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 15 September 2010
Market Technical Reading
Stronger Technical Bull Run Underway!

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

Local Market Leads:

♦ As investors continued to snap up heavyweights following the recent bullish breakout from 1,450, the FBM KLCI
expanded its rally to the highest level since mid-Jan 2008 on Tuesday.

♦ Trading sentiment was further buoyed by the overnight gain on the US markets as well as expectations of a
stronger ringgit going forward, on a possible “internationalization” of the local currency.

♦ This sparked aggressive institutional buying on heavyweight banking stocks, like Maybank (+25sen), PBBank
(+32sen) and CIMB (+13sen), as well as the foreign favourite heavyweight like Genting (+42sen).

♦ As a result, the FBM KLCI enjoyed another strong day by soaring 17.48 pts or 1.20% to a high of 1,474.44.

♦ As more investors turned more bullish, daily turnover expanded further to over 1.0bn shares mark at 1.04bn
shares, from 843m shares a day earlier. Market breadth was bullish with a ratio of nearly 2 to 1 gainers versus
losers.

Technical Interpretations:

♦ As the bulls pressed forward, the local sentiment turned even more bullish with the FBM KLCI closing at its day
high for a fourth straight day, to a fresh 32-month high on rising volume.

♦ Sealed with a series of bullish candles, the chart is still pointing to more upside ahead, even though the 14-day
RSI and the stochastic oscillators have moved into the “very overbought” and “extremely overbought” zones

♦ As such, we expect the FBM KLCI to retest an upper technical gap at 1,490.50 - 1,497.64 soon, before rallying
through the 1,500 level towards the all-time high level of 1,524.69.

♦ Following yesterday’s strong rally, its immediate support level has been revised higher to the 1,450 further
breakout point. The 10-day SMA of 1,440 remains a guardian to the current short-term upswing.

Please read important disclosures at the end of this report.

Page 1 of 6
A comprehensive range of market research reports by award-winning economists and analysts are exclusively
available for download from www.rhbinvest.com
 15 September 2010

Daily Trading Strategy:

♦ With a bullish confirmation candle charted at above the trigger point of 1,450 yesterday, the FBM KLCI has
confirmed another fresh breakout on the chart. It means a stronger technical bull run is well underway.

♦ Underpinned further by the aggressive buying momentum on the core heavyweights and steady improvement on
the daily turnover, this rally is likely to carry on for sessions to come, in our view.

♦ Therefore, we stay bullish on the market outlook and foresee the FBM KLCI to rally towards an upper technical gap
at 1,490.50 - 1,497.64, before attracting more investors to jump onto the bandwagon upon the crossing of 1,500.

♦ The all-time high resistance is at 1,524.69. A removal of this level will mean a venture into the uncharted territory
for the FBM KLCI (see our note on the long-term projection target in Chart Surveillance report dated today).

♦ With strong foreign buying activities and the continuous uptrend on the ringgit, and against a backdrop of follow-
through strength in the regional markets, investors are expected to turn more aggressive in chasing laggard
stocks in the near term.

♦ Any unexpected pullback, if it occurs, will see an immediate support at 1,450 and the 10-day SMA near 1,440 to
neutralise the swift profit-taking pressure.

