reclaim the 10-day SMA near RM3.08 to reattract bargain hunters.

Technical Readings:

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

RM3.082 RM2.816 IS = RM2.40 IR = RM3.00 S1 = RM2.15 R1 = RM3.72 S2 = RM1.76

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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. securities, subject to the duties of confidentiality, will be made available upon request. Additional information on recommended

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