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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

18 June 2010

Market Technical Reading

Negatively Biased View Maintained...

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

Local Market Leads:

In the absence of interesting trading leads, the local market edged slightly higher for the eighth day on thin
trading amid selective bargain-hunting on core bluechips on Thursday.

At the close, the FBM KLCI added 1.34 pts or 0.10% to 1,304.47, led by mild gains in Sime (+4sen), HLBank
(+15sen) and Maybank (+3sen).

Clearly, investors appeared skeptical, even after the recent successful breakthrough from the 1,300 psychological
threshold. Generally, the current lukewarm sentiment was caused by the external uncertainties.

As the market remained sluggish, daily turnover shrunk to 516m shares from 663m shares a day ago. Market
breadth remained positive for the fifth day with 295 gainers outpacing 277 losers.

Regionally, Asian markets ended mixed on nervous trading amid poor US housing starts and fear of more
tightening moves in the financial sector during the European leaders summit meeting due on Thursday.

Technical Interpretations:

Despite the previous gravestone doji candle, the FBM KLCI continued its crawl on mild buying interest yesterday.

But on the chart, the index formed a doji-like candle to indicate further uncertainties ahead.

If it can secure enough buying support, it will possibly inch higher towards the 40-day SMA of 1,311 soon.

However, the odds of overtaking the SMA in the near term appear slim due to the strong obstacle at the 40-day
SMA and the mixed momentum readings on the indicators, according to our chart.

In our view, the indexs near-term outlook remains uncertain as it fails to gain a confirmation positive candle for
the recent breakout of 1,300 and the 10-day SMA of 1,295.

As a result, the index still faces significant risk of a sudden pullback to below these immediate support levels.

Please read important disclosures at the end of this report.

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18 June 2010

Daily Trading Strategy:

Instead of turning lower on the previous gravestone doji candle, the FBM KLCI held up at above the 1,300 key
level and extended its recovery for the eighth day yesterday.

As the index registered a muted doji-like candle on the chart, uncertainty remains for the near term as the
index struggles to collect a confirmation positive candle.

But technically, without a convincing removal of the 40-day SMA near 1,311 in the short term, investors are
unlikely to commit more resources in the current market scenario.

Only if it can remove the 40-day SMA, will it have a fresh chance to retest the next major technical obstacle at

On the other hand, a fall to below the 1,300 level and the 10-day SMA of 1,295 will turn the technical outlook
negative, hence pressing the index lower to another round of selling mode ahead.

As a result, we maintain our negatively biased technical outlook on the local market and continue to suggest sell
into strength for the medium-term strategists.

Table 2 : Major Indices & Commodities

Table 1 : Daily Statistics Change Change
Scoreboard 11 June 14 June 15 June 16 June 17 June Local Key Indices Closing
(Pts) (%)
Gainers 380 302 296 494 295 FBM KLCI 1,304.47 1.34 0.1
Losers 193 242 291 174 277 FBM 100 8,570.92 7.46 0.1
Unchanged 282 269 270 240 294 FBM ACE 3,824.43 8.62 0.2
Untraded 517 556 512 460 502 Major Overseas
Market Cap Dow Jones 10,434.17 24.71 0.2
Turnover Nasdaq 2,307.16 1.23 0.1
(mln shares) 502 502 512 663 516 S&P 500 1,116.04 1.43 0.1
Value (RM FTSE 5,253.89 15.97 0.3
mln) 840 665 891 1,012 757 Hang Seng 20,138.40 76.25 0.4
Jakarta Composite 2,891.10 32.44 1.1
Currency Nikkei 225 9,999.40 -67.75 -0.7
MYR vs US Seoul Composite 1,707.92 2.59 0.2
Dollar 3.2820 3.2600 3.2690 3.2590 3.2640 Shanghai Composite 2,560.25 -9.69 -0.4
SET 789.34 2.70 0.3
Source: RHBInvest & Bloomberg FT Straits Times 2,843.95 -2.99 -0.1
Taiwan Weighted 7,515.78 61.72 0.8
India Sensex 17,616.69 153.82 0.9
Major Commodities
NYMEX Crude Oil
(US$/barrel) 76.79 -0.88 -1.1
Month (RM/metric ton) 2,398.00 18.00 0.8
US Interest Rate Current Last Updated
27-28 Apr
Overnight Fed Fund Rate 0-0.25% Unch
Next FOMC meeting 22-23 June 2010

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18 June 2010

Chart 3: FKLI Daily Chart 4: FKLI Intraday

Technical Interpretations:

After a slumpy trading action in the early session, the FKLI sprang to life and launched a late push on Thursday in
the wake of an afternoon surge in the major European markets.

From the 1,304.50 low in the afternoon session, the sudden return of fresh buying momentum drove the futures
index sharply higher in the late hours.

For the day, the FKLI for June contract rose another 4.00 pts or 0.31% to 1,313.00.

