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

30 July 2010
MARKET DATELINE

Market Technical Reading

The Bulls Are Ready To Take The Market Higher…

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

Local Market Leads:

♦ Underpinned by firm bargain-buying support on selective heavyweights, the local market edged higher for the fifth
straight day and hit a fresh year high on Thursday.

♦ Investors overlooked the overnight weakness in the US markets, while spreading their buying interest across the
board, from fundamental stocks like Axiata and RHBCap (+12sen) to lower liners, such as TimeCom (+1.5sen),
E&O (+6sen) and Scomi (+2sen).

♦ Axiata was the biggest index mover, as the share price surged 16sen to RM4.31 on strong turnover. Its strong
gain has boosted the FBM KLCI to end at 1,358.41 with a 3.22 pts or 0.24% gain for the day.

♦ Turnover expanded further to 1.0bn shares, compared to Wednesday’s 847m shares. There were 386 advancers
against 345 decliners.

♦ Elsewhere, most Asian markets ended positively following the strong early showing in the European markets.

Technical Interpretations:

♦ Backed by follow-through buying momentum, the FBM KLCI scaled to a fresh year high of 1,359.27 after clearing
the recent high of 1,357.23. It however, eased to end at 1,358.41 on mild profit-taking pressure.

♦ Still, it registered a positive candle, giving the needed confirmation signal to the recent bullish chart breakout from
1,350.

♦ Plus the robust turnover at around 1.0bn shares as well as its ability to hit another fresh year high, the odds of
extending the current upswing are improving.

♦ In other words, the FBM KLCI is likely to advance towards the next upside target at 1,390 in the near term.

♦ Meanwhile, the major resistance-turned-support level of 1,350 will be a strong launching pad for the extended
uptrend.
Please read important disclosures at the end of this report.

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Daily Trading Strategy:

♦ Clearly, the FBM KLCI’s medium-term view has turned more bullish following another positive candle recorded
yesterday, hence confirming the recent breakout of the 1,350 tough resistance level.

♦ Compounded with a fresh year-high on the back of robust daily turnover (800m – 1.0bn shares), the bulls are
ready to take the market even higher in coming sessions, in our view.

♦ Encouragingly, yesterday’s gain spread evenly across the board, as both blue chips and lower liners enjoyed
strong rotational interests throughout the day. This also strongly indicates that the current uptrend is sustainable.

♦ While we do not discount the possibility of mild profit-taking activities ahead of the weekend and the US 2Q GDP
report that is due later tonight, we believe any profit-taking pressure will be well-absorbed.

♦ And given the upbeat technical readings as well as the steady overseas performance of late, the FBM KLCI could
gear up for an extended rally to the next upside target at 1,390.

♦ On the downside, the major resistance-turned-support level of 1,350 will continue to protect the current uptrend.

Table 2 : Major Indices & Commodities

Table 1 : Daily Statistics Change Change
Scoreboard 23 Jul 26 Jul 27 Jul 28 Jul 29 Jul Local Key Indices Closing
(Pts) (%)
Gainers 491 336 308 445 386 FBM KLCI 1,358.41 3.22 0.2
Losers 268 355 381 264 345 FBM 100 8,944.48 22.58 0.3
Unchanged 285 274 285 278 279 FBM ACE 3,803.73 4.55 0.1
Untraded 320 398 391 378 355 Major Overseas
Indices
Market Cap Dow Jones 10,467.16 -30.72 -0.3
Turnover Nasdaq 2,251.69 -12.87 -0.6
(mln shares) 993 851 732 847 1,000 S&P 500 1,101.53 -4.60 -0.4
Value (RM FTSE 5,313.95 -5.73 -0.1
mln) 1,430 1,122 1,335 1,251 1,481 Hang Seng 21,093.82 2.64 0.0
Jakarta Composite 3,096.82 39.34 1.3
Currency Nikkei 225 9,696.02 -57.25 -0.6
MYR vs US Seoul Composite 1,770.88 -2.59 -0.1
Dollar 3.1985 3.1970 3.1815 3.1870 3.1820 Shanghai Composite 2,648.12 14.46 0.5
SET 854.59 0.81 0.1
Source: RHBInvest & Bloomberg Straits Times 2,997.65 12.27 0.4
Taiwan Weighted 7,798.99 14.18 0.2
India Sensex 17,992.00 34.63 0.2
Major Commodities
NYMEX Crude Oil
(US$/barrel) 78.36 1.37 1.8
MDEX CPO – Third
Month (RM/metric ton) 2,514.00 19.00 0.8
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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 30 July 2010

Chart 3: FKLI Daily Chart 4: FKLI Intraday

Technical Interpretations:

♦ Lifted by the resurgence of late buying momentum as well as the solid gains in early European and US futures
markets, the FKLI shrugged off the early sluggish performance to close at its highest level since end-Feb 2008.

♦ The FKLI pulled back mildly to the day low of 1,353.0 in the early session in response to the overnight weakness in
Wall Street, but sentiment improved steadily in the afternoon, causing the futures index to experience waves of
buying momentum towards the close.

