PP 7767/09/2010(025354)

RHB Research

Malaysia
Technical Research Institute Sdn Bhd
A member of the
8 RHB Banking Group
Company No: 233327 -M

Dail y Trad ing St rat eg y

MARKET DATELINE 30 September 2010
Market Technical Reading
A Penetration Of The 10-day SMA Is Crucial To Trading Sentiment...

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

Local Market Leads:

♦ Bursa Malaysia ended slightly higher on Wednesday, as investors sought bargains following the overnight rebound
in the US markets and gains in early Asian markets on better Chinese manufacturing data.

♦ But during the day, the FBM KLCI mostly traded tepidly due to constant profit-taking activities and poorer early
opening in the European markets.

♦ However, with the last-minute jump in the late session, the local benchmark ended up 2.14 pts or 0.15% to
1,461.78, led by gains in plantation heavyweights, Sime (+14sen) and IOICorp (+5sen).

♦ Despite weaker trading volume, the overall market tone was upbeat due to the strong rally in selected property
and semiconductor stocks. Property-related stocks, UEMLand rallied 17sen to RM2.19 and MRCB shot up 13sen to
RM2.16 on heavy turnover. Meanwhile, chipmaker Unisem jumped 12sen to RM2.02.

♦ Daily turnover fell for a third day to 905m shares. There were 430 advancers against 283 decliners.

Technical Interpretations:

♦ After trading in a tight range of 1,459.12 low and 1,466.29 high, the FBM KLCI ended the day with a small gain,
but chalked up a second negative candle on the chart.

♦ Compounded with its inability to take out the 10-day SMA of 1,466, as well as a shrinking daily turnover, the index
seems headed for further consolidation in the near term.

♦ In fact, with the 10-day SMA gradually turning lower, there is fear that an eventual hookdown on the 10-day SMA
could further dampen the short-term trading sentiment going forward.

♦ If that happens, the index will put a test to the crucial level of 1,450 again soon.

♦ On the upside, upon breaking out from the 10-day SMA, it will regain its short-term bullish momentum to the
recent high of 1,479.59.

Please read important disclosures at the end of this report.

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Daily Trading Strategy:

♦ Once again, the FBM KLCI failed to remove the key short-term resistance at the 10-day SMA near 1,466 yesterday.
This suggests that the recent profit-taking pressure remains strong.

♦ In fact, the risk of further consolidation has actually increased following the formation of another negative candle
yesterday, shrinking daily turnover as well as the declining 10-day SMA.

♦ And without a quick penetration of the 10-day SMA, the FBM KLCI is likely to lose its steam and retreat back to the
technical gap of 1,453.99 – 1,456.30 and even to retest the crucial technical support at 1,450 soon.

♦ We reiterate that the technical outlook of the FBM KLCI will remain positive in the near term so long as it can
sustain at above 1,450. But, we warn that the slowly declining trend on the 10-day SMA could be a potential
source of deteriorating chart readings going forward.

♦ On the brighter side, the strong rotational plays yesterday were pretty encouraging, signaling that the buying
interests remain robust in the local bourse.

♦ We maintain our positive outlook on the FBM KLCI in the medium- to long-term period.

Table 2 : Major Indices & Commodities

Table 1 : Daily Statistics Change Change
Scoreboard 23 Sep 24 Sep 27 Sep 28 Sep 29 Sep Local Key Indices Closing
(Pts) (%)
Gainers 221 408 469 244 430 FBM KLCI 1,461.78 2.14 0.1
Losers 523 307 292 493 283 FBM 100 9,569.98 22.01 0.2
Unchanged 254 289 276 289 306 FBM ACE 3,846.14 -5.82 -0.2
Untraded 354 342 309 327 330 Major Overseas
Indices
Market Cap Dow Jones 10,835.28 -22.86 -0.2
Turnover Nasdaq 2,376.56 -3.03 -0.1
(mln shares) 999 1,727 1,158 977 905 S&P 500 1,144.73 -2.97 -0.3
Value FTSE 5,569.27 -9.17 -0.2
(RM mln) 1,417 1,531 1,623 1,351 1,449 Hang Seng 22,378.67 268.72 1.2
Jakarta Composite 3,495.46 22.75 0.7
Currency Nikkei 225 9,559.38 63.62 0.7
MYR vs US Seoul Composite 1,866.45 10.48 0.6
Dollar 3.0950 3.0900 3.0885 3.0930 3.0835 Shanghai Composite 2,610.68 -0.67 0.0
SET 969.65 10.38 1.1
Source: RHBInvest & Bloomberg Straits Times 3,106.03 8.68 0.3
Taiwan Weighted 8,240.89 51.45 0.6
India Sensex 19,956.34 -148.52 -0.7
Major Commodities
NYMEX Crude Oil
(US$/barrel) 77.86 1.68 2.2
FCPO – Third Month
(RM/metric ton) 2,698.00 -39.00 -1.4
US Interest Rate Current Last Updated
21 Sep
Overnight Fed Fund Rate 0-0.25% Unch
2010
Next FOMC meeting 2-3 Nov 2010

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Chart 3: FKLI Daily Chart 4: FKLI Intraday

Technical Interpretations:

♦ After the previous day’s sharp selloff that pressed the futures index to end at 1,452, the FKLI bounced back from
the key 1,450 technical level on fresh bargain-hunting support yesterday.

♦ However, its gains were capped by profit-taking activities after taking negative leads from another round of fresh
selling pressure in the early European markets.

