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 29 September 2010
Market Technical Reading
Unless 1,450 Is Violated, Short-term Uptrend Remains Intact...

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

Local Market Leads:

♦ Undermined by the weakness in the regional front, the local market succumbed to fresh selling momentum and
ended lower on Tuesday.

♦ Nikkei 225 and Hang Seng led the selling by falling 1.12% and 1.03% respectively in reaction to renewed concerns
over the European debt problems as well as news that China government would take new measures to cap
property-price gains. It was also reported that Moody's Investors Service may cut its debt rating on Spain.

♦ Besides, sentiment was hit further by the sharp selloff of nearly 1% in the early European markets.

♦ At the close, the FBM KLCI was down by 5.07 pts or 0.35% to end at 1,459.64, with major of the index component
stocks taking a beating.

♦ Turnover remained strong at 977m shares, versus 1.16bn shares a day earlier. However, the market breadth has
turned negative again with losers outpacing gainers by a ratio of nearly 2 to 1.

Technical Interpretations:

♦ In the absence of follow-through buying support, the FBM KLCI failed to surpass beyond the 10-day SMA of 1,467
and suffered a fresh wave of selling by ending near its day low of 1,457.80.

♦ Coupled with a “negative harami” candle on the chart, it suggests that the recent rebound momentum is running
out of steam.

♦ In other words, a mild setback could be underway to retest the key breakout point support at 1,450.

♦ Before retesting the key level of 1,450, it will cover the recent technical gap at 1,453.99 – 1,456.30.

♦ But, as long as the index sustains at above 1,450, the current uptrend on the FBM KLCI will remain intact.

Please read important disclosures at the end of this report.

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Daily Trading Strategy:

♦ Disappointedly, buying momentum failed to extend yesterday, forcing the FBM KLCI to fail its attempt to cross
over the 10-day SMA of 1,467.

♦ The weak closing with a “negative harami” candle also indicates weaker trading momentum ahead.

♦ In our view, the index will likely retreat to cover the small technical gap before testing the 1,450 critical level in
the near term.

♦ But unless the crucial technical level of 1,450 is violated, the current uptrend will stay intact. As a result, we
expect a strong support near 1,450 in the near term.

♦ And for the index to resume its bullish momentum, it must break out from the 10-day SMA of 1,467 soon.

♦ The next lower supports are seen at a tiny technical gap at 1,438.32 – 1,439.26 and the 40-day SMA of 1,413.

♦ In our opinion, the local market sentiment will continue to be influenced by volatility in the overseas markets going
forward.

Table 2 : Major Indices & Commodities

Table 1 : Daily Statistics Change Change
Scoreboard 22 Sep 23 Sep 24 Sep 27 Sep 28 Sep Local Key Indices Closing
(Pts) (%)
Gainers 398 221 408 469 244 FBM KLCI 1,459.64 -5.07 -0.3
Losers 364 523 307 292 493 FBM 100 9,547.97 -39.58 -0.4
Unchanged 280 254 289 276 289 FBM ACE 3,851.96 -14.98 -0.4
Untraded 311 354 342 309 327 Major Overseas
Indices
Market Cap Dow Jones 10,858.14 46.10 0.4
Turnover Nasdaq 2,379.59 9.82 0.4
(mln shares) 1,333 999 1,727 1,158 977 S&P 500 1,147.70 5.54 0.5
Value FTSE 5,578.44 5.02 0.1
(RM mln) 2,022 1,417 1,531 1,623 1,351 Hang Seng 22,109.95 -230.89 -1.0
Jakarta Composite 3,472.71 4.67 0.1
Currency Nikkei 225 9,495.76 -107.38 -1.1
MYR vs US Seoul Composite 1,855.97 -4.86 -0.3
Dollar 3.0900 3.0950 3.0900 3.0885 3.0930 Shanghai Composite 2,611.35 -16.62 -0.6
SET 959.27 -3.20 -0.3
Source: RHBInvest & Bloomberg Straits Times 3,097.35 -16.11 -0.5
Taiwan Weighted 8,189.44 -2.10 0.0
India Sensex 20,104.86 -12.52 -0.1
Major Commodities
NYMEX Crude Oil
(US$/barrel) 76.18 -0.34 -0.4
FCPO – Third Month
(RM/metric ton) 2,737.00 2.00 0.1
US Interest Rate Current Last Updated
21 Sep
Overnight Fed Fund Rate 0-0.25% Unch
2010
Next FOMC meeting 2-3 Nov 2010

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Chart 3: FKLI Daily Chart 4: FKLI Intraday

Technical Interpretations:

♦ The local futures market nearly gave up its previous day gain by sliding more than 1.2% yesterday, mainly
attributed to the strong selldown in the overseas markets.

♦ For the day, the FKLI for Sep contract plunged 18.50 pts or 1.26% to 1,452.00, while the Oct contract shed 17.50
pts or 1.19% to 1,453.50.

♦ On the chart, as the FKLI lost back the key 10-day SMA of 1,467 with a bearish candle yesterday, this could spell
follow-through selling momentum today.

♦ And this means an imminent retest of the key pivotal point of 1,450 as soon as today.

