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

9 August 2010
MARKET DATELINE

Market Technical Reading

Remain Bullish On Short- To Medium-term Outlook…

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

Local Market Leads:

♦ The local market continued its recent consolidation by ending easier, as investors decided to lock in the recent
gains ahead of the key US jobs report due on Friday night.

♦ In fact, most of the local investors stayed cautious even as regional markets staged firm recoveries in the
afternoon, led by a 1.44% rebound on the SHComp. For Friday, Hang Seng rose 0.59%, while Jakarta Composite
resumed its bullish momentum by rising 0.51%.

♦ China markets recovered from Thursday’s selloff after the China banking regulator clarified on the recent stress
test on banks in order to ease investors’ worries. It said hypothetical scenarios examined in stress tests did not
reflect its forecasts for the property sector, nor represent changes in policy.

♦ Still, the FBM KLCI lost another 1.63 pts or 0.12% to 1,360.45 amid persistent selling activities.

♦ Compared to last Thursday’s 994m shares, turnover slowed to 866m shares. There were 367 decliners against 328
advancers.

Technical Interpretations:

♦ Chart wise, the FBM KLCI continued to consolidate its recent gains on Friday, retreating to an intraday low of
1,359.72, nearer to the 10-day SMA of 1,359, before bouncing back mildly.

♦ But, it settled the day with a “bearish engulfing” candle. Plus the weakened momentum indicators, the index could
see further consolidation today.

♦ However, as we reiterated earlier, the 10-day SMA and the key resistance-turned-support level of 1,350 will
continue to absorb selling pressure and will continue to underpin the current uptrend.

♦ And once the consolidation is over, in our view, the bulls are likely to return to push the FBM KLCI over the recent
high of 1,370.52, resuming its bullish uptrend towards the next target at 1,390.

Please read important disclosures at the end of this report.

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Daily Trading Strategy:

♦ Undeniably, the latest technical readings still point to a further consolidation ahead, though the consolidation
appears longer than what we had expected.

♦ But the current correction on the FBM KLCI is healthy and the index’s outlook remains bullish for the short- to
medium-term time frame.

♦ While a further retest of the 10-day SMA near 1,359 and the 1,350 stronghold is possible in the near term, it can
be seen as another opportunity to rebuild position for the coming rally, in our opinion.

♦ Moreover, with the average daily turnover staying robustly at between 800m and 1.0bn shares on the back of solid
rotational plays, and sustained speculative buying interests, the current uptrend still has legs.

♦ Elsewhere in the US, despite the early heavy selloff on the poor jobs data, the Dow still managed to end at above
the recent bullish breakout point of Jun high of 10,594.16 on strong afternoon recovery last Friday. Technically,
the performance indicates the bullish underlying strength on the US market.

♦ Nevertheless, the FBM KLCI needs to cross over the recent high of 1,370.52 to confirm a fresh rally ahead.

Table 2 : Major Indices & Commodities

Table 1 : Daily Statistics Change Change
Scoreboard 2 Aug 3 Aug 4 Aug 5 Aug 6 Aug Local Key Indices Closing
(Pts) (%)
Gainers 494 250 322 362 328 FBM KLCI 1,360.45 -1.63 -0.1
Losers 280 479 363 349 367 FBM 100 8,965.34 -9.64 -0.1
Unchanged 243 270 286 276 281 FBM ACE 3,827.66 -17.59 -0.5
Untraded 348 367 399 378 390 Major Overseas
Indices
Market Cap Dow Jones 10,653.56 -21.42 -0.2
Turnover Nasdaq 2,288.47 -4.59 -0.2
(mln shares) 964 1,106 811 994 866 S&P 500 1,121.64 -4.17 -0.4
Value (RM FTSE 5,332.39 -33.39 -0.6
mln) 1,284 1,463 1,188 1,576 1,256 Hang Seng 21,678.80 127.08 0.6
Jakarta Composite 3,060.59 15.65 0.5
Currency Nikkei 225 9,642.12 -11.80 -0.1
MYR vs US Seoul Composite 1,783.83 -0.03 0.0
Dollar 3.1580 3.1590 3.1660 3.1540 3.1445 Shanghai Composite 2,658.39 37.63 1.4
SET 875.07 0.15 0.0
Source: RHBInvest & Bloomberg Straits Times 2,995.06 -11.70 -0.4
Taiwan Weighted 7,963.30 26.45 0.3
India Sensex 18,143.99 -28.84 -0.2
Major Commodities
NYMEX Crude Oil
(US$/barrel) 80.70 -1.31 -1.6
MDEX CPO – Third
Month (RM/metric ton) 2,661.00 42.00 1.6
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:

♦ As cautious sentiment prevailed, the local futures market ended lower in another quiet trading day last Friday.

♦ Despite the improvement in the local sentiment in the afternoon session following a rebound in the overseas
markets, the FKLI turned lower towards the closing hour amid renewed profit-taking activities.

♦ For the day, the FKLI for Aug contract dropped 3.50 pts or 0.26% to 1,363.00, near its day low of 1,362.50.

♦ Still, the FKLI managed to chalk up an “inverted hammer” candle, suggesting a possible technical rebound ahead.

♦ But due to the weakened short-term momentum readings, the rebound momentum could be mild, technically.

