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

16 August 2010
MARKET DATELINE

Market Technical Reading

Must Remove The 10-day SMA Convincingly To Resume Its Uptrend…

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

Local Market Leads:

♦ Lifted by a powerful rally in the heavyweight, Genting as well as a bullish turnaround in the overseas sentiment,
the FBM KLCI staged a strong rebound to above the key technical hurdle of 1,350 on Friday.

♦ Genting’s share price rallied 48sen or 6.2% to a fresh multi-year high of RM8.18, after its unit, Genting Singapore
posted surprisingly stellar quarterly earnings.

♦ This has led to a strong rebound on the FBM KLCI. It surged 10.82 pts or 0.80% to settle at 1,360.15, with
Genting alone contributing about 3.63-pts to the benchmark’s gain.

♦ With the exception in Hang Seng Index (-0.16%), majority of Asian markets staged a firm rebound, tracking the
strong performance in the US futures markets and early European markets on Friday.

♦ Turnover expanded further to 996m shares from Thursday’s 798m shares. Market breadth turned positive for the
first time in six trading days with gainers surpassing decliners by a ratio of more than 2 to 1.

Technical Interpretations:

♦ In line with the previous “hammer” candle, the FBM KLCI kicked off a technical rebound to above the critical
support level of 1,350 and ended the day on the dot of the 10-day SMA of 1,360.

♦ By chalking up a huge bullish candle at above the key support of 1,350, near the 10-day SMA with a robust daily
turnover, the FBM KLCI’s short-term outlook will once again turn positive in the near term, technically.

♦ But certainly, for further upside ahead, the index must still acquire a positive confirmation candle at above the 10-
day SMA today.

♦ On follow-through buying momentum, a rechallenge of the recent high of 1,370.52 can be expected soon, before
the sentiment turns more bullish towards the upside target of 1,390.

♦ For now, 1,350 will provide strong support on the downside.

Please read important disclosures at the end of this report.

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Daily Trading Strategy:

♦ Last Friday’s strong rebound with a huge bullish candle has confirmed the previous “hammer-like” candle on the
chart. This suggests a further rebound in the immediate term.

♦ Also, the improved daily turnover and the upticks on the technical momentums have further strengthened the
potential recovery view.

♦ But in our opinion, for the FBM KLCI to launch a sustainable rebound, as well as to resume its bullishness, it must
remove the 10-day SMA of 1,360 convincingly in the near term.

♦ By then only it will see a brighter chance to rechallenge the recent high of 1,370.52. Beyond that, it will fully
restore the bullish sentiment and head its way to the next upside target at 1,390.

♦ However, given the robust buying interests on selective heavyweight like Genting due to positive earnings outlook,
and a possible laggard play on the plantation stocks on strong crude palm oil futures market rally of late, the local
market sentiment is expected to turn more positive this week.

♦ On any pullback, the index should find a good support near the critical level at 1,350.

Table 2 : Major Indices & Commodities

Table 1 : Daily Statistics Change Change
Scoreboard 9 Aug 10 Aug 11 Aug 12 Aug 13 Aug Local Key Indices Closing
(Pts) (%)
Gainers 293 255 207 298 502 FBM KLCI 1,360.15 10.82 0.8
Losers 402 409 464 383 228 FBM 100 8,951.85 68.85 0.8
Unchanged 256 281 279 261 269 FBM ACE 3,813.26 -9.07 -0.2
Untraded 416 421 424 431 374 Major Overseas
Indices
Market Cap Dow Jones 10,303.15 -16.80 -0.2
Turnover Nasdaq 2,173.48 -16.79 -0.8
(mln shares) 699 676 770 798 996 S&P 500 1,079.25 -4.36 -0.4
Value (RM FTSE 5,275.44 9.38 0.2
mln) 1,066 1,133 1,170 1,088 1,361 Hang Seng 21,071.57 -34.14 -0.2
Jakarta Composite 3,053.01 27.37 0.9
Currency Nikkei 225 9,253.46 40.87 0.4
MYR vs US Seoul Composite 1,746.24 24.49 1.4
Dollar 3.1405 3.1495 3.1710 3.1830 3.1660 Shanghai Composite 2,606.70 31.22 1.2
SET 862.16 Closed Closed
Source: RHBInvest & Bloomberg Straits Times 2,939.97 12.93 0.4
Taiwan Weighted 7,891.58 61.79 0.8
India Sensex 18,167.03 93.13 0.5
Major Commodities
NYMEX Crude Oil
(US$/barrel) 75.39 -0.35 -0.5
MDEX CPO – Third
Month (RM/metric ton) 2,718.00 45.00 1.7
US Interest Rate Current Last Updated
10 Aug
Overnight Fed Fund Rate 0-0.25% Unch
2010
Next FOMC meeting 21 Sep 2010

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Chart 3: FKLI Daily Chart 4: FKLI Intraday

Technical Interpretations:

♦ Powered by a solid rebound in the cash market as well as the positive regional sentiment, the FKLI made an
impresive comeback by jumping more than 1% on last Friday.

♦ Following the recent rebound from the 40-day SMA, the bulls continued to push the FKLI higher throughout the
day. At the close, the FKLI for Aug contract soared 15.50 pts or 1.15% to 1,361.50.

