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PP 7767/09/2010(025354

)

Malaysia

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

MARKET DATELINE

9 June 2010

Market Technical Reading
Investors Should Continue To Sell Into Strength...
Chart 2: FBM KLCI Intraday

Chart 1: FBM KLCI Daily

Local Market Leads:

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Bursa Malaysia alongside other regional markets turned higher on Tuesday, as investors were motivated by US Federal Reserve chairman Bernanke’s comments over the US economic recovery prospects. Earlier, most Asian indices opened lower after another triple-digit loss on the overnight US DJIA. But sentiment gradually improved after Bernanke said the US economic recovery remains intact. This lifted the US futures markets, and paved the way for mild recovery in Asian markets. Among the standouts were KOSPI and Hang Seng, which advanced 0.83% and 0.56% respectively. Locally, mild buying support emerged on Maybank (+8sen) and Genting (+10sen), prompting the FBM KLCI to inch higher. But it settled at 1,288.18 with a mere 1.91 pts or 0.15% gain, as the early declines in the European markets triggered late profit-taking activities in late afternoon session. Despite strong speculative interests on selective lower liners like IRCB (+12sen) and KEuro (+7sen), overall market volume remained tepid at 521m shares. Nonetheless, market breadth turned slightly positive, as winners outnumbered losers by 349 to 271.

Technical Interpretations:

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With the help of mild bargain-hunting activities, the FBM KLCI snapped recent retreats by turning higher yesterday with a small positive candle on the chart. Technically, this suggests a further rebound today. However, given the mixed signals on the momentum indicators, there are still risks involved for the index to take out the 1,300 solid support-turned-resistance barrier. As such, we continue to stay bearish over the FBM KLCI’s near- to medium-term direction. On the downside, it should find an immediate support at the 10-day SMA near 1,278. Breaching of the SMA will drag the index towards a technical gap at 1,269.42 - 1,271.55 and revisit the key support of 1,250 soon.
Please read important disclosures at the end of this report.

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9 June 2010 Daily Trading Strategy:

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Chart wise, the closing with a small positive candle suggests that the FBM KLCI could repeat its attempt to stage another rebound in the near term. But yesterday’s small rebound was not convincing enough, in our view, especially with the poor trading volume as well as the sluggish technical signals on the momentum indicators. Even if a rebound really takes place, its upside should be limited to the previous technical gap at 1,290.51 – 1,300.44 and the 1,300 heavy psychological level. Therefore, we are of the view that, investors should continue to “sell into strength” on expectation that the strong resistance at 1,300 will hold. On the other hand, upon resumption of fresh selling momentum, the index would turn south immediately to the 10-day SMA of 1.278. Falling below the SMA will refresh the previous corrective wave and lead the index towards 1,250 and the recent low of 1,243.86 in the short term.

Table 1 : Daily Statistics Scoreboard 2 June Gainers 287 Losers 294 Unchanged 269 Untraded 528 Market Cap Turnover (mln shares) Value (RM mln) Currency MYR vs US Dollar

3 June 542 154 244 435

4 June 312 274 278 511

7 June 151 463 206 555

8 June 349 271 221 534

585 803

655 1,244

674 989

492 844

521 768

3.2990

3.2630

3.2730

3.3310

3.3240

Source: RHBInvest & Bloomberg

Table 2 : Major Indices & Commodities Change Change Local Key Indices Closing (Pts) (%) FBM KLCI 1,288.18 1.91 0.1 FBM 100 8,440.05 4.76 0.1 FBM ACE 3,774.89 6.60 0.2 Major Overseas Indices Dow Jones 9,939.98 123.49 1.3 Nasdaq 2,170.57 -3.33 -0.2 S&P 500 1,062.00 11.53 1.1 FTSE 5,028.15 -40.91 -0.8 Hang Seng 19,487.48 109.33 0.6 Jakarta Composite 2,779.98 29.75 1.1 Nikkei 225 9,537.94 17.14 0.2 Seoul Composite 1,651.40 13.43 0.8 Shanghai Composite 2,513.95 2.22 0.1 SET 757.41 -2.44 -0.3 FT Straits Times 2,746.61 -5.27 -0.2 Taiwan Weighted 7,151.99 -5.84 -0.1 India Sensex 16,617.10 -163.97 -1.0 Major Commodities NYMEX Crude Oil (US$/barrel) 71.99 0.55 0.8 MDEX CPO – Third Month (RM/metric ton) 2,432.00 -17.00 -0.7 US Interest Rate Current Last Updated 27-28 Apr Overnight Fed Fund Rate 0-0.25% Unch 2010 Next FOMC meeting 22-23 June 2010

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9 June 2010

Chart 3: FKLI Daily

Chart 4: FKLI Intraday

Technical Interpretations:

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Boosted by the turnaround in the Asian markets amid the strong rebound in the US futures markets, the FKLI staged a recovery on Tuesday. Just as it got nearer to cover the entire technical gap at 1,285.0 – 1,293.0 formed recently, it gave up most of its gain on a sharp selloff in the European markets. Upon closing, the FKLI for June contract gained 3.50 pts or 0.27% to 1,282.50, after falling more than 20 pts in the past two trading days. On the chart, it acquired a small positive candle to indicate a possible further recovery ahead. But as it eased from its day high of 1,289.0 on late profit-taking pressure, chances are it could see a followthrough selling pressure towards the crucial support level at 1,270, near the 10-day SMA of 1,277. Technically, losing the SMA and the key support of 1,270 will refresh a correction mode on the FKLI. The lower supports are the recent low of 1,240.5 and the psychological level at 1,200. Meanwhile strong technical resistances can be found near a technical gap at 1,285.0 – 1,293.0 and the heavy psychological level at 1,300.