More importantly, the futures index has reclaimed the 40-day SMA near 1,311. This suggests a good potential for
the FKLI to accelerate its upswing today.

But due to the poor turnover, there is still a need to secure a positive confirmation candle at above the SMA

If it succeeds, it will pave way for another run-up towards Mays peak of 1,352.50 in the immediate term.

However, a failure will lure in the profit-taking pressure instead, and lead it back to cover a lower technical gap at
1,302.0 1,305.0 soon.

A clear support level is still near the 1,300 psychological level, followed by the 10-day SMA of 1,296.

Daily Trading Strategy:

Just like the cash index, the FKLI remains very resilient, even though it has registered some negative candles

However, we remain skeptical on the futures indexs near-term outlook pending more positive confirmation
signals on the chart.

Therefore, traders should keep their cautious view for the time being.

The FKLI is projected to swing from 1,302 to 1,320 today.

Table 3: FKLI Closings

FKLI (Month)
Contracts Open High Low Close Chg (Pts) Settle Volume Open Interest
Jun 10 1309.00 1313.00 1304.50 1313.00 4.00 1313.00 5022 17943
Jul 10 1307.50 1312.00 1304.00 1311.50 3.00 1311.50 168 505
Sep 10 1307.50 1309.50 1303.50 1309.50 2.00 1310.00 97 471
Dec 10 1307.00 1309.00 1304.00 1309.00 2.00 1309.50 54 238

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 staged a late reversal by extending its winning streaks for a third straight day on Thursday, shrugging
off the earlier selldown that was triggered by a set of weak US economic data.

On the economic news, a poor reading in the Federal Reserve Bank of Philadelphias factory index and a surprise
jump in the weekly jobless claims prompted profit-taking activities across the board in the early session.

But as confidence returned following a successful US$4.3bn bonds auction in Spain which eased concerns over
the recent European debt problems, the market saw renewed buying support.

Investors snapped up exporters, including Caterpillar (+0.9%) and Kraft (+0.8%), as well as some technology
stocks, like Apple Inc (+1.7%) that hit a record high.

But on the NYMEX, the US light sweet crude oil futures for July delivery ended the recent rally by closing down
US$0.88 or 1.1% to US$76.79/barrel on the disappointing US economic data.

Technical Interpretations:

Dow Jones Industrial Average (DJIA)

Though the early session saw a slide of as much as 90-pts, the US DJIA managed to engineer a late comeback on
Thursday. For the day, the index finished up 24.71 pts or 0.24% to to 10,434.17.

But, it accumulated another potential hangman candle, reiterating a possible technical pullback soon.

Coupled with the extremely overbought stochastic oscillators, this increased further its downside risk.

This means a pullback towards the 21-day SMA near the 10,150 support level is still possible, unless it can
overtake yesterdays high of 10,441.20 to boost its upside within the trading range of 10,150 10,850 in the
near term.

Nasdaq Composite (Nasdaq)

The Nasdaq Composite continued its upward march for the sixth day, inching up 1.23 pts or 0.05% to 2,307.16.

But just like the Dow, it finished the day with a hangman-like candle. Plus the very overbought stochastic
oscillators, we still believe there is a pullback risk towards the 21-day SMA of 2,240 soon.

A quick breakout from 2,330, however, will avoid a technical retreat risk and pave way for an extension of the
recent rebound strength towards the next resistance target at 2,470.

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

Petra Perdana (7108)

Another challenge to RM1.78 if it sustains at above the 40-day SMA

The share price of Petra plunged after losing a key support level of RM2.40 in Nov 2009.

The stock crashed to a low of RM1.20 in Dec 2009, before staging a sharp technical rebound to RM2.06. However,
as it failed to sustain at above the RM1.78 critical level, it resumed its selling momentum and headed south
towards the RM1.20 support region.

It relaunched another rally in Mar 2010, hitting a high of RM1.81 in early Apr, but once again, sellers returned to
drag down the stock near the RM1.78 level.

As a result, it touched a fresh six years low of RM1.05 in May 2010.

Thereafter, it recovered from its losses on mild bargain-hunting support and recaptured the RM1.20 support level
in recent trading.

The stock closed at RM1.38 with four positive candles in the last five trading sessions and cut through the 40-day
SMA near RM1.30. This suggests a likelihood of follow-through buying momentum ahead.

Although the stochastic oscillators signal a fresh sell signal from the overbought region, the 40-day SMA near
RM1.30 should buffer its near-term downside.

Should it sustain firmly at above the SMA, it will unveil another challenge to the RM1.78 critical level soon, in our

Technical Readings:

10-day SMA: RM1.232

40-day SMA: RM1.30

Support: IS = RM1.20

Resistance: IR = RM1.78 R1 = RM2.20 R2 = RM2.40

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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 RHBRIs 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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