♦ For the day, the FKLI for Jul contract settled up by 6.50 pts or 0.48% to 1,362.50, while the more closely watched
Aug contract jumped 7.50 pt or 0.55% to 1,364.00.

♦ On the chart, it has dismissed the earlier pullback threat, by chalking up a positive candle and cut above the
recent high of 1,361.0.

♦ Aided by the improvement in the momentum readings, the FKLI is well poised to extend the current uptrend, in
our opinion.

♦ Support-wise, the resistance-turn-support level at 1,350 will continue to buffer any pullback attempt in the near
term.

Daily Trading Strategy:

♦ Yesterday’s strong breakout from the recent tight range consolidation as well as its ability to hit a fresh year-high
suggest the FKLI is ready to advance for more near-term upside.

♦ Traders should add “long” positions in view of further upside potential to 1,390. Firm support is set at 1,350.

♦ The futures index is projected to swing from 1,358 to 1,375 today.

Table 3: FKLI Closings

FKLI (Month)
Contracts Open High Low Close Chg (Pts) Settle Volume Open Interest
Jul 10 1356.00 1363.50 1353.00 1362.50 6.50 1362.00 4985 10225
Aug 10 1357.00 1365.00 1353.50 1364.00 7.50 1364.50 5736 15599
Sep 10 1355.00 1364.50 1352.50 1364.50 7.50 1364.50 152 503
Dec 10 1354.00 1363.50 1353.00 1363.50 9.00 1363.50 73 276

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:

♦ US markets gave up its early gains by closing lower for a second day on Thursday amid weaker earnings news
from technology and consumer companies.

♦ Tech stocks, Nvidia and Symantec slumped 9.9% and 11.2% respectively after lowering forecasts for the third
quarter. Consumer company Kellogg’s share price dipped 6.9% after cutting its outlook, while Colgate-Palmolive
dropped 6.8% on weaker sales.

♦ Also, investors turned cautious ahead of the 2Q GDP report that is due in late Friday. It was widely expected that
the US economic growth may have slowed to 2% in the second quarter. Separately, Federal Reserve Bank of St.
Louis President James Bullard warned that the US may face a Japanese-style deflationary trap.

♦ On the other hand, the US light sweet crude oil futures for Sep delivery bounced back US$1.37 or 1.8% to
US$78.36/barrel on a weaker greenback.

Technical Interpretations:

Dow Jones Industrial Average (DJIA)

♦ After hitting a new weekly high of 10,584.99, the US DJIA turned lower and hit a low of 10,387.39, before
bouncing back strongly to end the volatile session at 10,467.16 with a 30.72 pts or 0.29% loss yesterday.

♦ This resulted in a formation of a negative candle, indicating a further retreat likely today.

♦ In other words, if it fails to stage a rebound today, it will end the recent technical uptrend.

♦ The Dow will find a solid support near the 21-day SMA of 10,189 and the 10,150 stronghold, nonetheless.

♦ To restore the uptrend, the index must remove Jun’s high of 10,594.16 and yesterday’s 10,584.99 high.

Nasdaq Composite (Nasdaq)

♦ The Nasdaq Composite index took another beating by falling 12.87 pts or 0.57% to 2,251.69 last night.

♦ With three consecutive negative candles in a row, this points to a further downside potential ahead.

♦ However, we are of the view that its downside risk is well-capped by the 21-day SMA of 2,203 and the 2,190
support level. Meanwhile, its resistance stays solidly at 2,330.

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Daily Technical Watch:

Chart 7: Landmrk Daily Chart 8: Landmrk Intraday

Landmarks (1643)

Could launch a fresh uptrend ahead…

♦ Landmrk halted its more than one year bear run after touching a low of RM0.625 in Mar 2009.

♦ The stock triggered a technical rebound after recapturing the RM0.78 level, as the 10-day SMA was secured at
above its 40-day SMA.

♦ It enjoyed a sweet rally and hit RM1.58 in Aug 2009. However, the stock rolled into a downtrend thereafter.

♦ During the last 10 months, the stock drifted lower as the 10-day and 40-day SMAs criss-crossed each other along
the way. It hit a low of RM1.06 in May 2010.

♦ But, after months of consolidation nearer to the RM1.15 level, it blasted off with a powerful rally recently, and
ended yesterday’s trading at RM1.31, with two huge bullish candles on the chart.

♦ Technically, as both the momentum indicators are turning more upbeat, and the 10-day SMA is heading north, it
suggests a likelihood of a sustained uptrend ahead.

♦ Given the positive technical readings, we are of the view that it will retest the RM1.33 immedaite resistance level
soon.

♦ Upon successful removal of RM1.33, it will head towards the RM1.55 heavy resistance level on follow-through
buying support.

♦ Crossing the RM1.33 will also mark a beginning of a new trend. In this case, it is likely to be a fresh uptrend.

Technical Readings:

♦ 10-day SMA: RM1.162

♦ 40-day SMA: RM1.132

♦ Support: IS = RM1.15 S1 = RM0.78 S2 = RM0.535

♦ Resistance: IR = RM1.33 R1 = RM1.55 R2 = RM2.00

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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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