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 21 September 2010
Market Technical Reading
Good Chance To Reverse The Recent Profit-taking Leg...

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

Local Market Leads:

♦ Led by late push-up on the core blue chips, the FBM KLCI overcomes the afternoon profit-taking dip by turning
slightly higher on Monday.

♦ The day started on a positive note as investors scooped up stocks that were badly hit by last Friday’s late selloff
such as Tenaga and Sime.

♦ But as they turned to profit taking, plus the selling on the broader market on T+3 heavy deliveries from last
Tuesday’s 1.04bn shares, the FBM KLCI slipped into the negative territory in the afternoon.

♦ Nonetheless, the local benchmark managed to end up 2.72 pts or 0.19% at 1,469.69, driven by gains in Sime,
Genting (+18sen) and IOICorp (+9sen).

♦ Daily volume slowed to 851m shares, compared to last Friday’s 968m shares, while market breadth turned
negative again for a second time in three trading days.

Technical Interpretations:

♦ Despite retreating into the negative territory at one stage, the FBM KLCI managed to end with a “harami” candle,
signaling a decrease in the previous selling momentum.

♦ In other words, the chart shows a chance for the FBM KLCI to resume its rally soon. But first, it must break out
from last Friday’s high of 1,479.59 with a positive candle to restore its upward momentum.

♦ If the buying momentum fails to improve today, consolidation may continue to drag the index towards the
resistance-turn-support level at 1,450 and the 10-day SMA of 1,452 soon.

♦ On the upside, the next resistance is at an upper technical gap at 1,490.50 - 1,497.64, followed by the 1,500
psychological level and the all-time high level of 1,524.69.

Please read important disclosures at the end of this report.

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Daily Trading Strategy:

♦ Thanks to the late buying on selective heavyweight stocks, the previous day’s negative candle was interrupted as
the FBM KLCI recorded a “harami” candle to indicate a better chance to halt the current profit-taking leg.

♦ If the follow-through buying support improves further today, the index will trigger a rebound to resume the recent
rally.

♦ Upon the removal of last Friday’s high of 1,479.59, it will aim towards the technical gap at 1,490.50 - 1,497.64,
1,500 and the all-time high level of 1,524.69.

♦ We are confident that the 10-day SMA of 1,452 and the pivotal point of 1,450 will continue to underpin the current
uptrend on the FBM KLCI.

♦ Going forward, investors will focus on the release of further details on the National Key Economic Areas (NKEA)
today as well as the interest rate decision by the US Federal Reserve on the FOMC meeting late tonight.

Table 2 : Major Indices & Commodities

Table 1 : Daily Statistics Change Change
Scoreboard 13 Sep 14 Sep 15 Sep 17 Sep 20 Sep Local Key Indices Closing
(Pts) (%)
Gainers 542 504 299 446 316 FBM KLCI 1,469.69 2.72 0.2
Losers 218 274 416 296 417 FBM 100 9,606.40 12.37 0.1
Unchanged 254 269 301 268 269 FBM ACE 3,879.94 -0.12 0.0
Untraded 345 312 349 350 359 Major Overseas
Indices
Market Cap Dow Jones 10,753.62 145.77 1.4
Turnover Nasdaq 2,355.83 40.22 1.7
(mln shares) 843 1,040 725 968 851 S&P 500 1,142.71 17.12 1.5
Value FTSE 5,602.54 94.09 1.7
(RM mln) 1,992 2,128 1,436 1,906 1,382 Hang Seng 21,977.34 6.48 0.0
Jakarta Composite 3,370.98 -13.67 -0.4
Currency Nikkei 225 9,626.09 Closed Closed
MYR vs US Seoul Composite 1,832.63 5.28 0.3
Dollar 3.1000 3.1045 3.1150 3.1010 3.1015 Shanghai Composite 2,588.71 -9.98 -0.4
SET 922.67 -0.90 -0.1
Source: RHBInvest & Bloomberg Straits Times 3,080.98 4.61 0.1
Taiwan Weighted 8,186.96 28.63 0.4
India Sensex 19,906.10 311.35 1.6
Major Commodities
NYMEX Crude Oil
(US$/barrel) 74.86 1.20 1.6
FCPO – Third Month
(RM/metric ton) 2,708.00 63.00 2.4
US Interest Rate Current Last Updated
10 Aug
Overnight Fed Fund Rate 0-0.25% Unch
2010
Next FOMC meeting 21 Sep 2010

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Chart 3: FKLI Daily Chart 4: FKLI Intraday

Technical Interpretations:

♦ The local futures market experienced a volatile session yesterday.

♦ From a sharp fallout to an intraday low of 1,456.50 (-13.50 pts), near the 10-day SMA of 1,454 in the morning
session, the FKLI kicked off a powerful recovery towards the closing hour.

♦ Also aided by the late recovery in the cash market, as well as a strong rally in the early European markets, the
FKLI for Sep contract rose 5.50 pts or 0.37% to 1,475.50.

♦ On the chart, it recorded a “hammer-like” candle from the supportive 10-day SMA to mark a likely technical
rebound today.

