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

29 April 2010
MARKET DATELINE

Market Technical Reading

Investors Likely To Stay At The Trading Bay...

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

Local Market Leads:

♦ In tandem with the global selloff amid the credit-rating downgrades on Greece and Portugal, the local market
extended its selling activities on Wednesday.

♦ Standard & Poor’s on Tuesday downgraded Greece's debt rating to “junk” status and cut Portugal's rating by two
levels, triggering a sharp correction in the overnight US and European markets on fears of possible contagion
effect from Greece and uncertainties over the outlook of other indebted Eurozone members.

♦ Coupled wth the powerful selloff in early European markets, most Asian bourses stayed deep in the negative
territories. The Nikkei 225 led yesterday’s selldown with a 2.57% slump for the day.

♦ Locally, the FBM KLCI lost 6.55 pts or 0.49% to 1,333.17, but it pared down its losses from a low of 1,324.34.

♦ Turnover slowed to 831m shares, versus 975m shares a day earlier. There were 472 counters down, compared to
236 counters up.

Technical Interpretations:

♦ As sellers intensified their activities, the FBM KLCI was forced down by 9.19 pts upon opening yesterday.

♦ But after falling as much as 15.38 pts to 1,324.34, near the 40-day SMA of 1,323, the benchmark recovered
slowly and ended the day with a potential “hammer-like” candle, indicating a possible technical rebound ahead.

♦ However, judging from the fresh breakdown of the 10-day SMA of 1,335 and a fresh “sell” signal on the
stochastic oscillators, any rebound attempt will be short-lived, we believe.

♦ In other words, the risk of extending its sell mode is fairly high, should it fail to recover to above the 10-day SMA
soon.

♦ Downside supports are at the 40-day SMA, a 2.6-pts technical gap near 1,305, and the 1,300 psychological level.

Please read important disclosures at the end of this report.

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 29 April 2010

Daily Trading Strategy:

♦ Despite rebounding successfully from the day’s low of 1,324.34, with a “hammer-like” candle suggesting follow-
through buying momentum today, we remain skeptical on the ability of any rebound today.

♦ This is mainly because the FBM KLCI has fallen below the crucial short-term support at the 10-day SMA near
1,335 yesterday.

♦ Besides, the newly triggered “sell” signal on the stochastic oscillators and the continuous negative market breadth
of late further weighed down the possibility of a meaningful rebound ahead.

♦ Without recapturing the 10-day SMA, the FBM KLCI will still be vulnerable to the resumption of selling activities
and a possible further correction in the near term.

♦ Further downside supports are seen at the 40-day SMA of 1,323, a technical gap near 1,305 and the 1,300
psychological level.

♦ Given uncertainties on renewed worries on the Eurozone debt crisis and the ongoing US financial industry’s
overhaul, investors are expected to stay at the trading bay pending more signs of stabilisation.

Table 2 : Major Indices & Commodities

Table 1 : Daily Statistics Change Change
Scoreboard 22 Apr 23 Apr 26 Apr 27 Apr 28 Apr Local Key Indices Closing
(Pts) (%)
Gainers 333 305 362 178 236 FBM KLCI 1,333.17 -6.55 -0.5
Losers 307 352 306 502 472 FBM 100 8,761.47 -47.49 -0.5
Unchanged 324 333 306 308 276 FBM ACE 4,177.22 -15.51 -0.4
Untraded 398 369 384 377 385
Major Overseas
Market Cap Indices
Turnover Dow Jones 11,045.27 53.28 0.5
(mln shares) 834 818 800 975 831 Nasdaq 2,471.73 0.26 0.0
Value (RM S&P 500 1,191.36 7.65 0.6
mln) 1,190 943 936 1,195 1,118 FTSE 5,586.61 -16.91 -0.3
Hang Seng 20,949.40 -312.39 -1.5
Currency Jakarta Composite 2,903.32 -35.98 -1.2
MYR vs US Nikkei 225 10,924.79 -287.87 -2.6
Dollar 3.1955 3.1900 3.1810 3.1860 3.2160 Seoul Composite 1,733.91 -15.64 -0.9
Shanghai Composite 2,900.33 -7.60 -0.3
Source: RHBInvest & Bloomberg SET 749.49 -12.51 -1.6
FT Straits Times 2,932.04 -59.64 -2.0
Taiwan Weighted 8,081.55 -64.89 -0.8
India Sensex 17,380.08 -310.54 -1.8
Major Commodities
NYMEX Crude Oil
(US$/barrel) 83.22 0.78 0.9
MDEX CPO – Third
Month (RM/metric ton) 2,547.00 -3.00 -0.1
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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 29 April 2010

Chart 3: FKLI Daily Chart 4: FKLI Intraday

Technical Interpretations:

♦ Taking leads from the regional woes amid the deepened Eurozone debt crisis, selling pressure increased
significantly in the KL futures market yesterday.

♦ As a result, the FKLI for Apr and May contracts slid another 10.50 pts or 0.78% each, settling the day at
1,328.00 and 1,328.50 respectively.