♦ To restore its bullish upward momentum, the FKLI must overcome the recent high of 1,374.50. Only by then, can
it resume the bullish rally towards 1,390.

♦ On the downside, the rising 10-day SMA near 1,361 will support the current uptrend.

♦ And so long as the resistance-turn-support level of 1,350 remains firm, the overall technical landscape for the FKLI
stays bullish.

Daily Trading Strategy:

♦ In line with our expectation, the FKLI eased lower on fresh profit-taking activities on last Friday.

♦ But as we stressed earlier, the uptrend is still very much intact on expectation that the 10-day SMA of 1,361 and
the key 1,350 technical level will be able to mitigate any further downside pressure.

♦ The daily trading range for the futures index is from 1,360 to 1,374 today.

Table 3: FKLI Closings

FKLI (Month)
Contracts Open High Low Close Chg (Pts) Settle Volume Open Interest
Aug 10 1364.00 1368.00 1362.50 1363.00 -3.50 1363.00 2516 18085
Sep 10 1361.50 1367.50 1361.50 1365.50 -0.50 1365.50 69 649
Dec 10 1366.00 1368.00 1364.00 1364.00 -3.50 1363.00 39 275
Mar 11 1368.00 1368.00 1365.00 1365.00 -4.00 1364.00 3 140

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:

♦ Wall Street ended lower on last Friday, as investors unloaded stocks in the wake of poor US monthly jobs reports.

♦ The US Labor Department said US employers cut 131,000 jobs in Jul, far worse than expectation of 65,000 jobs
lost. Meanwhile, the unemployment rate remained steady at 9.5%.

♦ In reponse, the US DJIA tumbled as much as 160-pts at one stage, before recouping most of its losses on the
fresh bargain-hunting support in the afternoon.

♦ The US light sweet crude oil futures for Sep delivery pulled back by another US$1.31 or 1.6% to end at
US$80.70/barrel on Friday.

♦ After the close, Hewlett-Packard tumbled 9% in extended-hours trading, after its CEO Mark Hurd resigned
following an investigation of a sexual harassment case.

Technical Interpretations:

Dow Jones Industrial Average (DJIA)

♦ Thanks to fresh bargain-hunting support, the US DJIA recovered strongly from its intraday low of 10,515.37. For
the day, it only lost 21.42 pts or 0.20% to 10,653.56.

♦ But with a possible “hangman” candle registered and weaker momentum readings on the chart, this could
indicate further weakness ahead for the index.

♦ Nevertheless, the overall bullish uptrend is still intact, as we expect strong bargain-hunting support to reemerge
nearer to its recent breakout point at the Jun high of 10,594.16 and the 21-day SMA of 10,413

♦ On the other hand, if last Friday’s afternoon rebound momentum persists and the index surges to above the
recent high of 10,702.99, it could trigger another wave of rally towards 10,850.

Nasdaq Composite (Nasdaq)

♦ After sliding as much as 39-pts to near the 21-day SMA of 2,250, the Nasdaq Composite index narrowed its
losses by easing only 4.59 pts or 0.20% to 2,288.47. In fact, it recorded a positive candle on the chart.

♦ This means a technical rebound is in the pipeline, if it can secure follow-through buying momentum today.

♦ And for it to intensify its momentum towards 2,330, it needs to take out the recent high of 2,307.60.

♦ Immediate support stays strong near the 21-day SMA.

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Daily Technical Watch:

Chart 7: CBIP Daily Chart 8: CBIP Intraday

CB Industrial Product Holding (7076)

Could challenge the RM3.50 hurdle soon, if it can attract buying at above the 10-day SMA…

♦ CBIP’s share price halted its 4-month strong uptrend after failing to remove the strong resistance barrier at
RM3.50 in Jun 2009.

♦ The failure in turn triggered a nearly 1-year old consolidation trend and forced the stock to hit a low of RM2.35 in
end-May 2010.

♦ But, following a positive cut of the 10-day SMA over the 40-day SMA in late-Jun to issue a positive medium-term
outlook on the chart, the stock enjoyed a steady technical recovery leg.

♦ It even pierced through the tough RM2.88 level in Jul, accelerating its bullish momentum before consolidating
sideways nearer to the 10-day SMA (RM3.12) lately.

♦ Last Friday, it recorded a positive candle and closed firmly at above the 10-day SMA and off its day high of
RM3.23 at RM3.17.

♦ Still, with higher volume and the slightly improved momentum readings, follow-through rebound can be expected
in sessions ahead. In other words, the stock could rechallenge the RM3.50 hurdle soon, if buying continues.

♦ The removal of RM3.50, if it happens, will end its multi-year consolidation phase and lift the stock towards the
higher resistance levels at RM3.94 and RM4.40 next.

Technical Readings:

♦ 10-day SMA: RM3.119

♦ 40-day SMA: RM2.794

♦ Support: IS = RM2.88 S1 = RM2.20 S2 = RM1.75

♦ Resistance: IR = RM3.50 R1 = RM3.94 R2 = RM4.40

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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
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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
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“Connected Persons” means any holding company of RHBRI, the subsidiaries and subsidiary undertaking of such a holding company and the respective directors,
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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.

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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