Table 2 : Major Indices & Commodities

Table 1 : Daily Statistics Change Change
Scoreboard 7 Sep 8 Sep 9 Sep 13 Sep 14 Sep Local Key Indices Closing
(Pts) (%)
Gainers 336 263 402 542 504 FBM KLCI 1,474.44 17.48 1.2
Losers 354 409 162 218 274 FBM 100 9,622.33 97.84 1.0
Unchanged 286 281 280 254 269 FBM ACE 3,784.14 13.01 0.3
Untraded 385 404 512 345 312 Major Overseas
Indices
Market Cap Dow Jones 10,526.49 -17.64 -0.2
Turnover Nasdaq 2,289.77 4.06 0.2
(mln shares) 642 607 450 843 1,040 S&P 500 1,121.10 -0.80 -0.1
Value FTSE 5,567.41 1.88 0.0
(RM mln) 1,173 1,038 861 1,992 2,128 Hang Seng 21,696.04 37.69 0.2
Jakarta Composite 3,230.89 Closed Closed
Currency Nikkei 225 9,299.31 -22.51 -0.2
MYR vs US Seoul Composite 1,815.25 -3.61 -0.2
Dollar 3.1230 3.1110 3.1100 3.1000 3.1045 Shanghai Composite 2,688.52 0.20 0.0
SET 921.39 -15.65 -1.7
Source: RHBInvest & Bloomberg Straits Times 3,048.65 -18.16 -0.6
Taiwan Weighted 8,132.60 41.30 0.5
India Sensex 19,346.96 138.63 0.7
Major Commodities
NYMEX Crude Oil
(US$/barrel) 76.8 -0.39 -0.5
MDEX CPO – Third
Month (RM/metric ton) 2,643.00 -33.00 -1.2
US Interest Rate Current Last Updated
10 Aug
Overnight Fed Fund Rate 0-0.25% Unch
2010
Next FOMC meeting 21 Sep 2010

Page 2 of 6
A comprehensive range of market research reports by award-winning economists and analysts are exclusively
available for download from www.rhbinvest.com
 15 September 2010

Chart 3: FKLI Daily Chart 4: FKLI Intraday

Technical Interpretations:

♦ Taking the positive lead from the soaring cash index, bullish traders continued to chase the KL futures index
higher for the fourth straight day yesterday.

♦ Though the FKLI eased off from its fresh year high of 1,476.50 (+13.0 pts) amid mild profit-taking activities in the
regional markets, it still managed to hold most of its gains and closed firmly positive.

♦ The FKLI for Sep contract gained another 8.00 pts or 0.55% to settle at 1,471.50.

♦ On the chart, it acquired another positive candle to confirm Monday’s bullish technical breakthrough from the
1,450 key technical hurdle. And the positive candle also implies more follow-through buying support today.

♦ Given the robust short-term momentum signals, we are bullish on the FKLI’s near-term technical outlook.

♦ This means the FKLI should head towards the next upper technical gap at 1,490 – 1,502.50, before rallying further
to the all-time high of 1,536 on follow-through buying momentum.

♦ Like the cash market, 1,450 has become a strong resistance-turn-support level for the futures index.

Daily Trading Strategy:

♦ Stay bullish, with the immediate target set at the next upper technical gap at 1,490 – 1,502.50.

♦ Once the technical gap is cleared, the futures index will likely charge towards the all-time high level of 1,536.

♦ The trading range for today should be from 1,465 to 1,490.

Table 3: FKLI Closings

FKLI (Month)
Contracts Open High Low Close Chg (Pts) Settle Volume Open Interest
Sep 10 1461.50 1476.50 1460.00 1471.50 8.00 1471.50 5906 21023
Oct 10 1461.50 1477.00 1460.00 1472.00 8.50 1471.50 366 320
Dec 10 1460.00 1476.00 1460.00 1470.00 8.50 1470.00 135 414
Mar 11 1462.00 1474.50 1462.00 1469.50 11.00 1468.50 99 90

Source: Bursa Malaysia

Page 3 of 6
A comprehensive range of market research reports by award-winning economists and analysts are exclusively
available for download from www.rhbinvest.com
 15 September 2010

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

US Market Leads:

♦ US stocks retreated in the afternoon and closing mixed on Tuesday, as the weakness in financial stocks offset
positive news in retail sales and strength in technology stocks.

♦ Bank of America’s share fell 1.9% on worries that it may have to buy back as much as US$20bn in home loans.

♦ Lender, BB&T (-3.9%) said it will write down more than US$1bn in loans, while JPMorgan Chase (-1.0%) CEO
Jamie Dimon said Basel III is likely to increase bank loan prices for customers, and this may force some to seek
loan from non-bank financial institutions.

♦ On a positive note, it was reported that retail sales rose 0.4% in Aug, easing fears on the US economic outlook.
Meanwhile, tech stocks advanced after Cisco System (+0.9%) announced its first ever dividend plan.

♦ As the recently leaked Canada-US crude pipeline was restored, traders locked in profit by leading the US light
sweet crude oil futures for Oct delivery lower. For the day, it eased 39cents or 0.5% to US$76.80/barrel.