♦ Although the FKLI managed to recover from its day low of 1,321.0 (-17.5pts), it encountered another fresh
selling wave in the late session in response to an extended selldown in the key European markets.

♦ This resulted in a “doji” candle on the chart, implying further uncertainty ahead.

♦ But with a decisive breakdown from the 10-day SMA yesterday, coupled with a “double sell” signal on the short-
term momentum indicators, the selling wave is likely to continue today.

♦ As such, it could stand to lose the 40-day SMA near 1,325 soon on follow-through selling momentum, in our view.

♦ Losing the 40-day SMA will spell more trouble for the FKLI, as the next downside support is only seen near the
psychological threshold of 1,300.

♦ On the upside, its immediate hurdles are reset at the 10-day SMA of 1,336 and a 2-pt technical gap at 1,337.

Daily Trading Strategy:

♦ Due to the negative technical readings, traders should expect more downside risk ahead.

♦ Therefore, the FKLI is poised to experience further selldown, with a possible loss of the 40-day SMA of 1,325
soon.

♦ The FKLI is likely to trade from 1,320 to 1,332 today.

Table 3: FKLI Closings

FKLI (Month)
Contracts Open High Low Close Chg (Pts) Settle Volume Open Interest
Apr 10 1328.00 1335.00 1321.00 1328.00 -10.50 1328.00 10108 17301
May 10 1326.00 1335.00 1321.00 1328.50 -10.50 1328.50 8676 9209
Jun 10 1327.50 1333.00 1321.00 1327.00 -11.00 1327.00 136 509
Sep 10 1327.00 1331.50 1320.50 1327.00 -11.00 1326.50 22 238

Source: Bursa Malaysia

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 29 April 2010

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

US Market Leads:

♦ US stocks bounced back on Wednesday, after the US Federal Reserve said the economic recovery is
strengthening and decided to maintain the current record low interest rate for an extended period.

♦ This eased concerns over the recent Eurozone debt crisis following the latest downgrade on Spain’s credit rating
by the Standard & Poor.

♦ Besides keeping its easy money policy for a longer period, the Fed in the FOMC statement said economic activity
has continued to strengthen, while adding the labour market is beginning to improve as well.

♦ Apart from the Fed statement, strong earnings from companies like Dow Chemical also buoyed sentiment.

♦ On the NYMEX, the US light sweet crude oil futures for June delivery staged a mild rebound by adding US$0.78 or
0.9% to US$83.22/barrel on lower gasoline inventories.

Technical Interpretations:

Dow Jones Industrial Average (DJIA)

♦ The US DJIA halted its steep plunge yesterday and registered a small rebound, recouping 53.28pts or 0.48% to
11,045.27.

♦ On the chart, it registered a small positive candle, indicating a reprieve from the recent selldown momentum.

♦ As the index struggled to sustain at above the 21-day SMA of 11,026, with a muted short-term momentum
readings, it could continue to stay uncertain within the current range of 10,850 to 11,250.

♦ The worry remains that if it falls below the 10,850, it will trigger a sizeable correction on the current more-than-
a-year uptrend.

Nasdaq Composite (Nasdaq)

♦ After a further retreat in the early session, the Nasdaq Composite Index recovered from below the 21-day SMA of
2,465 to end flat for the day. It inched up 0.26 pt or 0.01% to 2,471.73, at slightly above the 2,470 level.

♦ And with a negative candle on the chart, it might not be enough to trigger a decent technical rebound.

♦ Only if it can build a base at above 2,470 and the 21-day SMA, a mild rebound can be generated.

♦ But due to its weak momentum, the risk remains high for a trip further south to below 2,470. Next support is
only seen at 2,330.

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

WCT Engineering (9679)

Follow-through selling momentum in the near term to RM2.80 likely…

♦ The share price of WCT enjoyed a sweet rally after triggering a “buy” signal in Apr 2009, and successfully
penetrated the heavy resistance level of RM2.40 in Jul 2009, before reaching a high of RM2.86 in Aug 2009.

♦ However, after the high, the stock encountered constant resistance near the technical hurdle of RM2.80.

♦ As a result, the stock began a sideways trading trend, scaling sideways from a support of RM2.40 and a
resistance of RM2.80.

♦ Only after Feb 2010, its upward momentum increased steadily, and the stock finally broke above the RM2.80
hurdle in Apr 2010.

♦ The breakout momentum led the stock to a fresh year high of RM3.12, but encountered another waves of selling
activity in recent trading.

♦ It registered its third negative candle on Wednesday, and fell to below the 10-day SMA of RM2.967.

♦ Technically, given the bearish momentum readings on the chart, follow-through selling momentum may drag the
stock lower in the near term and revisit the resistance-turn-support level of RM2.80 and the 40-day SMA of
RM2.796.

♦ Nevertheless, for a medium-term outlook, we believe the stock would find a decent support near these levels.

Technical Readings:

♦ 10-day SMA: RM2.967

♦ 40-day SMA: RM2.796

♦ Support: IS = RM2.80 S1 = RM2.40 S2 = RM1.95

♦ Resistance: IR = RM3.20 R1 = RM3.74

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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.

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actions of third parties in this respect.

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