PP 7767/09/2011(028730)

RHB Research

Malaysia
Technical Research Institute Sdn Bhd
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8 RHB Banking Group
Company No: 233327 -M

Dail y Trad ing St rat eg y

MARKET DATELINE 11 October 2010
Market Technical Reading
Upside Intact Despite Short-term Uncertainties...

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

Local Market Leads:

♦ Local market ended nearly unchanged on Friday amid cautious sentiment ahead of the Friday’s US key jobs report.

♦ Most Asian markets finished lower, despite a more than 3% rally in China market following a laggard play after a
week-long holiday in China. For the day, Shanghai Composite rose sharply by 3.13% to a 5-month high. Elsewhere,
Jakarta Composite tumbled 1.09%.

♦ Upon closing, the FBM KLCI settled nearly flat at 1,481.41, easing 0.04 pt for the day.

♦ Overall market tone, however, stayed robust amid strong rotational plays in property and Johor Corp-related
stocks, despite facing constant profit-taking pressure on heavy selling activities.

♦ Property plays, Malton and KEuro gained 4sen and 7.5sen respectively, while Johor Corp stocks, like QSR
(+38sen), KFC (+12sen) and KPJ (+11sen) attracted the market trading limelight.

♦ Turnover improved for the first time in four trading days to 1.08bn shares with 397 gainers leading 332 losers.

Technical Interpretations:

♦ For the day, the FBM KLCI was stuck within a tight trading range between the 1,479.31 low and 1,484.48 high,
before settling the day with a “doji” candle.

♦ Based on the candlestick pattern, the index is expecting further uncertainties in the immediate term.

♦ But backed by the supportive momentum indicators and an improvement in the turnover, the FBM KLCI stands a
good chance to stay on the current upswing.

♦ Added by its ability to scale to a fresh year high, a further rechallenge of the technical gap near 1,490.5 –
1,497.64 and the psychological level of 1,500 can be anticipated soon, in our view.

♦ On the downside, we see firm immediate supports near the technical gap at 1,472.32 – 1,476.05 and the 10-day
SMA of 1,469.
Please read important disclosures at the end of this report.

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Daily Trading Strategy:

♦ Chart wise, the closing with another “doji” candle shows uncertainties in the immediate direction. Still, we continue
to stay bullish over the FBM KLCI’s near-term outlook.

♦ In our view, the market still has upside room, judging from its ability continue to chalk up a fresh year high on the
back of the upbeat momentum readings as well as the improved trading volume on Friday.

♦ In fact, from the way of the market absorbing the heavy T+4 forced selling pressure from last Monday’s 1.37bn
shares high volume and the ongoing solid rotational plays in selected second liner stocks, the trading sentiment is
clearly staying bullish for now.

♦ Coupled with the recent upturn on the 10-day SMA of 1,469, we believe another round of bullish leg could be
underway, once last Friday’s year-high level of 1,484.48 is being removed.

♦ The next upside target is set at the technical gap near 1,490.5 – 1,497.64, followed by the psychological level of
1,500 and the historical high level of 1,524.69.

Table 2 : Major Indices & Commodities

Table 1 : Daily Statistics Change Change
Scoreboard 4 Oct 5 Oct 6 Oct 7 Oct 8 Oct Local Key Indices Closing
(Pts) (%)
Gainers 501 319 443 299 397 FBM KLCI 1,481.41 -0.04 0.0
Losers 295 411 330 410 332 FBM 100 9,729.17 2.35 0.0
Unchanged 258 290 283 303 301 FBM ACE 4,020.18 1.81 0.0
Untraded 299 337 301 343 324 Major Overseas
Indices
Market Cap Dow Jones 11,006.48 57.90 0.5
Turnover Nasdaq 2,401.91 18.24 0.8
(mln shares) 1,369 986 955 842 1,075 S&P 500 1,165.15 7.09 0.6
Value FTSE 5,657.61 -4.52 -0.1
(RM mln) 1,707 1,505 1,657 1,523 1,657 Hang Seng 22,944.18 59.86 0.3
Jakarta Composite 3,546.95 -39.24 -1.1
Currency Nikkei 225 9,588.88 -95.93 -1.0
MYR vs US Seoul Composite 1,897.07 -3.78 -0.2
Dollar 3.0910 3.0963 3.0890 3.0890 3.1125 Shanghai Composite 2,738.74 83.08 3.1
SET 963.19 -7.71 -0.8
Source: RHBInvest & Bloomberg Straits Times 3,153.34 -13.31 -0.4
Taiwan Weighted 8,244.19 -39.73 -0.5
India Sensex 20,250.26 -65.06 -0.3
Major Commodities
NYMEX Crude Oil
(US$/barrel) 82.66 0.99 1.2
FCPO – Third Month
(RM/metric ton) 2,760.00 -26.00 -0.9
US Interest Rate Current Last Updated
21 Sep
Overnight Fed Fund Rate 0-0.25% Unch
2010
Next FOMC meeting 2-3 Nov 2010

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Chart 3: FKLI Daily Chart 4: FKLI Intraday

Technical Interpretations:

♦ Due to nervousness ahead of the US jobs report later on Friday, the futures market continued its consolidation and
ended easier for a second day on Friday.

