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

6 July 2010
MARKET DATELINE

Market Technical Reading

Immediate-term Outlook Turning More Bearish...

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

Local Market Leads:

♦ Undermined by constant selling activities amid growing concerns over the global economic prospects, the FBM
KLCI extended its losing streak for the sixth straight day and lost the crucial 1,300 psychological level on Monday.

♦ Upon closing, the index was down by another 7.94 pts or 0.61% to 1,299.50, with strong selling pressure on
selective heavyweights like Sime (-20sen) and CIMB (-7sen).

♦ Apart from that, the sharp afternoon selldown in the FKLI also dampened sentiment in the cash market. The FKLI
broke to below the 1,300 psychological level as it slid nearly 1% to 1,293.5 yesterday.

♦ Elsewhere, Asian stocks finished mixed amid the lack of trading catalyst from the US markets. The US financial
markets were closed for Independence Day holiday on Monday.

♦ Turnover slowed to 450m shares, down sharply from last Friday’s 626m shares. Market breadth was negative, as
decliners outnumbered advancers by a ratio of more than 2 to 1.

Technical Interpretations:

♦ As selling activities persist, the FBM KLCI headed lower and breached to below the psychological threshold of
1,300 with a huge bearish candle.

♦ Not only that, the benchmark also failed to defend the 40-day SMA near 1,306. This indicates that a sharper
correction leg could be underway, if it fails to reclaim the 40-day SMA.

♦ Coupled with the recent “sell” signal on the 14-day RSI and the newly “oversold” momentum on the stochastic
oscillators, added with the fresh downtick on the 10-day SMA of 1,318, we see a high risk of further fall ahead.

♦ As a result, a steeper correction towards the 1,250 support level can be expected in the near term, in our view.

Please read important disclosures at the end of this report.

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Daily Trading Strategy:

♦ Led by a fresh breakdown of the local futures index with the FKLI falling to below the 1,300 critical level, the FBM
KLCI broke the 1,300 psychological support yesterday.

♦ As it also lost the 40-day SMA of 1,306, the immediate-term outlook of the FBM KLCI has turned bearish.

♦ Unless it can dramatically reclaim the 1,300 level and the 40-day SMA today, it is poised to see further selling
pressure and head towards the lower support level of 1,250 – the critical trigger for the major Head & Shoulders
formation on the chart.

♦ Trading sentiment is likely to stay sluggish today, pending the resumption of trading in the US financial markets
tonight, after a long weekend holiday.

♦ Meanwhile, trading leads should track those of the local futures market today, as the FKLI struggles to stay near
to the 1,300 critical level after a nearly 1% drop yesterday.

♦ Investors, therefore, in our view, should capitalise on the current resiliency of the local market to “sell into
strength” before the FBM KLCI benchmark heads lower and breaches the 1,250 critical level in the near term.

Table 2 : Major Indices & Commodities

Table 1 : Daily Statistics Change Change
Scoreboard 29 June 30 June 01 Jul 02 Jul 05 Jul Local Key Indices Closing
(Pts) (%)
Gainers 175 267 206 286 182 FBM KLCI 1,299.50 -7.94 -0.6
Losers 514 343 413 300 425 FBM 100 8,550.41 -53.40 -0.6
Unchanged 252 259 238 263 270 FBM ACE 3,747.19 -37.27 -1.0
Untraded 423 494 506 514 484 Major Overseas
Indices
Market Cap Dow Jones 9,686.48 Closed Closed
Turnover Nasdaq 2,091.79 Closed Closed
(mln shares) 741 564 558 626 450 S&P 500 1,022.58 Closed Closed
Value (RM FTSE 4,823.53 -14.56 -0.3
mln) 1,059 988 1,023 974 718 Hang Seng 19,842.20 -63.12 -0.3
Jakarta Composite 2,877.30 5.75 0.2
Currency Nikkei 225 9,266.78 63.07 0.7
MYR vs US Seoul Composite 1,675.37 3.55 0.2
Dollar 3.2505 3.2350 3.2375 3.2220 3.2060 Shanghai Composite 2,363.95 -18.95 -0.8
SET 804.03 1.46 0.2
Source: RHBInvest & Bloomberg FT Straits Times 2,844.02 -0.17 0.0
Taiwan Weighted 7,439.96 109.22 1.5
India Sensex 17,441.44 -19.51 -0.1
Major Commodities
NYMEX Crude Oil
(US$/barrel) 72.14 Closed Closed
MDEX CPO – Third
Month (RM/metric ton) 2,290.00 -45.00 -1.9
US Interest Rate Current Last Updated
22-23 Jun
Overnight Fed Fund Rate 0-0.25% Unch
2010
Next FOMC meeting 10 Aug 2010

