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

10 March 2010
MARKET DATELINE

Market Technical Reading

Outlook Remains Positive If It Sustains At Above 1,300…

Chart 1: KLCI Daily Chart 2: KLCI Intraday

Local Market Leads:

♦ Led by profit-taking activities on key blue chips, the FBM KLCI took a breather, closing lower on Tuesday after the
recent bullish chart breakout.

♦ Also, given the lacklustre sentiment in the regional markets, amid lack of trading catalysts, investors decided to
lock in profit on the rallied big-cap stocks like Maybank (-11sen) and Genting (-15sen).

♦ For the day, the FBM KLCI settled down at 1,317.94, losing 6.28 pts or 0.47%.

♦ Savvy investors turned sideline again yesterday, forcing the turnover to dwindle back to 798m shares, versus
Monday’s 1.16bn shares. Disappointedly, losers topped gainers again by 455 to 253.

♦ Other Asian counterparts closed nearly flat. Hang Seng inched up 0.05%, while Nikkei 225 eased 0.17%.

Technical Interpretations:

♦ As sellers resumed control, the FBM KLCI encountered sustained profit-taking pressure throughout the day.

♦ As a result, the index registered a “negative harami” candle, implying a reduction in the recent bullish momentum.

♦ Coupled with mixed short-term momentum indicators, the benchmark could extend yesterday’s fall today.

♦ However, based on the recent bullish technical breakout from the 1,300 psychological level, we remain bullish on
the short- to medium-term outlook on the FBM KLCI.

♦ As such, we only expect a shallow retracement ahead, before seeing the return of bargain-hunting activities.

♦ Immediate upside target upon the resumption of bullish buying momentum could lead the index towards the
upper technical gap near 1,354.79.

♦ On the downside, we expect the 1,300 psychological level to buffer any immediate profit-taking pressure.

Please read important disclosures at the end of this report.

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 10 March 2010

Daily Trading Strategy:

♦ Instead of heading higher towards the upper technical gap near 1,354.79, the FBM KLCI took a breather on
strong profit-taking pressure yesterday.

♦ Though the selling is expected to persist today based on the short-term weakness on the technical picture, the
index could just go lower to cover a technical gap at the 1,300.74 - 1,312.18 region.

♦ In other words, the 1,300 psychological level should cap further downside.

♦ We keep our bullish short- to medium-term technical outlook on the FBM KLCI, so long as it sustains at above
1,300.

♦ While the underlying market sentiment is expected to cool down slightly and the trading volume dwindles again in
the next few sessions, we foresee the bargain-buying support to return as soon as the index can form a solid
base near 1,300.

Table 2 : Major Indices & Commodities

Table 1 : Daily Statistics Change Change
Scoreboard 3 Mar 4 Mar 5 Mar 8 Mar 9 Mar Local Key Indices Closing
(Pts) (%)
Gainers 294 281 547 583 253 FBM KLCI 1,317.94 -6.28 -0.5
Losers 402 385 194 194 455 FBM 100 8,619.92 -39.45 -0.5
Unchanged 270 282 236 256 258 FBM ACE 4,277.31 -33.91 -0.8
Untraded 370 388 359 304 375 Major Overseas
Indices
Market Cap Dow Jones 10,564.38 11.86 0.1
Turnover Nasdaq 2,340.68 8.47 0.4
(mln shares) 864 727 942 1,161 798 S&P 500 1,140.45 1.95 0.2
Value (RM FTSE 5,602.30 -4.42 -0.1
mln) 1,511 1,268 1,564 2,259 1,453 Hang Seng 21,207.55 10.68 0.1
Jakarta Composite 2,657.17 30.72 1.2
Currency Nikkei 225 10,567.65 -18.27 -0.2
MYR vs US Seoul Composite 1,660.83 0.79 0.0
Dollar 3.3725 3.3710 3.3620 3.3380 3.3410 Shanghai Composite 3,069.14 15.91 0.5
SET 718.77 -1.52 -0.2
Source: RHBInvest & Bloomberg FT Straits Times 2,839.54 4.97 0.2
Taiwan Weighted 7,770.59 8.32 0.1
India Sensex 17,052.54 -50.06 -0.3
Major Commodities
NYMEX Crude Oil
(US$/barrel) 81.49 -0.38 -0.5
MDEX CPO – Third
Month (RM/metric ton) 2,650.00 -59.00 -2.2
US Interest Rate Current Last Updated
Overnight Fed Fund 26-27 Jan
0-0.25% Unch
Rate 2010
Next FOMC meeting 16 Mar 2010

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 10 March 2010

Chart 3: FKLI Daily Chart 4: FKLI Intraday

Technical Interpretations:

♦ In the absence of clear trading leads from the overseas markets, the local futures market ended lower on
Tuesday following the recent strong run-up.

♦ The FKLI experienced a sharp pullback as much as 7.5 pts to 1,316.00 low, but staged a rebound in late session.

♦ This helped to narrow the early losses, and lifted the FKLI for March contract off low with 2.50 pts or 0.19% loss
to 1,321.00.