Daily Trading Strategy:

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We remain unconvinced on yesterday’s mild rebound, and considered the rebound to be unsustainable. Instead, traders should be wary of losing the 10-day SMA of 1,277 and 1,270, as it could stoke a steeper corrective wave towards the recent low of 1,240.50 and even 1,200. Meanwhile, the FKLI is likely to trade from 1,269 to 1,285 today.

Table 3: FKLI Closings FKLI (Month) Contracts Open Jun 10 1279.50 Jul 10 1279.50 Sep 10 1279.00 Dec 10 1280.00 Source: Bursa Malaysia

High 1289.00 1288.50 1287.00 1286.00

Low 1279.50 1279.50 1278.00 1279.00

Close 1282.50 1282.50 1281.00 1286.00

Chg (Pts) 3.50 4.00 4.00 8.00

Settle 1282.50 1282.50 1281.00 1281.50

Volume 5378 238 48 15

Open Interest 16644 320 475 247

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9 June 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 ended mixed on Tuesday with the DJIA rebounding more than 100-pts amid reassuring comments from the US Federal Reserve’s chairman Ben Bernanke on the US economy. This successfully offset the weakness in the European markets which were hurt by the Fitch Ratings’ negative comments. The international rating agency cautioned that the UK’s fiscal challenge is “formidable”. Meanwhile, Bernanke said the US economy will continue to recover, albeit at a moderate pace, as consumer spending and business investment take over from the government’s stimulus in growing the economy. While commodity and financial-related stocks enjoyed a rebound, technology stocks mostly turned lower after Bank of America Merrill Lynch cut its 2011 estimates on some technology stocks, like Amazon and eBay. Driven by a bounce in the euro, the US light sweet crude oil futures for July delivery rebounded 55cents or 0.8% to US$71.99/barrel ahead of the weekly crude inventory reports later today.

Technical Interpretations: Dow Jones Industrial Average (DJIA)

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Backed by the renewed bargain-hunting activitity in the afternoon, the US DJIA bounced back from its 7-month low of 9,757.55. At the close, it shot up 123.49 pts or 1.26% to 9,939.98 on Tuesday. Ending with a “bullish engulfing” candle on the chart, it is poised to extend the current rebound in the near term. But as the overall technical picture remains bearish, its rebound momentum is unlikely sustainable with the upside potential capped at the 10,000 psychological level and the 10,150 resistance level. On the downside, we reset its immediate support at yesterday’s low of 9,757.55. Once it broke the low, a sharper correction towards the 9,200 – 9,700 support region will take place.

Nasdaq Composite (Nasdaq)

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After falling to a fresh year low of 2,139.46, near the May’s low of 2,140.53, the Nasdaq Composite Index trimmed its losses by easing only 3.33 pts or 0.15% to 2,170.57 last night. As a result, it chalked up a “hammer-like” candle to signal a technical rebound could be underway. If a rebound sets in, it must quickly remove 2,190 for it to launch a meaningful rebound towards the 21-day SMA of 2,278. But, we expect the 21-day SMA to limit upside. Immediate range is from 2,100 to 2,190.
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Daily Technical Watch:
Chart 7: BjCorp Daily Chart 8: BjCorp Intraday

Berjaya Corporation (3395) Losing RM1.33 will confirm an uptrend derailment…

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Since late Mar 2009, the share price of BjCorp has been trending along the Uptrend Line (UTL). The stock almost fell below the supportive UTL in Oct last year on prolonged consolidation, but a timely rebound lifted it back to secure its uptrend. In Mar 2010, the upward momentum accelerated, after it pierced through the RM1.33 important level. With powerful buying support, the stock soared to a more-than-a-decade high of RM1.87 in Apr 2010. However, as it failed to sustain above RM1.78, it was engaged in a sustained profit-taking leg in the recent weeks. The stock fell below RM1.55 recently and plunged to a low of RM1.35, before closing yesterday at RM1.37. Sealed the chart with a bearish candle, the stock has effectively fallen off the supportive UTL yesterday. Given the weak set of momentum readings, the stock will likely fall below the crucial immediate support level at RM1.33 today. Losing this level will confirm an uptrend derailment on the chart. That will also means the stock will fall into a deeper correction phase. That, if it happens will lead a further retreat towards the RM1.06 – RM1.20 support region in the medium term.

Technical Readings:

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

RM1.476 RM1.609 IS = RM1.33 IR = RM1.55 S1 = RM1.20 R1 = RM1.78 S2 = RM1.06

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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 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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