♦ From its day high of 1,486.50, the FKLI worked its way lower on continuous profit-taking activities.

♦ At the end of the day, the FKLI for Oct contract was down again by losing another 2.00 pts or 0.13% to 1,479.50.

♦ And with a negative candle and the weakened short-term momentum readings, this spells a further weakness
today.

♦ Nevertheless, the rising 10-day SMA of 1,470 will provide a firm support to the futures index, in our view.

♦ In fact, any weakness is likely temporary, and the FKLI will restore its bullish momentum once the recent high of
1,487 can be taken out.

♦ Therefore, we maintain our bullish view and expect the FKLI to head high towards the technical gap at 1,490 –
1,502.5 soon.

♦ Beyond that, the FKLI will retest the all-time high level of 1,536 on follow-through buying momentum.

Daily Trading Strategy:

♦ We believe any weakness will likely be temporary, and the FKLI will see strong support near the 10-day SMA of
1,470.

♦ And the current short-term consolidation will end upon a successful removal of 1,487.

♦ We expect the FKLI to fluctuate at between 1,473 and 1,490 today.

Table 3: FKLI Closings

FKLI (Month)
Contracts Open High Low Close Chg (Pts) Settle Volume Open Interest
Oct 10 1482.00 1486.50 1475.00 1479.50 -2.00 1479.50 3786 21719
Nov 10 1482.00 1486.00 1476.00 1479.50 -2.50 1479.50 143 114
Dec 10 1482.50 1486.00 1477.00 1478.50 -3.50 1480.00 49 387
Mar 11 1477.00 1477.00 1477.00 1477.00 -4.00 1479.50 1 135

Source: Bursa Malaysia

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

US Market Leads:

♦ US major gauges finished higher on Friday with the Dow surpassing the 11,000 mark for the first time in five
months, after a surprisingly weak jobs data boosted hopes of further stimulus measures by the Federal Reserve.

♦ According to the US Labour Department, the US economy lost 95,000 jobs in Sep, though there were 64,000 jobs
created in the private sector. Unemployment rate, on the other hand, remained flat at 9.6%. These were against
the market expectations of a flat unemployment data and a rise to 9.7% in the unemployment rate.

♦ Despite the worse-than-expected jobs data, investors resumed their buying activities and drove the market
higher on optimism that the Fed will step in to boost the economy soon.

♦ Driven by the further weakness in the greenback, the US light sweet crude oil futures for Nov delivery bounced
back and ended up by 99 cents or 1.2% to US$82.66/barrel.

Technical Interpretations:

Dow Jones Industrial Average (DJIA)

♦ As the bulls returned, the DJIA resumed its rally by gaining 57.90 pts or 0.53% to 11,006.48 on Friday.

♦ Though it closed off its day high of 11,032.17, it still recorded a “bullish engulfing” candle to suggest more follow-
through upside ahead.

♦ In fact, the ability to overcome Thursday’s high of 10,998.53 and the firm short-term momentum readings also
signal a resumption of a rally ahead.

♦ As such, the odds of staging a further rally towards 11,250 near the Apr’s high of 11,258.01 have turned
favourable. And beyond 11,250, the bulls will charge towards 11,750 over the longer term.

Nasdaq Composite (Nasdaq)

♦ The Nasdaq Composite index extended its gains for a second day, as it jumped another 18.24 pts or 0.77% to
2,401.91 on Friday.

♦ And with a positive candle on the chart, the index is due for a breakout from the recent consolidation.

♦ A further clearance of last Friday’s high of 2,406.67 will pave the way for a rally towards the next 2,470
resistance level and the Apr’s high of 2,535.28.

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Daily Technical Watch:

Chart 7: KPJ Daily Chart 8: KPJ Intraday

KPJ Healthcare (5878)

A fresh buying lead on the current technical rebound…

♦ The share price of KPJ kicked off its steady uptrend in Aug 2009. Since then, it has been trading along and above
the supportive uptrend line (UTL).

♦ The stock excelerated its upward momentum after a consolidation phase near the RM2.70 – RM3.10 region in Mar
– May 2010.

♦ The move led it to a high of RM3.85 in Jul 2010. However, as it failed to sustain at above the RM3.80 tough
resistance level, it fell into a profit-taking trend.

♦ But thanks to the supportive UTL, the stock formed a base near RM3.37 and staged a technical rebound in recent
sessions.

♦ It retested a high of RM3.70 on Friday, before closing the day at RM3.36, with a positive candle.

♦ The candlestick pattern, alongside with the positive upticks on the momentum indicators, suggest a fresh buying
lead on the current technical rebound.

♦ Furthermore, as the 10-day SMA recrossed to above the 40-day SMA, it claimed another medium-term positive
signal on the chart.

♦ Optimistically, the stock is heading towards the RM3.80 resistance soon. A removal of the level will mean a retry
of the all-time high level at RM3.85, before heading into the uncharted territory.

Technical Readings:

♦ 10-day SMA: RM3.517

♦ 40-day SMA: RM3.472

♦ Support: IS = RM3.37 S1 = RM3.10 S2 = RM2.70

♦ Resistance: IR = RM3.80

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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. 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.

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