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

11 May 2010
MARKET DATELINE

Market Technical Reading

Still Vulnerable To Downside Risk...

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

Local Market Leads:

♦ Buoyed by the powerful rallies across the regional markets amid a nearly US$1trillion new loan programme
unveiled by the European Union (EU) and IMF, the FBM KLCI edged higher on follow-through bargain-hunting
supports on Monday.

♦ Just before the opening in the Asian markets, the EU and IMF rolled out an emergency fund worth 750bn euros
(US$962bn) in bids to halt the sovereign-debt crisis in the Eurozone.

♦ As a result, the US DJIA futures index rallied nearly 400 pts at one stage. In fact, regional markets’ rally
intensified after key European markets soared more than 4% in the early session. Hang Seng rallied 2.54%, while
Sensex jumped 3.35%.

♦ On the home front, the local benchmark FBM KLCI continued its recovery leg by adding another 1.08 pts or
0.08% to 1,333.97 on fresh bargain-hunting activities.

♦ Turnover, however, eased to 806m shares from last Friday’s 937m shares. Market breadth turned positive for the
first time in six trading days, with 529 gainers overwhelmed 194 losers.

Technical Interpretations:

♦ However, the FBM KLCI recorded a “star-like” candle impling a possibility of a profit-taking pullback today,
despite further recovery for a second day yesterday.

♦ Not only that, it has also failed to clear off the immediate hurdle of the 10-day SMA near 1,338 yesterday.

♦ It is still possible for it to breach below the 40-day SMA of 1,328, if selling activities reemerge soon.

♦ In other words, until it can fully reclaim the 10-day SMA and the previous resistance zone near 1,347 - 1,350, the
FBM KLCI will remain vulnerable to further correction ahead.

♦ The next lower supports remain near the technical gap at 1,305 and the 1,300 psychological level.

Please read important disclosures at the end of this report.

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 11 May 2010

Daily Trading Strategy:

♦ In our view, the two-day recovery was not enough to warrant a turnaround on the FBM KLCI’s short-term
technical downswing.

♦ In fact, the risk of a resumption of selling pressure remains high, especially after its failure to overcome the 10-
day SMA of 1,338 and given the formation of a “star-like” candle yesterday.

♦ Not only that, the index must not fall to below the 40-day SMA near 1,328, because that will lure back the selling
forces, hence igniting the “sell” mode towards a technical gap near 1,305 and the psychological level of 1,300.

♦ And despite the fact that Asian and European markets enjoyed a powerful technical rebound yesterday, local
investors remained unconvinced on the potential of a powerful technical rebound, as shown on the easing of the
daily turnover to 806m shares.

♦ We expect the index to be trapped between the 10-day SMA and the recent resistance zone near 1,347 - 1,350.

♦ The previous “double top” formation remains intact and as a result of which, investors should maintain their “sell
on strength” strategy in anticipation of an imminent retracement of the 13-mth uptrend on the FBM KLCI, in our
opinion.

Table 2 : Major Indices & Commodities

Table 1 : Daily Statistics Change Change
Scoreboard 4 May 5 May 6 May 7 May 10 May Local Key Indices Closing
(Pts) (%)
Gainers 176 193 137 205 529 FBM KLCI 1,333.97 1.08 0.1
Losers 555 531 644 522 194 FBM 100 8,733.52 19.01 0.2
Unchanged 285 257 233 234 217 FBM ACE 4,008.96 69.53 1.8
Untraded 354 389 353 406 433
Major Overseas
Market Cap Indices
Turnover Dow Jones 10,785.14 404.71 3.9
(mln shares) 767 861 899 938 806 Nasdaq 2,374.67 109.03 4.8
Value (RM S&P 500 1,159.73 48.85 4.4
mln) 1,069 1,522 1,578 1,814 1,310 FTSE 5,387.42 264.40 5.2
Hang Seng 20,426.64 506.35 2.5
Currency Jakarta Composite 2,850.43 111.10 4.1
MYR vs US Nikkei 225 10,530.70 166.11 1.6
Dollar 3.2100 3.2310 3.2530 3.2560 3.1960 Seoul Composite 1,677.63 30.13 1.8
Shanghai Composite 2,698.76 10.38 0.4
Source: RHBInvest & Bloomberg SET 779.06 10.51 1.4
FT Straits Times 2,880.48 59.37 2.1
Taiwan Weighted 7,664.73 97.63 1.3
India Sensex 17,330.55 561.44 3.3
Major Commodities
NYMEX Crude Oil
(US$/barrel) 76.80 1.69 2.3
MDEX CPO – Third
Month (RM/metric ton) 2,529.00 10.00 0.4
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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 11 May 2010

Chart 3: FKLI Daily Chart 4: FKLI Intraday

Technical Interpretations:

♦ With the overseas markets and the US futures markets skyrocketing amid news that the EU has set up a nearly
US$1trillion emergency fund to rescue Greece, the FKLI enjoyed a strong rebound too as traders quickly rushed
back to cover their short positions yesterday.

♦ The futures index opened up by 6.50 pts at 1,331.00, before expanding its recovery leg in the afternoon session.
For the day, the FKLI for May contract surged 13.50 pts or 1.02% to 1,338.00.

♦ This in turn, lifted the FKLI back to above the 10-day SMA of 1,335 and the 40-day SMA of 1,329.

