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

22 March 2010
MARKET DATELINE

Market Technical Reading

Foresee Lukewarm Sentiment And Poor Volume Participation...

Chart 1: KLCI Daily Chart 2: KLCI Intraday

Local Market Leads:

♦ The FBM KLCI closed lower and broke below the 1,300 psychological level on Friday, as investors extended their
profit-taking activities on the index-linked counters.

♦ This was despite a firmer performance in the Asian regional markets in response to the eight straight days of
gains in the overnight US DJIA. Topping the gainers’ list were SET (+2.1%) and Nikkei 225 (+0.8%).

♦ With the key blue chips like Sime (-9sen) and Maybank (-6sen) facing renewed selling pressure on Friday, the
FBM KLCI dropped 5.34 pts or 0.41% to 1,296.60.

♦ Not only that, daily turnover declined further to 575m shares on Friday, down from 677m shares traded a day
earlier. This was mainly attributed to the cautious sentiment ahead of the weekend.

♦ Market breadth stayed negative, as 357 counters down beat 278 counters up.

Technical Interpretations:

♦ After trading in the positive territory for a brief session, sellers returned and dragged down the FBM KLCI into the
negative territory.

♦ It breached to below the recent low of 1,295.31 and hit a low of 1,294.90, before bouncing off the low to end the
day with a seventh negative candle on the chart.

♦ Technically, the fall has jeopardised its recent recovery efforts, as a loss of the 1,300 psychological support
indicates a failure attempt to remove the crucial medium-term resistance zone of 1,250 – 1,300.

♦ But more importantly, the negative closing means more near-term downside ahead for the index.

♦ As such, if the index fails to rebound to above 1,300 today, it is likely to head lower towards a technical gap at
1,287.78 and the 40-day SMA near 1,281. Its resistances are at 1,300 and the 10-day SMA of 1,310.

Please read important disclosures at the end of this report.

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 22 March 2010

Daily Trading Strategy:

♦ The FBM KLCI’s immediate outlook has turned negative following its failure to stabilise near the 1,300 support
region on last Friday.

♦ The breaking of 1,300 with a clear negative candle spells more retreats for the benchmark in the near term.

♦ In our view, this could potentially induce further pullbacks toward a lower technical gap at 1,287.78 and the 40-
day SMA near 1,281 in the near term. A stronger support is only at 1,250.

♦ We expect the local market to track developments in the regional markets, especially after a sudden hike of
intrest rates in India on Friday and the immediate impact on the US’ healthcare bill voting on Sunday.

♦ Meanwhile, we foresee the lukewarm sentiment and the poor volume participation to persist this week.

Table 2 : Major Indices & Commodities

Table 1 : Daily Statistics Change Change
Scoreboard 15 Mar 16 Mar 17 Mar 18 Mar 19 Mar Local Key Indices Closing
(Pts) (%)
Gainers 211 290 405 302 278 FBM KLCI 1,296.60 -5.34 -0.4
Losers 461 361 268 364 357 FBM 100 8,485.04 -39.14 -0.5
Unchanged 240 293 289 279 286 FBM ACE 4,181.04 1.49 0.0
Untraded 432 401 385 402 427 Major Overseas
Indices
Market Cap Dow Jones 10,741.98 -37.19 -0.3
Turnover Nasdaq 2,374.41 -16.87 -0.7
(mln shares) 765 679 742 677 575 S&P 500 1,159.90 -5.93 -0.5
Value (RM FTSE 5,650.12 7.50 0.1
mln) 1,098 1,060 1,218 1,218 1,123 Hang Seng 21,370.82 40.15 0.2
Jakarta Composite 2,742.97 5.73 0.2
Currency Nikkei 225 10,824.72 80.69 0.8
MYR vs US Seoul Composite 1,686.11 10.94 0.7
Dollar 3.3165 3.3185 3.2980 3.3040 3.3020 Shanghai Composite 3,067.75 21.66 0.7
SET 774.59 15.57 2.1
Source: RHBInvest & Bloomberg FT Straits Times 2,915.70 1.76 0.1
Taiwan Weighted 7,897.91 11.57 0.1
India Sensex 17,578.23 58.97 0.3
Major Commodities
NYMEX Crude Oil
(US$/barrel) 80.68 -1.52 -1.8
MDEX CPO – Third
Month (RM/metric ton) 2,577.00 42.00 1.7
US Interest Rate Current Last Updated
Overnight Fed Fund 16 Mar
0-0.25% Unch
Rate 2010
Next FOMC meeting 27-28 Apr 2010

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 22 March 2010

Chart 3: FKLI Daily Chart 4: FKLI Intraday

Technical Interpretations:

♦ A day after experiencing a late pullback to below the 1,300 psychological level, the local futures market staged a
mild rebound on Friday amid fresh bargain-hunting supports.

♦ In the early session, traders capitalised on the overnight US markets’ gains by pushing up the FKLI to 1,304 high,
before seeing the return of the sellers.

♦ But soon after reaching 1,293.50 low, a recovery set in and led the FKLI to above 1,300 at one stage. At the
close, the FKLI for March contract ended at 1,298.0 with a marginal gain of 1.00 pt or 0.08%.