♦ The FKLI for Sep contract settled the day at 1,459.00 with a 7.00 pts or 0.48% gain. Meanwhile, the widely
watched Oct contract rose 6.50 pts or 0.45% to 1,460.00.

♦ Chartwise, the FKLI formed a “harami cross” candle to signal a positive reversal likely today.

♦ Coupled with the uptick on the short-term momentum indicators, it is ready to rechallenge the 10-day SMA of
1,466 soon.

♦ In our view, the 10-day SMA must be cleared in order to pave the way for a more meaningful technical rebound to
the recent high of 1,485.50 to take place.

♦ Otherwise, it could return into a consolidation mode towards the 1,450 level. Losing the critical level will point it to
the lower supports near the 40-day SMA of 1,415 and the 1,390 - 1,400 region.

Daily Trading Strategy:

♦ Instead of taking a further beating to below the critical level of 1,450, the FKLI bounced back to form a “harami
cross” candle yesterday, suggesting a further rebound likely today.

♦ But in our opinion, buyers must wait until it fully reclaims the 10-day SMA of 1,466 before they can see a
meaningful and stronger technical rebound.

♦ The trading range for today is likely to range between 1,452 and 1,469.

Table 3: FKLI Closings

FKLI (Month)
Contracts Open High Low Close Chg (Pts) Settle Volume Open Interest
Sep 10 1458.50 1465.00 1455.00 1459.00 7.00 1459.00 5518 14465
Oct 10 1456.50 1466.00 1455.50 1460.00 6.50 1459.50 7266 16207
Dec 10 1460.00 1466.00 1456.00 1459.00 5.00 1459.00 103 386
Mar 11 1465.00 1465.00 1459.50 1459.50 4.50 1459.50 8 160

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:

♦ Financial stocks led the US markets lower on Wednesday in the wake of analysts’ downgrade on the financial
sector. And this in turn, offset gains in energy stocks which were buoyed by a rally in crude oil prices.

♦ JPMorgan Chase (-1.4%) and Wells Fargo (-1.2%) took a hit, after investors reacted negatively to analysts’
downgrade on banks’ earnings estimates. Meredith Whitney cut her earnings forecasts on banks for 2010 to
2012, while Goldman Sachs lowered its forecast on Morgan Stanley’s 3Q earnings.

♦ On the other hand, energy stocks, including Sunoco and Chevron ended higher on news that crude oil inventories
dropped more than expected by 475,000 barrels, versus expectations of only 300,000 barrels. As a result, the US
light sweet crude oil futures for Nov delivery surged US$1.68 or 2.2% to US$77.86/barrel.

♦ In the political development, the US House of Representatives passed legislation to pressure China to boost its
currency.

Technical Interpretations:

Dow Jones Industrial Average (DJIA)

♦ Disappointedly, the US DJIA bowed to fresh selling that led to another closing at below the key 10,850 support
level for a second time in four trading days.

♦ It dipped 22.86 pts or 0.21% to 10,835.28 with a “negative harami” candle to imply weaker momentum today.

♦ In fact, as it failed to secure a positive confirmation candle yesterday, the odds of a further consolidation in the
near term is increasing.

♦ This means if there is no quick and decisive removal of 10,850 soon, it could ease down towards the 21-day SMA
of 10,561, and slip back into a rangebound consolidation of between 10,150 – 10,850.

Nasdaq Composite (Nasdaq)

♦ The Nasdaq Composite index also recorded a small “positive harami” candle by easing 3.03 pts or 0.13% lower to
2,376.56 yesterday.

♦ The latest candlestick also points to a potential consolidation ahead. But any short-term weakness will likely be
capped by strong supports at the resistance-turn-support level of 2,330 and the 21-day SMA of 2,286.

♦ In order to reboost its rally towards 2,470, it must at least take out the recent high of 2,386.01.

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Daily Technical Watch:

Chart 7: MMCCorp Daily Chart 8: MMCCorp Intraday

MMC Corporation (2194)

Clearing the recent high of RM2.97 will spell more upside signals ahead…

♦ Since Sep 2009, MMCCorp had been consolidating within a tight trading band of RM2.30 – RM2.55.

♦ But the stock staged a bullish chart breakout from RM2.55 in late Jul 2010.

♦ However, the stock consolidated sideways for about a month near RM2.55, before heading towards the RM2.80
resistance region. It pierced through the RM2.80 level only in recent trading, prior to the current mild profit-
taking pullback at above the RM2.80 level.

♦ But underpinned by the solid resistance-turn-support level of RM2.80, the stock is experiencing strong buying
support near RM2.80 – RM2.90 region in recent sessions.

♦ Yesterday, it edged up by 5sen to end at RM2.94 with a fresh positive candle on the chart.

♦ And backed by the upbeat momentum readings with the stochastic oscillators issuing a fresh “buy” signal, it is set
to extend its bullish momentum in sessions ahead.

♦ Clearing the recent high of RM2.97 will spell more upside signals toward the next target at RM3.08, before
heading higher towards the higher resistance levels of RM3.40 and RM3.68.

♦ On the downside, the recent bullish breakout point near RM2.80 and the 10-day SMA of RM2.85 will underpin the
current uptrend.

Technical Readings:

♦ 10-day SMA: RM2.845

♦ 40-day SMA: RM2.672

♦ Support: IS = RM2.80 S1 = RM2.55 S2 = RM2.30

♦ Resistance: IR = RM3.08 R1 = RM3.40 R2 = RM3.68

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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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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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