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Chart 3: FKLI Daily Chart 4: FKLI Intraday

Technical Interpretations:

♦ After experiencing a brief recovery in the early trading, the FKLI resumed its selling momentum by ending below
the 1,300 psychological level on Monday.

♦ From a high of 1,307, sellers worked its way through and pressed the FKLI lower in the afternoon trading. In fact,
it has prompted a fresh breakdown of the FKLI to below the critical 1,300 level upon closing.

♦ For the day, the FKLI for Jul contract stumbled 12.00 pts or 0.92% to 1,293.50, with a huge bearish candle on
the chart.

♦ The decline from the 1,300 level also reinforced the negative signs from the fallout to below the 40-day SMA
yesterday.

♦ In our view, the futures index is facing a higher risk of follow-through selling momentum and is expected to
revisit the next lower support at 1,270 soon, if it fails to reclaim 1,300 and the 40-day SMA.

♦ Beyond the 1,270 support level, the index will find a mild support at the May’s low of 1,240.5.

Daily Trading Strategy:

♦ As we warned earlier, the failure of the FKLI lauching a quick recovery to above the 40-day SMA has caused a
clear “sell” signal and prompted it to lose the psychological support at 1,300.

♦ With yesterday’s closing, traders should expect further selldown today towards the 1,270 level.

♦ Meanwhile, the trading range for the FKLI is expected to be from 1,280 to 1,295 today.

Table 3: FKLI Closings

FKLI (Month)
Contracts Open High Low Close Chg (Pts) Settle Volume Open Interest
Jul 10 1305.50 1307.00 1291.50 1293.50 -12.00 1293.50 7087 16108
Aug 10 1304.50 1305.50 1291.50 1293.00 -11.50 1293.00 174 96
Sep 10 1305.50 1305.50 1291.50 1291.50 -13.00 1291.50 102 538
Dec 10 1306.00 1306.00 1293.00 1293.50 -11.50 1293.50 27 227

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 markets are closed on Monday in conjunction with the 4th of July Independence Day holiday. Trading will
resume on Tuesday.

Technical Interpretations:

Dow Jones Industrial Average (DJIA)

♦ Nil.

Nasdaq Composite (Nasdaq)

♦ Nil.

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Daily Technical Watch:

Chart 7: Supermx Daily Chart 8: Supermx Intraday

Supermax Corporation (7106)

Likely to retreat towards the 40-day SMA of RM5.48 soon…

♦ The share price of Supermx has been trading on an uptrend since Apr 2009, when the 10-day SMA cut above the
40-day SMA to point to a medium-term bullish outlook on the chart.

♦ After it hit a high of RM4.94 in Jan 2010, near the resistance at RM4.97, the stock pulled back to the support
level of RM3.90 in Feb 2010.

♦ However, on its second attempt in Mar, the stock pierced through the RM4.97 level after a brief consolidation.

♦ Thereafter, it fluctuated at above RM4.97 but below the RM5.96 significant resistance level.

♦ In Jun, the stock retested the resistance level of RM5.96, but encountered heavy selling pressure, prompting a
fresh retreat on the share price in recent trading.

♦ This downshift has pressed the stock to below the 10-day SMA near RM5.84 and caused the momentum readings
to close mixed.

♦ If it still unable to recoup its recent loss ground, it is likely to retreat towards the 40-day SMA of RM5.48, before
retesting the resistance-turn-support level of RM4.97 soon.

♦ Nevertheless, without further deterioration of the current technical platform, the stock should keep its current
trading range from RM4.97 to RM5.96 in the near to medium term.

Technical Readings:

♦ 10-day SMA: RM5.838

♦ 40-day SMA: RM5.48

♦ Support: IS = RM4.97 S1 = RM3.90 S2 = RM3.50

♦ Resistance: IR = RM5.96 R1 = RM6.60

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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
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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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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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