♦ With that, the FKLI has successfully reclaimed the 1,350 resistance-turn-support level and the 10-day SMA of
1,360 to repaint a bullish short-term technical scenario.

♦ Based on the huge bullish candle and a fresh “double buy” signal on the short-term momentum indicators, more
near-term run-ups can be expected in early this week.

♦ Nevertheless, the FKLI must first earn a positive confirmation candle at above the 10-day SMA today, before
resuming the bullish technical upswing.

♦ And for the FKLI to expand its bullish momentum towards 1,390, it needs to clear out the recent high of 1,374.50
in the near term.

♦ On a negative note, failure to hold steady at above the 10-day SMA will endanger Friday’s recovery mode and may
potentially threaten another round of downswing toward the critical 1,350 support level.

Daily Trading Strategy:

♦ Thanks to the timely rebound, the chart view has once again turned slightly positive following a successful
recovery to above 1,350 and the crossing of the 10-day SMA of 1,360 last Friday.

♦ But a further confirmation signal is still needed before the chart can turn more bullish going forward. It must at
least register another positive candle at above the SMA to sustain further recovery.

♦ Today, in our view, the trading range for the FKLI is likely to range from 1,356 to 1,368.

Table 3: FKLI Closings

FKLI (Month)
Contracts Open High Low Close Chg (Pts) Settle Volume Open Interest
Aug 10 1347.50 1362.00 1346.50 1361.50 15.50 1361.50 5228 17282
Sep 10 1346.50 1362.00 1346.50 1361.00 17.00 1361.00 436 844
Dec 10 1346.50 1360.50 1346.50 1360.50 14.00 1360.50 137 291
Mar 11 1347.50 1361.50 1347.50 1361.50 13.50 1362.00 13 156

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:

♦ Selling activities continued in US markets for a fourth day last Friday, after the weak retail sales number added
another evidence of a slowdown in the US economic recovery pace.

♦ Retail sales rose less than expected by 0.4% in Jul, suggesting US consumers were tightening their belts amid a
gloomier outlook in jobs market. Also, this overshadowed a higher-than-expected 0.3% rise in consumer price
and a small improvement in consumer sentiment.

♦ In addition, retailer JCPenney’s share price tumbled nearly 4% after its full-year profit forecasts came below
expectations.

♦ As concerns over a slowdown in the US economy persist, the US light sweet crude oil futures for Sep delivery
extended its corrections for a fourth day in a row, losing another 35cents or 0.5% to US$75.39/barrel.

Technical Interpretations:

Dow Jones Industrial Average (DJIA)

♦ Last Friday, the US DJIA extended its correction mode and closed down for a fourth day in a row. It slipped
another 16.80 pts or 0.16% to 10,303.15.

♦ By accumulating another negative candle on the chart, the index is pointing to further weakness ahead.

♦ This means the risk of a further pullback towards the key technical support level at 10,150 and the 10,000
psychological level has increased.

♦ On the upside, the weakening 21-day SMA near 10,453 is expected to cap any attempt to stage a recovery.

Nasdaq Composite (Nasdaq)

♦ As the Nasdaq Composite index failed to extend last Thursday’s recovery momentum, fresh selling pressure
returned and pressed it down by 16.79 pts or 0.77% to 2,173.48 on Friday.

♦ The “negative harami” candle indicates a slowdown on Thursday’s recovery momentum, and suggests
vulnerability to further selling, as it has failed to retake 2,190.

♦ Given the depressed short-term momentum readings, the index may retreat towards the next immediate support
level at 2,100 and the Jul’s low of 2,061.14, if the buying momentum fails to push the index over the 2,190 level
in the early part of this week.

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Daily Technical Watch:

Chart 7: MBMR Daily Chart 8: MBMR Intraday

MBM Resources (5983)

An equal chance to breakout from RM3.19 in the near term…

♦ The share price of MBMR began recovering smoothly since Jul 2009, when its 10-day SMA cut above the 40-day
SMA to trigger a medium-term uptrend.

♦ The stock broke out from an important RM2.70 level in Apr 2010, and surged steeply to a high of RM3.19.

♦ However, it was pressed down to below the RM2.70 level in late May, on strong profit-taking pressure.

♦ By early Jun, the stock regathered its upward momentum and relaunched a technical rebound.

♦ Thanks to the recovery on the 10-day SMA to above the 40-day SMA, the stock reached an intraday high of
RM3.20 on Friday, before closing at RM3.16.

♦ Technically, it registered a “star-like” candle on the chart, indicating potential further profit-taking activities this
week.

♦ If this occurs, the stock’s outlook will turn negative as it will confirm a “double top” formation at the RM3.19
resistance level.

♦ However, as the momentum readings stayed mixed, and the 10-day SMA is still heading higher, we see an equal
chance for the stock to breakout from RM3.19 this week.

♦ A successful removal of RM3.19 will mean an extension of the recent rally towards RM3.61 and RM3.83 in the
near term.

Technical Readings:

♦ 10-day SMA: RM3.049

♦ 40-day SMA: RM2.989

♦ Support: IS = RM2.95 S1 = RM2.70

♦ Resistance: IR = RM3.19 R1 = RM3.61 R2 = RM3.83

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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
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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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