♦ Critically, the FKLI should not fall below the 1,450 level, in order to protect the recent uptrend.

♦ If it can successfully defend this key level, it will potentially trigger another technical rebound.

♦ A failure, on the other hand, will induce more selling pressure ahead, hence leading to further falls to the next
supports at the 40-day SMA of 1,413 and the 1,390 – 1,400 region.

♦ Following yesterday’s unexpected selling forces, we revise the immediate resistance down to the 10-day SMA,
followed by the recent high of 1,485.50.

Daily Trading Strategy:

♦ The FKLI’s short-term outlook has turned negative again following a surprise breakdown to below the 10-day SMA
of 1,467 yesterday.

♦ To prevent any further downside risk, it must hold at above 1,450. As such, we expect reasonably strong bargain-
hunting support today.

♦ The FKLI is expected to trade from 1,448 to 1,465 today.

Table 3: FKLI Closings

FKLI (Month)
Contracts Open High Low Close Chg (Pts) Settle Volume Open Interest
Sep 10 1464.00 1469.50 1450.50 1452.00 -18.50 1452.00 14230 16682
Oct 10 1470.00 1471.00 1452.50 1453.50 -17.50 1453.50 13610 6605
Dec 10 1466.50 1469.50 1454.00 1454.00 -16.00 1454.00 111 376
Mar 11 1466.00 1467.00 1455.00 1455.00 -15.00 1455.00 42 123

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 stocks reversed the early sharp decline by staging a rebound on Tuesday, thanks to the upbeat earnings from
Walgreen and hopes of more merger & acquisition (M&A) deals.

♦ Earlier, the market continued its pullback in response to a drop in consumer confidence index. Conference Board’s
consumer confidence index fell to 48.5 in Sep from 53.2 a month earlier.

♦ But stocks managed to turn around after Walgreen, the biggest US drugstore chain, soared 11.4% on stronger-
than-expected quarterly earnings.

♦ Also, Endo Pharmaceuticals (+8.1%) announced to buy generics maker Qualitest Pharmaceuticals for US$1.2bn.
Separately, Broadwind Energy rallied 27% on speculation that General Electric may buy the wind tower maker.

♦ On the other hand, the US light sweet crude oil futures for Nov delivery declined 34 cents or 0.44% to
US$76.18/barrel, dampened by expectations of higher fuel inventories and weaker crude demand.

Technical Interpretations:

Dow Jones Industrial Average (DJIA)

♦ Led by a timely rebound, the US DJIA recaptured the major 10,850 technical level with a 46.10 pts or 0.43% gain.
It settled at 10,858.14 yesterday.

♦ By regaining 10,850 with a positive candle, this shows that the recent bullish breakout from 10,850 is still intact.

♦ And a further rally from here with a positive confirmation candle today will boost its chance to rally towards the
next upside resistance at 11,250 in the near term.

♦ On the downside, the rising 21-day SMA of 10,522 will keep sellers in check.

Nasdaq Composite (Nasdaq)

♦ Likewise, the Nasdaq Composite index made a comeback from the early sharp selloff by gaining 9.82 pts or
0.41% to end at 2,379.59 yesterday.

♦ With a small positive candle and the improved short-term momentum readings, the index is set to push for more
gains towards the next resistance target at 2,470 soon.

♦ Meanwhile, its strong immediate support remains at the resistance-turn-support level of 2,330.

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Daily Technical Watch:

Chart 7: Unisem Daily Chart 8: Unisem Intraday

Unisem (5005)

Must penetrate the 40-day SMA and RM2.10 to turn the medium-term outlook positive…

♦ After topping at RM2.67 high in May 2010, the share price of Unisem triggered a sharp pullback following its
failure to defend its share price at above the RM2.60 resistance level.

♦ Though the chipmaker managed to engineer a technical rebound in Jun and Jul, its rebound momentum was
constantly capped by another strong resistance barrier at RM2.40.

♦ In fact, its selling momentum intensified in early Aug when the 10-day SMA cut below the 40-day SMA to spell a
bearish medium-term outlook on the chart.

♦ Since then, it has drifted lower to below the RM1.80 level on persistent selling pressure.

♦ But just after hitting a more than 6-month low of RM1.68 on 24 Sep, it staged a powerful rebound following a
formation of a “morning star” candle.

♦ As a result, the stock rose another 10sen to settle at RM1.90 with a second bullish candle yesterday. The stock
rallied higher above the RM1.80 level and the 10-day SMA of RM1.82 to turn the short-term outlook positive.

♦ Aided with a sharp spike in the momentum indicators, we see a higher probability of further rebound towards the
40-day SMA of RM1.99 soon.

♦ But in our view, its medium-term outlook will stay under pressure until it can fully penetrate above the 40-day
SMA and the RM2.10 hurdle.

Technical Readings:

♦ 10-day SMA: RM1.818

♦ 40-day SMA: RM1.989

♦ Support: IS = RM1.80 S1 = RM1.55 S2 = RM1.30

♦ Resistance: IR = RM2.10 R1 = RM2.40 R2 = RM2.60

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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
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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
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
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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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