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

31 May 2010
MARKET DATELINE

Market Technical Reading

“Sell Into Strength” On Possible Further Rebound...

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

Local Market Leads:

♦ In tandem with the strong bargain-hunting support in the regional markets, the FBM KLCI finally reversed its
nine-day losing streaks with a powerful technical rebound on Thursday. It was closed on Friday.

♦ Despite a weak opening on the back of the late overnight selldown in the Wall Street last Wednesday, the local
benchmark quickly regained its lost ground and marched into the positive territory.

♦ In fact, the recovery pace intensified in the afternoon session, helped by the positive performance in the regional
bourses. Amongst the outperforming markets, KOSPI rallied 1.60%, while FTSTI surged 1.62%.

♦ Investors rushed back to snap up the recent bashed-down stocks like Sime (+23sen), Maybank (+19sen) and
CIMB (+13sen), lifting the FBM KLCI to close up by 20.22 pts or 1.62% to 1,269.16.

♦ However, overall turnover eased to 864m shares from Wednesday’s 930m shares. Market breadth stayed positive
for a second day, as gainers outnumbered losers by a ratio of more than 4 to 1.

Technical Interpretations:

♦ Underpinned by strong bargain-hunting activities, the FBM KLCI generated a powerful rebound and closed
Thursday with a huge “bullish engulfing” candle on the chart.

♦ The candlesticks pattern suggests a likelihood of a reversal pattern, after the index managed to sustain at above
the key 1,250 level, with a rebound due to the “8 to 10 candles pattern” formation.

♦ Plus an uptick in both the 14-day RSI and stochastic oscillators, the FBM KLCI is ready to expand its recovery
momentum towards the technical gap near 1,290.51 – 1,300.44 and the heavy support-turn-resistance hurdle at
1,300.

♦ Now, 1,250 will become the immediate support level of the FBM KLCI, while the 1,300 and the technical gap will
be the resistance levels.

Please read important disclosures at the end of this report.

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Daily Trading Strategy:

♦ Basically, we were not surprise with last Thursday’s sharp rebound, as we had earlier anticipated a rebound in
view of the “8 to 10 candles” pattern formation on the chart.

♦ But, sealed with a huge “bullish engulfing” candle at above the 1,250 technical level on last Thursday, coupled
with the turnaround in the short-term momentum readings, a further technical rebound can be expected going
forward, towards a technical gap near 1,290.51 – 1,300.44 and the heavy support-turn-resistance hurdle at
1,300 soon.

♦ Having said that, this will not alter our bearish medium-term outlook on the FBM KLCI.

♦ Without a successful removal of the psychological level of 1,300, and the 10-day SMA of 1,294, the upside will
likely be limited.

♦ In fact, investors should continue to “sell into strength”, pending resumption of selling activities.

♦ As a note, investors should remember that a loss of the 1,250 key support level will mark further downside
adjustment towards the 23.6% FR level at 1,229 and the 1,200 psychological level, followed by the 38.2%FR
level near 1,154.

Table 2 : Major Indices & Commodities

Table 1 : Daily Statistics Change Change
Scoreboard 21 May 24 May 25 May 26 May 27 May Local Key Indices Closing
(Pts) (%)
Gainers 145 252 82 426 635 FBM KLCI 1,269.16 20.22 1.6
Losers 678 415 846 320 142 FBM 100 8,320.10 139.77 1.7
Unchanged 169 285 152 265 195 FBM ACE 3,795.30 106.09 2.9
Untraded 384 421 293 361 405
Major Overseas
Market Cap Indices
Turnover Dow Jones 10,136.63 -122.36 -1.2
(mln shares) 886 662 941 930 864 Nasdaq 2,257.04 -20.64 -0.9
Value (RM S&P 500 1,089.41 -13.65 -1.2
mln) 1,764 1,287 1,787 2,109 1,240 FTSE 5,188.43 -6.74 -0.1
Hang Seng 19,766.71 335.34 1.7
Currency Jakarta Composite 2,713.92 17.14 0.6
MYR vs US Nikkei 225 9,762.98 123.26 1.3
Dollar 3.3180 3.3180 3.3610 3.3200 3.3105 Seoul Composite 1,622.78 15.28 1.0
Shanghai Composite 2,655.78 -0.14 0.0
Source: RHBInvest & Bloomberg SET 737.28 closed closed
FT Straits Times 2,739.70 closed closed
Taiwan Weighted 7,295.32 52.16 0.7
India Sensex 16,863.06 196.66 1.2
Major Commodities
NYMEX Crude Oil
(US$/barrel) 73.97 -0.58 -0.8
MDEX CPO – Third
Month (RM/metric ton) 2,457.00 5.00 0.2
US Interest Rate Current Last Updated
Overnight Fed Fund 27-28 Apr
0-0.25% Unch
Rate 2010
Next FOMC meeting 22-23 June 2010

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 31 May 2010

Chart 3: FKLI Daily Chart 4: FKLI Intraday

Technical Interpretations:

♦ As strong buying wave swept across the board amid positive leads from the overseas markets, the KL futures
index pushed for another strong day, soaring more than 2% on Thursday.

♦ In fact, sentiment turned buoyant, with the futures index intensifying its bullish momentum towards the late
session in response to the positive performance in the European markets on late Thursday.

♦ At the close, the FKLI for May contract rallied 26.00 pts or 2.08% to 1,279.00, a clearly strong bounce from the
early intraday low of 1,245.50. Meanwhile, the June contract gained 25.50 pts or 2.04% to 1,278.50.