♦ Technically, as it successfully reclaimed both of these important technical levels with a positive candle, the chart
is pointing to a continuous recovery ahead.

♦ The recovery prospect is further strengthened by the upticks on the short-term momentum indicators with a fresh
“buy” signal on the stochastic oscillators.

♦ While all these improvements on the technical landscape warrant a further recovery in the coming days, the FKLI
must still penetrate above the recent high of 1,352.50 to gear-up a bullish mode.

♦ Failure to do so will mean the FKLI could still be vulnerable to the return of selling activities.

♦ The downside supports for the FKLI are near the 10-day and 40-day SMAs.

Daily Trading Strategy:

♦ The FKLI has regained the 10-day and 40-day SMAs to signal a likely positive turn in the short-term outlook. It
must now remove the recent high of 1,352.5 to convince a sustainable buying momentum.

♦ However, given the uncertainties in the cash market outlook, traders should exercise caution before commiting a
heavy position.

♦ Meanwhile, the FKLI is likely to swing from 1,330 to 1,345 today.

Table 3: FKLI Closings

FKLI (Month)
Contracts Open High Low Close Chg (Pts) Settle Volume Open Interest
May 10 1331.00 1340.50 1329.00 1338.00 13.50 1338.00 7275 18772
Jun 10 1329.50 1339.00 1328.50 1338.00 13.50 1338.00 717 877
Sep 10 1330.50 1339.50 1329.00 1338.00 14.00 1337.00 154 240
Dec 10 1332.00 1340.00 1330.50 1339.00 14.50 1337.50 72 109

Source: Bursa Malaysia

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 11 May 2010

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

US Market Leads:

♦ Lifted by the announcement of a nearly US$1trillion rescue package by the EU in bids to end the recent European
sovereign debt crisis, the overnight US markets responded with a powerful rally in more than a year on Monday.

♦ EU came out with a mega bailout plan worth 750 bn euros on Monday, comprising 440 bn euros of loans from the
Eurozone governments, 60 bn euros from the EU emergency fund and 250 bn euros from the IMF.

♦ Not only that, ECB will go into the secondary market to buy Eurozone’s national bonds, while the US Federal
Reserve works with other global central banks to reactivate swap lines in order to provide loan access to foreign
institutions.

♦ In response, major European markets rallied more than 5%, while the US major gauges jumped at least 3.9%.

♦ After experiencing a sharp correction recently, the US light sweet crude oil futures for June delivery also staged a
rebound by gaining US$1.69 or 2.3% to US$76.80/barrel.

Technical Interpretations:

Dow Jones Industrial Average (DJIA)

♦ Surprisingly, the US DJIA launched a timely technical rebound on Monday, climbing 405 pts or 3.90% to
10,785.14, and recorded a huge bullish candle on the chart.

♦ Added with the upbeat rebound in the momentum indicators, the index could see further rally ahead.

♦ However, the index fell short of removing the immediate resistance of 10,850 and the 21-day SMA of 11,001
yesterday. As a result, it is still stuck within the current trading range from 10,150 to 10,850.

♦ Technically, without a powerful recovery to above these levels, the recent corrective swing remains intact, and it
is still vulnerable to a slip into the next support zone of 9,200 – 9,700.

Nasdaq Composite (Nasdaq)

♦ The Nasdaq Composite Index also staged a powerful rebound yesterday, jumping 109 pts or 4.81% to end at
2,374.67, above the key level of 2,330.

♦ However, the index registered a “hangman-like” candle, indicating a possible pullback on profit-taking activities.

♦ Technically, it must sustain at above the 2,330 level to avoid a fall back into the bearish downswing. Key support
is at 2,190, followed by the support zone at 2,100 and the 2,000 pyschological level.

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

Tan Chong Motor Holdings (4405)

Further rebound if it removes RM4.50 and the 10-day SMA…

♦ The share price of TChong fell into a consolidation phase after touching a high of RM3.61 in Jan 2010.

♦ But, as it survived the fall at a low of RM2.68 in Feb, it kicked off a recovery move.

♦ The stock surpassed the Jan high and a resistance level of RM3.65 in late Mar 2010, and continued with a
stunning rally to a more than a decade high of RM5.20 in Apr.

♦ Thereafter, however, the stock triggered constant selling pressure, pressing it to a downtrend and subsequently
fell to below the 10-day SMA and the important support level of RM4.50.

♦ It nearly fell below the 40-day SMA near RM4.14 and a critical support of RM4.15 recently, but registered a huge
bullish candle on the chart yesterday.

♦ Technically, coupled with the fresh “double buy” signal on the momentum indicators, the stock is poised to launch
a technical rebound soon.

♦ If it crosses above the 10-day SMA of RM4.45 and the crucial level of RM4.50, it will rise faster and steeper
towards the RM4.90 and RM5.20 resistances in the near term.

♦ For the medium-term outlook, the stock must not fall to below the 40-day SMA and the RM4.15 support level.

♦ Lower support zone is only at the RM3.36 – RM3.65 region.

Technical Readings:

♦ 10-day SMA: RM4.45

♦ 40-day SMA: RM4.14

♦ Support: IS = RM4.15 S1 = RM3.65 S2 = RM3.36

♦ Resistance: IR = RM4.50 R1 = RM4.90 R2 = RM5.20

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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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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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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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