♦ Though further confirmation is still needed, to reverse the recent “sell” signal on the stochastic oscillators, the
futures index could see more upside today, in our view.

♦ If it removes last Friday’s high of 1,485.50 with a stronger volume, it will see further rally to an upper technical
gap at 1,490 – 1,502.50 and even the historical high of 1,536.

♦ A clear support is seen near the 10-day SMA of 1,454 and the resistance-turn-support level of 1,450.

Daily Trading Strategy:

♦ Surprisingly positive, yesterday’s sharp recovery from the day’s low points to a possible further recovery ahead.

♦ This means the futures index stands a good chance to resume its rally towards its all-time high of 1,536 soon on
follow-through recovery momentum.

♦ We expect the FKLI to swing from 1,470 to 1,490 today.

Table 3: FKLI Closings

FKLI (Month)
Contracts Open High Low Close Chg (Pts) Settle Volume Open Interest
Sep 10 1469.00 1477.50 1456.50 1475.50 5.50 1475.50 4041 21119
Oct 10 1469.50 1477.50 1457.50 1476.00 5.50 1476.00 361 695
Dec 10 1469.50 1476.50 1458.00 1476.50 8.50 1476.50 53 364
Mar 11 1472.00 1478.00 1465.00 1476.50 8.50 1476.50 23 134

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 major gauges rallied to their highest level in more than 4 months on Monday ahead of Tuesday’s FOMC
meeting, as sentiment was bolstered by strong earnings from homebuilder as well as the declaration of the end of
the 18-month long recession in the US.

♦ Also, news of merger & acquisition (M&A) gave another shot of confidence to investors. International Business
Machines (IBM) announced to buy business software company Netezza for US$1.7bn.

♦ Homebuilder Lennar shot up 8.2% after posting stronger-than-expected profits, offsetting news that the monthly
index of builder sentiment remained flat at an 18-month low in Sep. Sentiment turned even more bullish after the
National Bureau of Economic Research said that the longest US recession since World War II has ended since Jun
2009.

♦ Buoyed by a rally in the equity markets, the US light sweet crude oil futures for the expiring Oct delivery surged
US$1.20 or 1.6% to settle at US$74.86/barrel.

Technical Interpretations:

Dow Jones Industrial Average (DJIA)

♦ Suprisingly, the bulls made a strong comeback yesterday by propelling the US DJIA sharply higher by 145.77 pts
or 1.37% to 10,753.62.

♦ By sealing with a huge bullish candle, this has overturned the previous “evening star” candle to signal a
continuity of the current rally.

♦ In fact, the breakout from the Jul high of 10,719.94 also strongly hints that the DJIA is poised to rally towards
the key resistance hurdle of 10,850 very soon.

♦ A lift beyond 10,850 will confirm the end of the current more than 4-month consolidation at between the 9,700 –
10,850 range by pointing to the next upside target at 11,250.

Nasdaq Composite (Nasdaq)

♦ As the Nasdaq Composite index rallied 40.22 pts or 1.74% to 2,355.83 with a huge bullish candle, this has
successfully shrugged off the previous “hangman” candle.

♦ By piercing through the 2,330 obstacle, this signals a breakout rally to the next upside target of 2,470 soon.

♦ Following yesterday’s breakout from 2,330, the level will now act as a solid immediate support to the market.

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Daily Technical Watch:

Chart 7: Tenaga Daily Chart 8: Tenaga Intraday

Tenaga Nasional (5347)

Medium-term uptrend stays intact…

♦ The previous uptrend on Tenaga’s share price was interrupted when the stock traded near a tough resistance of
RM8.50 in Jul 2009.

♦ As the stock trended sideways within the next one year, it constantly face stiff resistance whenever it penetrated
above the RM8.50 level, and ended up falling back into the trading range of between RM7.95 and RM8.50.

♦ However, since mid Jul 2010, the stock steadily pierced through RM8.50 and slowly gained its upward
momentum.

♦ With the consistent uptrend on the supportive 10-day and 40-day SMAs, the stock scaled higher and broke out
from the RM9.00 resistance level in recent trading.

♦ But after hitting a high of RM9.29, it encountered strong profit-taking pressure, prompting it to retreat towards
the RM9.00 support region. It closed at RM9.06 yesterday.

♦ Charted with two negative candles in a row, the immediate-term outlook on Tenaga is negative.

♦ Given the mixed readings on the momentum indicators, the current downswing could even overshoot to below
RM9.00 to close a technical gap near RM8.96 – RM9.00, in our view.

♦ However, so long as the stock keeps floating at above the 40-day SMA near RM8.78, we reckon its medium-term
uptrend will stay intact.

♦ A recapturing of the RM9.00 level in the near term will boost its upward momentum and aim its target at RM9.60.

Technical Readings:

♦ 10-day SMA: RM9.061

♦ 40-day SMA: RM8.782

♦ Support: IS = RM9.00 S1 = RM8.50 S2 = RM7.95

♦ Resistance: IR = RM9.60 R1 = RM10.60

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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
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.

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