Technical Interpretations:

Dow Jones Industrial Average (DJIA)

♦ After the recent rally, the US DJIA ended the day with a mild setback on profit-taking activities. Upon closing, it
dipped 17.64 pts or 0.17% to 10,526.49 with a “negative harami” candle.

♦ The candle pattern suggests a reduction in the recent bullish momentum.

♦ But even if there is a pullback, it is likely to be mild, as a strong support at the 21-day SMA of 10,274 and the
solid support at 10,150 will underpin the current bullish uptrend.

♦ We see a possibility for it to resume its rally towards the Jul high of 10,719.94.

Nasdaq Composite (Nasdaq)

♦ The Nasdaq Composite index continued its recent winning streak by adding another 4.06 pts or 0.18% to end at
2,289.77 yesterday.

♦ Though it pulled back from its intraday high of 2,302.57, it still recorded a positive candle to indicate follow-
through rally towards the next heavy upside resistance at 2,330.

♦ On the downside, we continue to see strong supports near a lower technical gap of 2,200.01 and the 21-day SMA
nearby the 2,190 level.

Page 4 of 6
A comprehensive range of market research reports by award-winning economists and analysts are exclusively
available for download from www.rhbinvest.com
 15 September 2010

Daily Technical Watch:

Chart 7: CBIP Daily Chart 8: CBIP Intraday

CB Industrial Product Holding (7076)

A decisive chart breakout signal…

♦ The share price of CBIP began to consolidate after touching a high of RM3.50 in Jun 2009, and drifted within a
downtrend to a low of RM2.35 in May 2010.

♦ The stock kicked off a technical rebound leg after its 10-day SMA cut above the 40-day SMA in Jun 2010, and
surpassed the important resistance level of RM2.88 in Jul.

♦ As the buying support continued, the stock extended its rally to a critical resistance level at RM3.50 in early Aug,
before congesting at around the RM3.25 – RM3.50 region in recent weeks.

♦ However, as the momentum gathered strength in recent sessions, the stock pierced through the critical
resistance level of RM3.50 convincingly yesterday.

♦ With a huge bullish candle on the chart, above the RM3.50 level, plus the upbeat momentum readings, the stock
could continue to surge in the near term towards the next resistance level of RM3.94.

♦ Although the momentum has moved into the “overbought” region, the steady uptrend on the 10-day and 40-day
SMAs suggests a decisive chart breakout rally ahead, should it sustain at above RM3.50 in the near term.

♦ A target resistance zone for this rally is seen at the RM3.94 - RM4.40 region.

♦ This bullish view will be voided if it unexpectedly falls to below the RM3.50 breakout level.

Technical Readings:

♦ 10-day SMA: RM3.443

♦ 40-day SMA: RM3.26

♦ Support: IS = RM3.50 S1 = RM2.88 S2 = RM2.20

♦ Resistance: IR = RM3.94 R1 = RM4.40

Page 5 of 6
A comprehensive range of market research reports by award-winning economists and analysts are exclusively
available for download from www.rhbinvest.com
 15 September 2010

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
any liability for any loss or damage arising out of the use of all or any part of this report.

RHBRI and the Connected Persons (the “RHB Group”) are engaged in securities trading, securities brokerage, banking and financing activities as well as providing
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
securities or loans of any company that may be involved in this transaction.

“Connected Persons” means any holding company of RHBRI, the subsidiaries and subsidiary undertaking of such a holding company and the respective directors,
officers, employees and agents of each of them. Investors should assume that the “Connected Persons” are seeking or will seek investment banking or other
services from the companies in which the securities have been discussed/covered by RHBRI in this report or in RHBRI’s previous reports.

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
information known to, professionals in other business areas of the “Connected Persons,” including investment banking personnel.

The research analysts, economists or research associates principally responsible for the preparation of this research report have received compensation based
upon various factors, including quality of research, investor client feedback, stock picking, competitive factors and firm revenues.

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.

Page 6 of 6
A comprehensive range of market research reports by award-winning economists and analysts are exclusively
available for download from www.rhbinvest.com