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

4 June 2010
MARKET DATELINE

Market Technical Reading

Sellers To Return Near 1,300...

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

Local Market Leads:

♦ Bolstered by a powerful overnight rally in the US markets, the local bourse alongside with other regional markets
ended sharply higher on Thursday.

♦ Wall Street shot up more than 2.2% amid renewed optimism over the US economic recovery pace following a
series of upbeat economic news. As a result, this lifted the sluggish market sentiment around the world.

♦ Nikkei 225 was the best regional performer, chalking up by a staggering 3.2%, followed closely by Jakarta
Composite (+2.83%) and FTSTI (+2.42%).

♦ Back home, the FBM KLCI also staged a surprise rebound, surging 18.42 pts or 1.44% to 1,294.44, as
institutional investors snapped up bluechips like CIMB (+16sen), Axiata (+9sen) and Genting (+19sen).

♦ Turnover increased for the first time in six trading days to 655m shares, versus Wednesday’s 585m shares. There
were 542 counters up, compared to 154 counters down.

Technical Interpretations:

♦ As renewed buying momentum staved off the recent profit-taking pressure, the FBM KLCI gapped up to above the
10-day SMA of 1,277 upon opening and traded firmly throughout the day.

♦ Sealed with a handsome bullish candle and a fresh gap crossing to above the 10-day SMA, the index appears
determined to cover the whole of the previous technicap gap of 1,290.51 – 1,300.44 and the 1,300 level today.

♦ Having said that, we remain skeptical over its ability to surpass 1,300, a support-turn-resistance and a
psychological barrier, given the poor trading volume and mixed readings on the short-term momentum indicators.

♦ In other words, only a decisive breakout of 1,300 with strong volume will refresh its short-term momentum and
prompt a rebound to the 40-day SMA near 1,321 and the 1,347 triple-top resistance level.

♦ Without doing so, we will maintain our short- to medium-term bearish outlook on the FBM KLCI.
Please read important disclosures at the end of this report.

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 4 June 2010

Daily Trading Strategy:

♦ Undeniably, the unexpected strong rally that sent the FBM KLCI to above the 10-day SMA of 1,277 yesterday has
signaled a potential turnaround in the short-term market direction.

♦ The firm closing also suggests a likely rechallenge to the key psychological level at 1,300 today. Chart wise, a
removal of 1,300 will switch the trading sentiment to a short-term positive mode.

♦ However, we remain unconvinced and suspect the current push-up is unsustainable without a firm growth in daily
turnover. Likely, the rebound was merely to cover the previous technical gap at 1,300.44.

♦ Not only that, the average daily turnover must exceed 800m – 1.0bn shares mark to churn-up the poor trading
sentiment currently, in our opinion.

♦ As a result, we remain bearish and expect sellers to return near the strong resistance level at 1,300.

♦ Supports are now seen at the 10-day SMA of 1,277, the key level of 1,250 and the recent low of 1,243.86.

Table 2 : Major Indices & Commodities

Table 1 : Daily Statistics Change Change
Scoreboard 27 May 31 May 1 June 2 June 3 June Local Key Indices Closing
(Pts) (%)
Gainers 635 364 200 287 542 FBM KLCI 1,294.44 18.42 1.4
Losers 142 306 487 294 154 FBM 100 8,482.13 118.18 1.4
Unchanged 195 242 214 269 244 FBM ACE 3,777.17 26.99 0.7
Untraded 405 469 477 528 435
Major Overseas
Market Cap Indices
Turnover Dow Jones 10,255.28 5.74 0.1
(mln shares) 864 761 653 585 655 Nasdaq 2,303.03 21.96 1.0
Value (RM S&P 500 1,102.83 4.45 0.4
mln) 1,240 1,467 758 803 1,244 FTSE 5,211.18 59.86 1.2
Hang Seng 19,786.71 314.91 1.6
Currency Jakarta Composite 2,810.98 77.30 2.8
MYR vs US Nikkei 225 9,914.19 310.95 3.2
Dollar 3.3105 3.2590 3.3070 3.2990 3.2630 Seoul Composite 1,661.84 31.44 1.9
Shanghai Composite 2,552.66 -18.76 -0.7
Source: RHBInvest & Bloomberg SET 765.96 17.21 2.3
FT Straits Times 2,793.47 65.90 2.4
Taiwan Weighted 7,360.28 164.57 2.3
India Sensex 17,022.33 280.49 1.7
Major Commodities
NYMEX Crude Oil
(US$/barrel) 74.61 1.75 2.4
MDEX CPO – Third
Month (RM/metric ton) 2,456.00 -12.00 -0.5
US Interest Rate Current Last Updated
Overnight Fed Fund 27-28 Apr
0-0.25% Unch
Rate 2010
Next FOMC meeting 22-23 June 2010

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 4 June 2010

Chart 3: FKLI Daily Chart 4: FKLI Intraday

Technical Interpretations:

♦ Underpinned by strong follow-through buying momentum, the FKLI charged ahead by ending sharply higher on
the dot of the major psychological barrier at 1,300 yesterday.

♦ The surge was mainly engineered by a broad-based rally across the global markets, driven by a triple-digit rally
on the US DJIA overnight.

♦ The day started with a steep 11-pt gap-up on the FKLI’s Jun contract, before advancing further to end the day
gaining 20.00 pts or 1.60% to 1,300.0.