♦ Chart wise, the FKLI chalked up a huge “bullish engulfing” candle and successfully covered a technical gap near
1,263 to 1,269.

♦ Impressively, the futures index also closed at above the strong technical hurdle at 1,270.

♦ Plus the positive momentum readings, the FKLI should see further recovery towards the 10-day SMA of 1,294
near another technical gap between 1,292.5 and 1,296.0 soon, followed by the 1,300 important support-turn-
resistance level.

♦ However, the medium-term outlook remains negative, in our opinion. Without a successful removal of the 1,300
psychological level and the 10-day SMA of 1,294, the recent bearish signal remains intact.

♦ In fact, traders should bear in mind, a loss of 1,270 again will mark another dip towards the lower psychological
level of 1,200 imminently.

Daily Trading Strategy:

♦ Last Thursday’s stunning rebound points to further recovery ahead.

♦ But, if it fails to overcome the 10-day SMA of 1,294, a technical gap between 1,292.5 and 1,296.0 as well as the
1,300 hurdle, sellers will return to pound the FKLI lower.

♦ The FKLI is expected to swing from 1,270 to 1,292 today.

Table 3: FKLI Closings

FKLI (Month)
Contracts Open High Low Close Chg (Pts) Settle Volume Open Interest
May 10 1248.00 1279.00 1245.50 1279.00 26.00 1279.00 14702 18642
Jun 10 1245.50 1278.50 1244.00 1278.50 25.50 1278.50 13088 8662
Sep 10 1243.00 1277.00 1242.00 1277.00 26.00 1277.00 323 398
Dec 10 1246.00 1277.00 1245.00 1276.00 24.50 1278.00 99 248

Source: Bursa Malaysia

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 31 May 2010

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

US Market Leads:

♦ The US Wall Street fell on Friday, after gaining more than 3% on Thursday, when China dismissed reports that
they were reviewing their nation's investment in European bonds amid concerns about the continent's debt
problems. The country also pledged to stay invested in European debt.

♦ However, on Friday, investors turned sellers after a rating agency downgraded Spain’s debt one notch lower,
rattling investors’ sentiment in the already thinly traded market on Friday. Most investors were away ahead of the
long Memorial Day weekend.

♦ Friday’s closing also marked the worst May in recent years. The US DJIA lost 7.9% in May, its worst May since
1940, when it lost 21.7% 70 years ago. The S&P 500 and Nasdaq lost 8.2% and 8.3% respectively in May.

♦ The US light sweet crude oil futures for July delivery fell US$0.58 to US$73.97 a barrel on the New York
Mercantile Exchange.

Technical Interpretations:

Dow Jones Industrial Average (DJIA)

♦ Despite launching a significant rebound on Thursday to above the key level of 10,150, the US DJIA lost 122.36
pts or 1.19% to 10,136.63 on Friday, marginally missing the key level again to paint a cautious mode ahead.

♦ Chart wise, the index registered a negative candle, with a mixed momentum reading, implying a poor
performance likely in the immediate term.

♦ We expect the index to struggle to maintain near to the 10,150 level in the near term, but warn of a steep fallout
again, should it give up the psychological level of 10,000 soon.

♦ Support is only seen near 9,200 – 9,700 region.

Nasdaq Composite (Nasdaq)

♦ Likewise, the Nasdaq Composite Index turned lower on Friday, after gaining a positive candle on Thursday. It
lost 20.64 pts or 0.91% to 2,257.04 with a “negative harami” candle on the chart.

♦ The sudden retreat has prompted the 14-day RSI to ease lower, while suggesting a potential pullback on the
recent rebound.

♦ We see a good support at the 2,190 level, but resistance is seen at 2,330, near the 21-day SMA of 2,326.

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

Green Packet (0082)

Upside will be capped at RM1.10…

♦ GPacket broke out from a consolidation phase in Oct 2009 near RM0.70 level, and rallied all the way to a high of
RM1.68 in Nov 2009.

♦ However, almost immediately, the stock plunged towards a low of RM1.00, before stabilising at above the RM1.10
significant support level.

♦ The stock fluctuated around RM1.10 to RM1.40 initially, but since Mar 2010, its technical outlook has deteriorated.

♦ The 10-day SMA has eased to below the 40-day SMA, indicating a bearish medium-term outlook, and the share
price fell below the RM1.10 important level in Apr 2010.

♦ The stock continued to fall and reached a low of RM0.82 last week, before issuing a dramatic turnaround in late
last week. It registered two consecutive positive candles to RM0.99, after testing a high near the 40-day SMA of
RM1.01 on last Thursday.

♦ Technically, the candlestick pattern suggests follow-through buying momentum likely ahead, but the stock could
potentially retest the heavy support-turn-resistance level of RM1.10 soon.

♦ However, dampened by the medium-term negative view, the outlook will remain negatively biased unless it can
remove the RM1.10 level convincingly.

♦ If fails, the current upside will be capped at RM1.10, and the stock will retract to the supports at RM0.82 and
RM0.95 in the near term.

Technical Readings:

♦ 10-day SMA: RM0.893

♦ 40-day SMA: RM1.0144

♦ Support: IS = RM0.95 S1 = RM0.82 S2 = RM0.70

♦ Resistance: IR = RM1.10 R1 = RM1.40 R2 = RM1.65

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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
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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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