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 June 2010
MARKET DATELINE

Market Technical Reading

Technical Pullback Likely To Below 1,300...

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

Local Market Leads:

The FBM KLCI finally broke out from the 1,300 psychological threshold on Wednesday, as investors rushed in to
scoop up core bluechips after an overnight Wall Street rally.

The US DJIA rallied 213 pts on firm US manufacturing data and easing fear on the European debt crises. This
lifted investors risk appetite on riskier assets, including stocks, commodities and currencies.

Asian markets extended their gains, despite the EUs denial on a news report that the European Union, the IMF
and the US Treasury were mulling a bailout plan for Spain, which includes a credit line of up to 250 bn euros.
Nikkei 225 rallied 1.81%, as FTSTI advanced 1.02%.

However, the FBM KLCI pared down its gains in the late session, adding only 4.76 pts or 0.37% to 1,303.13 for
the day. Overall turnover improved to 663m shares from 512m shares a day ago. Advancers topped decliners by
a ratio of nearly 3 to 1.

Technical Interpretations:

Upon opening, the FBM KLCI gapped up by 4.77-pts and surged towards the 40-day SMA of 1,312. But after
touching a day high of 1,312.10, the index eased on late profit-taking activities.

While a fresh breakout from 1,300 could lead to further upside ahead on follow-through buying support, we
remain skeptical on the upside potential, as the index recorded a gravestone doji candle on the chart yesterday.

In fact, the fall from the 40-day SMA and a fresh sell signal on the stochastic oscillators are pointing to a
likelihood of the resumption in selling activities soon.

The index needs to sustain at above 1,300 to avoid a sudden fall back to below the key 1,300 psychological level
and the 10-day SMA of 1,294.

Losing these levels will refresh the bearish momentum on the FBM KLCIs near-term outlook.

Please read important disclosures at the end of this report.

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 17 June 2010

Daily Trading Strategy:

Overall, we remain unconvinced on the recent technical rebound, despite the fact that the benchmark has finally
overcome the 1,300 major psychological level yesterday.

In our view, with the record of a gravestone doji candle, as well as the mixed momentum signals on the
indicators, the FBM KLCI should continue to encounter stiff selling pressure at above or nearer to 1,300.

In addition, the failure to remove the 40-day SMA at 1,312 yesterday has increased the odds of a technical
pullback risk in the near term.

This means, unless the index can extend its gains to above the 40-day SMA today, we are of the view that a
technical pullback could happen to drag the index to below the 1,300 psychological level and the 10-day SMA
near 1,294 soon.

Further upside resistance is seen at 1,350, should it remove the 40-day SMA unexpectedly.

Table 2 : Major Indices & Commodities

Table 1 : Daily Statistics Change Change
Scoreboard 10 June 11 June 14 June 15 June 16 June Local Key Indices Closing
(Pts) (%)
Gainers 261 380 302 296 494 FBM KLCI 1,303.13 4.76 0.4
Losers 280 193 242 291 174 FBM 100 8,563.46 41.07 0.5
Unchanged 290 282 269 270 240 FBM ACE 3,815.81 17.93 0.5
Untraded 541 517 556 512 460 Major Overseas
Indices
Market Cap Dow Jones 10,409.46 4.69 0.0
Turnover Nasdaq 2,305.93 0.05 0.0
(mln shares) 733 502 502 512 663 S&P 500 1,114.61 -0.62 -0.1
Value (RM FTSE 5,237.92 20.10 0.4
mln) 743 840 665 891 1,012 Hang Seng 20,062.15 Closed Closed
Jakarta Composite 2,858.66 28.49 1.0
Currency Nikkei 225 10,067.15 179.26 1.8
MYR vs US Seoul Composite 1,705.33 15.30 0.9
Dollar 3.3000 3.2820 3.2600 3.2690 3.2590 Shanghai Composite 2,569.94 Closed Closed
SET 786.64 6.27 0.8
Source: RHBInvest & Bloomberg FT Straits Times 2,846.94 28.73 1.0
Taiwan Weighted 7,454.06 Closed Closed
India Sensex 17,462.87 50.04 0.3
Major Commodities
NYMEX Crude Oil
(US$/barrel) 77.67 0.73 0.9
MDEX CPO Third
Month (RM/metric ton) 2,380.00 14.00 0.6
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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 17 June 2010

Chart 3: FKLI Daily Chart 4: FKLI Intraday

Technical Interpretations:

As the overnight US gains shore up earlier market sentiment on Wednesday, the local futures index staged a
strong comeback and reclaimed the 1,300 psychological barrier.

Unfortunately, it retreated from the days high of 1,316 on afternoon profit-taking pressure. At the close, the FKLI
for June contract ended at 1,309 with a smaller gain of 13.00 pts or 1.00%.