♦ Chart wise, it recorded a “negative harami” candle, suggesting a decrease in the recent bearish momentum.

♦ Compounded with a marginal “buy” signal on the stochastic oscillators, it could attempt to rise further today.

♦ However, it must quickly reclaim the 1,300 hurdle to void the recent bearish breakdown signal on the chart.

♦ Its downside targets remain at a lower technical gap at 1,288, followed by the 40-day SMA of 1,280 and the
1,270 support level.

♦ Apart from 1,300, it needs to reclaim the 10-day SMA of 1,313 to reattract a stronger buying momentum in the
near term.

Daily Trading Strategy:

♦ Traders should stay cautious, until the FKLI recovers to above 1,300.

♦ Failure to reclaim 1,300 will spell an extended retracement ahead.

♦ The FKLI’s trading band for today is likely to be around 1,288 to 1,303.

Table 3: FKLI Closings

FKLI (Month)
Contracts Open High Low Close Chg (Pts) Settle Volume Open Interest
Mar 10 1302.50 1304.00 1293.50 1298.00 1.00 1298.00 5138 20384
Apr 10 1301.50 1303.50 1293.00 1298.00 1.00 1298.00 711 1213
Jun 10 1302.50 1302.50 1292.00 1298.00 1.00 1297.50 147 518
Sep 10 1300.00 1300.00 1293.00 1298.50 2.00 1298.00 15 196

Source: Bursa Malaysia

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 22 March 2010

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

US Market Leads:

♦ The Wall Street finally surrendered to the sellers, after recent impressive rally which closed lower on Friday, on
rekindled worries over Greece’s debt problems and an important congressional vote on the healthcare bill on
Sunday prompted investors to turn cautious.

♦ Also, technology stocks were hit by a 29% plunge on Palm, a smartphone maker following its sharper-than-
expected quarterly loss. Palm also warned that a big build-up of inventory would drag current-quarter’s revenue.

♦ With the US dollar rebounding against the EUR amid uncertainty over the financial aid for Greece, commodity
prices like gold and crude oil fell on Friday. The US light sweet crude oil futures sank another US$1.52 or 1.8% to
US$80.68/barrel.

♦ As a result, material and energy-related stocks, including 3M (-2.0%) and Baker Hughes (-3.7%) were under
great selling pressure.

Technical Interpretations:

Dow Jones Industrial Average (DJIA)

♦ After enjoying a steady rally for eight consecutive days, the US DJIA finally bowed to sellers, losing 37.19 pts or
0.35% to 10,741.98 on Friday.

♦ By forming its first negative candle in nine trading days, it is due for a tehnical pullback soon.

♦ As both momentum indicators tweaked lower, a further pullback towards a lower technical gap at 10,693.99 as
well as the 21-day SMA near 10,523 can be expected soon.

♦ For now, last Friday’s high of 10,819.90 will become an immediate resistance, followed by the tough resistance
barrier at 10,850.

Nasdaq Composite (Nasdaq)

♦ On Friday, the Nasdaq Composite Index finished lower at 2,374.41, falling 16.87 pts or 0.71 for the day.

♦ Ended with a bearish candle on the chart and the downtick on the short-term momentum indicators, it is likely to
extend its current selling leg in sessions ahead.

♦ Nevertheless, the resistance-turn-support level of 2,330 and the 21-day SMA of 2,310 should cap near-term
downside on the index. Meanwhile, strong resistances can be expect near the recent high of 2,400.09 and 2,470.

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

Evergreen Fibreboard (5101)

A rechallenge of the overhead resistance at RM1.75 soon …

♦ Evergrn’s recovery momentum accelerated after piercing through the RM1.10 resistance hurdle in Oct 2009.

♦ But immediately after running into a strong resistance near the RM1.59 level, it’s share price slipped into a
consolidation phase and retreated to RM1.26 low in late Dec.

♦ Thereafter, it recovered steadily to a high of RM1.76 in Jan 2010, before another round of profit-taking activities
kicked in following its failure to retake the RM1.75 hurdle.

♦ But backed by a firm support at RM1.34, it regenerated a mild recovery leg recently. In fact, its recovery
momentum increases lately and ended at RM1.65 on Friday, a day after a successful removal of RM1.59.

♦ Technically, it closed with three positive candles in a row, suggesting a strong chance of a follow-through
recovery mode ahead.

♦ Underpinned further by the robust turnover as well as the improved short-term momentum readings, this will
pave ways for a rechallenge of the overhead resistance near RM1.75 soon.

♦ Clearing RM1.75 will mark an important bullish breakout on the chart, and points to a further rally towards the
next upside targets at RM1.86 and RM2.04.

♦ Any weakness should be capped at RM1.59, with additional support seen near the 10-day and 40-day SMAs at
around the RM1.51 to RM1.57 region.

Technical Readings:

♦ 10-day SMA: RM1.569

♦ 40-day SMA: RM1.513

♦ Support: IS = RM1.59 S1 = RM1.34 S2 = RM1.10

♦ Resistance: IR = RM1.75 R1 = RM1.86 R2 = RM2.04

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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
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may from time to time have an interest in the securities mentioned by this report.

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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
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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 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.

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actions of third parties in this respect.

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