♦ Effectively, the futures index has covered two of the four technical breakaway gaps created during the recent
selldown. The other gaps are near 1,325 – 1,327.5 and 1,335 – 1,336.5.

♦ By recording its second bullish candle on the back of upbeat short-term momentum readings, the futures index is
clearly showing its determination to remove the key 1,300 level today.

♦ Should it succeed, the chart will turn bullish and point to a steeper upside ahead in the short term.

♦ Beyond 1,300, the immediate upside target is set at the 40-day SMA near 1,321, followed by May’s high of
1,352.50.

♦ All said, we remain unconvinced on the upside potential, merely due to the skeptism on the cash market (FBM
KLCI) outlook. Still, we expect significantly strong resistance near 1,300 today.

♦ The immediate downside support is at the 10-day SMA of 1,277, near the 1,270 key support level.

Daily Trading Strategy:

♦ We see a higher risk for the futures market to return to bullishness soon, but we remain bearish for now.

♦ In our view, sellers should continue to “short”, but be prepared to “cut” if 1,300 is breached.

♦ The FKLI should trade within a range of 1,288 to 1,302 today.

Table 3: FKLI Closings

FKLI (Month)
Contracts Open High Low Close Chg (Pts) Settle Volume Open Interest
Jun 10 1290.50 1302.50 1289.50 1300.00 20.50 1300.00 7767 16216
Jul 10 1289.50 1302.00 1288.50 1299.50 19.50 1299.50 277 160
Sep 10 1290.00 1300.00 1290.00 1299.00 21.00 1299.00 112 444
Dec 10 1290.50 1300.00 1290.50 1297.50 18.50 1299.50 30 246

Source: Bursa Malaysia

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 4 June 2010

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

US Market Leads:

♦ US markets extended their gains for a second day last night, but it pared some of its gains ahead of the US key
jobs data on Friday.

♦ Earlier, markets enjoyed a strong run-up in the morning session, as investors snapped up stocks like energy and
technology stocks. However, buying momentum tapered off after disappointing ISM service data and another
fresh round of weakness in the euro.

♦ Also, investors turned cautious ahead of the monthly nonfarm payrolls report due on Friday. According to the
Reuters’ poll, US employers might have added 513,000 jobs in May.

♦ In response to the larger-than-expected decline in the US crude and gasoline inventories, the US light sweet
crude oil futures for July delivery jumped US$1.75 or 2.4% to US$74.61/barrel.

Technical Interpretations:

Dow Jones Industrial Average (DJIA)

♦ After trading between 10,175.02 low and 10,315.21 high, the US DJIA settled the day at 10,255.28 by inching up
5.74 pts or 0.06% on Thursday.

♦ Chart wise, the formation of a “doji-like” candle points to uncertainties ahead. But backed by the 10,150 support
level and the improved momentum readings, it could still march higher today.

♦ However, as we reiterated, it needs to remove the 21-day SMA of 10,403 to turn positive on its short-term
direction.

♦ Should it fail, sellers are likely to return, with the immediate downside support at 10,150, followed by the recent
low of 9,774.48.

Nasdaq Composite (Nasdaq)

♦ Underpinned by firm buying momentum, the Nasdaq Composite Index managed to reclaim the key 21-day SMA
of 2,298 by rising another 21.96 pts or 0.96% to 2,303.03 yesterday.

♦ Technically, the successful penetration of the 21-day SMA marks a positive tunaround in the short-term outlook.
Potentially, this could lead to a further retest of the immediate hurdle at 2,330 soon.

♦ But until it can fully break out from 2,330, we still expect it to trade rangebound at between 2,190 and 2,330 in
the near term.

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

Unisem (M) Bhd (5005)

Limited upside ahead…

♦ The upward momentum on Unisem’s uptrend accelerated after the 10-day SMA rebounded to above the 40-day
SMA in late Dec 2009.

♦ The stock experienced some profit-taking pressure at the RM2.60 hurdle, but ramped over the level in Mar 2010,
before topping a high of RM3.53 in early May.

♦ Unfortunately, as it failed to sustain at above RM3.42 level, it began losing momentum and subsequently fell
below the key RM3.00 level to trigger a medium-term bearish Head-and-Shoulders formation (H&S).

♦ As a result, the stock fell to a low of RM2.52, marginally below the key resistance-turn-support level of RM2.60,
before issuing a mild technical rebound in recent trading.

♦ The stock surpassed the 10-day SMA of late and touched a high of RM2.96 yesterday, before closing off high at
RM2.92.

♦ Yesterday’s candlestick pattern, coupled with the upbeat momentum readings and the increase in daily turnover
of late suggest the stock may see further upside potential today.

♦ However, we see a significant resistance region near the neckline of the H&S at RM2.95, the RM3.00 key
psychological level and the 40-day SMA near RM3.05 to cap near-term upside.

♦ As such, we see limited upside ahead for the stock.

♦ In fact, we will keep our medium-term bearish outlook on the stock with a target near the RM2.10 support level
and the long-term UTL nearby, until and unless the 10-day SMA (RM2.74) cuts above the 40-day SMA again or
the stock surpasses the RM3.42 higher resistance level.

Technical Readings:

♦ 10-day SMA: RM2.74

♦ 40-day SMA: RM3.052

♦ Support: IS = RM2.60 S1 = RM2.40 S2 = RM2.10

♦ Resistance: IR = RM3.00 R1 = RM3.42

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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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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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