As a result, the futures index registered a shooting star-like candle on the chart, after a hangman candle
registered earlier. This pattern suggests a possible reversal of the recent recovery.

Also, given a clear resistance at the 40-day SMA of 1,311, the futures index may have a limited upside ahead.

Instead, it could risk further pullback, if it loses the 1,300 level and the 10-day SMA of 1,295 soon.

For now, the FKLI is expected to cover a technical gap at 1,302.0 1,305.0, before revisiting the 1,300 key
psychological level and the 10-day SMA in the near term.

The next clear support is seen at 1,270.

Daily Trading Strategy:

Though the FKLI has made a successful recovery to above 1,300 in a surprise rebound yesterday, the risk of a
possible technical pullback remains high, chiefly due to the shooting star candle yesterday.

In our opinion, traders should stay alert for a possible downswing move ahead, unless it can pierce through the
40-day SMA of 1,311 in the short term.

Today, the expected trading zone for the futures index is around 1,300 to 1,314.

Table 3: FKLI Closings

FKLI (Month)
Contracts Open High Low Close Chg (Pts) Settle Volume Open Interest
Jun 10 1306.00 1316.00 1305.00 1309.00 13.00 1309.00 7122 16990
Jul 10 1306.50 1315.00 1304.50 1310.00 15.00 1308.50 386 466
Sep 10 1304.50 1313.00 1303.00 1310.00 16.50 1307.50 211 461
Dec 10 1303.00 1312.50 1303.00 1309.00 14.00 1307.00 44 262

Source: Bursa Malaysia

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 17 June 2010

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

US Market Leads:

Major US gauges ended flat on Wednesday, as a steep decline in housing starts and cautious comments from
Federal Express (FedEx) outweighed better-than-expected industrial production data.

Investors reacted negatively to the news that housing starts dropped the most in 14 months in May, slumping
10% after the US government ended home-buyer tax credit programme. This clearly offset positive news of the
1.2% surge on the industrial output in May.

In addition, FedExs warning that higher cost would affect its 2011 earnings also undermined investors
sentiment. Its share price slid 6%.

Meanwhile, BP Inc bounced back 1.5% after an agreement with the US government to set up a $20bn fund to pay
damage claims from the Gulf of Mexico oil spill.

News of lower operating rates in the US refineries and lower gasoline supplies lifted crude oil prices to a 6-week
high, with the US light sweet crude oil futures for July delivery rising US$0.73 or 1.0% to US$77.67/barrel.

Technical Interpretations:

Dow Jones Industrial Average (DJIA)

Following Tuesdays surprise rally, the US DJIA extended its gains by inching up another 4.69 pts or 0.05% to
10,409.46 yesterday.

But due to a hangman-like candle on the chart, plus the flat momentum readings, this could signal a potential
technical retreat soon.

Nonetheless, any downside should be capped by the 21-day SMA near the strong technical support of 10,150.

And as long as it stays at above 10,150, it will secure the trading range of 10,150 10,850 in the near term.

Nasdaq Composite (Nasdaq)

Underpinned by steady buying support, the Nasdaq Composite ended flat with 0.05 pt gain at 2,305.93.

Closed with a positive harami candle as well as flattish momentum readings, this implies the recent bullish
momentum is running out of steam.

Therefore, if it fails to take out 2,330 in the short term, a pullback towards the 21-day SMA of 2,241 could be
underway. A stronger support is detected near 2,190.

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

Titan Chemicals Corp (5103)

Outlook will remain positive only if it sustains at above RM1.35

The share price of Titan staged a powerful rebound in Apr 2009, and surpassed a tough level of RM0.80 in May
2009.

After building its strength at above RM0.80 for months, the stock resumed its rally to above RM1.14 in early Aug
2009.

Thereafter, the stock has been trading at above RM1.14 for most of the time.

In its recent attempt, the stock rebounded from the solid support level of RM1.14, and pierced through the tough
RM1.35 resistance level in early Jun 2010.

After some profit-taking activities, the stock rose yesterday and registered its second bullish candle on the chart,
suggesting follow-through buying momentum likely today.

As it manages to sustain at above the RM1.35 level and the 10-day SMA of RM1.37, coupled with the upbeat
readings on the momentum indicators, it is poised to head higher in the near term to RM1.51, in our view.

Upon removal of RM1.51, it may head towards the next resistance at RM1.68 soon on follow-through buying
momentum.

Technically, the outlook will remain positive if it sustains at above RM1.35. Failing to defend this support will spell
a sudden reversal into the lower trading range of RM1.14 RM1.35.

Technical Readings:

10-day SMA: RM1.369

40-day SMA: RM1.284

Support: IS = RM1.35 S1 = RM1.14 S2 = RM0.80

Resistance: IR = RM1.51 R1 = RM1.68

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IMPORTANT DISCLOSURES

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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 RHBRIs 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.

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