♦ But with a negative candle on the chart, the possibility of a near-term pullback remains.

♦ Compounded with the mixed short-term momentum readings, the futures index could ease towards a lower gap
near 1,305 - 1,311 soon.

♦ Nevertheless, we are convinced that the recent bullish technical breakout from the 1,300 psychological hurdle
could protect the current trading sentiment.

♦ In fact, we foresee a return of buying momentum once the FKLI covers the lower technical gap near the 1,300
pcyshological support.

♦ Upside target near the upper technical gap of 1,348 remains to be challenged soon.

Daily Trading Strategy:

♦ We remain bullish on the FKLI’s overall technical outlook, though we do not discount the possibility of a shallow
retracement towards a lower gap near 1,305 - 1,311 and 1,300.

♦ Traders can prepare to reposition their “long” calls, when the futures index reaches the 1,300 support again.

♦ For today, its trading band is expected to be around 1,311 to 1,326.

Table 3: FKLI Closings

FKLI (Month)
Contracts Open High Low Close Chg (Pts) Settle Volume Open Interest
Mar 10 1324.50 1325.00 1316.00 1321.00 -2.50 1321.00 5146 17214
Apr 10 1321.00 1321.00 1313.00 1318.50 -3.00 1318.50 369 581
Jun 10 1317.00 1317.00 1310.00 1315.50 -2.50 1316.00 70 597
Sep 10 1313.00 1313.00 1310.00 1312.00 -5.50 1315.00 32 183

Source: Bursa Malaysia

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 10 March 2010

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

US Market Leads:

♦ Wall Street ended slightly higher on the anniversary of the 2009 bear-market bottom on Tuesday, driven by gains
in telecommunication and financial stocks.

♦ Telecommunication stocks, including AT&T (+1.1%) and Verizon Communications (+0.9%) climbed higher after
Cisco Systems unveiled a higher capacity router.

♦ Also, financial stocks led by American International Group Inc (AIG) and Citigroup were in the market spotlight.
AIG’s share leapt 12.6% on speculation that the company will sell more assets, while the latter jumped 7.3% on
talks that the US government is discussing to sell its 27% stake in the bank.

♦ Weighed down by a stronger US dollar, the US light sweet crude oil for Apr delivery fell off from the recent 8-
week high. It eased US$0.38 or 0.5% to settle at US$81.49/barrel, but off its day low of US$80.16.

Technical Interpretations:

Dow Jones Industrial Average (DJIA)

♦ Due to the late profit-taking activities, the US DJIA pared down its early gains from the 10,612.60 high to end at
10,564.38 with a 11.86 pts or 0.11% gain.

♦ As it registered a “shooting star” candle, coupled with the mixed short-term momentum indicators, the risk of
staging a pullback is increasing.

♦ In our view, unless it can create a fresh year high by breaking beyond 10,612.60, it is likely to turn lower in
coming days. Still, we see a strong support near the 21-day SMA of 10,316.

♦ The next upper challenge remains at the Jan high of 10,729.89, followed by the 10,850 level.

Nasdaq Composite (Nasdaq)

♦ The Nasdaq Composite Index extended its gains for a fourth winning streak, gaining 8.47 pts or 0.36% to
2,340.68.

♦ With its fourth positive candle on the chart, this has confirmed a bullish technical breakout from the heavy 2,330
barrier.

♦ This in turn, could prepare the index for another extended rally towards the next resistance target of 2,470 in the
near term. Its immediate support is near a technical gap at 2,293.16.

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

Faber Group (1368)

Poised to head higher towards RM2.10 and RM2.29 soon…

♦ In early Nov 2009, the share price of Faber kicked off a surprise rally with a strong breakout from the tough
RM1.25 resistance hurdle and moved above the RM1.40 level.

♦ Backed by continuous follow-through buying momentum, the stock charged ahead in Dec 2009, and pierced
through the Rm1.65 tough hurdle in Jan 2010.

♦ But, after topping a high at RM1.81 in the same month, the stock registered a “shooting star” candle and settled
for a consolidation phase.

♦ The stock built a base near RM1.54 – RM1.65 region, near the support of the 10-day and 40-day SMAs, and
blasted across the key RM1.65 resistance level in early Mar.

♦ As the buying momentum charged higher, the stock has successfully penetrated its two-and-a-half years high of
RM1.86 and a technical resistance of RM1.85 recently, marking another important technical breakthrough.

♦ Ended with a huge “bullish engulfing” candle at above the RM1.85 barrier yesterday, the chart is pointing to a
possible acceleration of the bullish momentum soon.

♦ In our view, it is poised to trend higher towards the next technical stop at RM2.10, before rechallenging the
RM2.29 resistance level, where it had lost since Jul 1997.

Technical Readings:

♦ 10-day SMA: RM1.803

♦ 40-day SMA: RM1.672

♦ Support: IS = RM1.85 S1 = RM1.65 S2 = RM1.54

♦ Resistance: IR = RM2.10 R1 = RM2.29

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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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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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