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

12 July 2010
MARKET DATELINE

Market Technical Reading

Poised To Hit 1,335 June’s High Soon...

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

Local Market Leads:

♦ Tracking the sustainable rally in the US markets as well as the optimism over Asian’s economic prospects, the local
bourse headed higher for the fourth trading day on Friday.

♦ Investors interpreted the latest interest rate hikes by Malaysia and South Korea as a confidence vote on further
economic recovery. South Korea central bank unexpectedly raised interest rate by 25 bps to 2.25% on Friday.

♦ Also, comment by the European Central Bank President Jean-Claude Trichet that the EU recovery is gaining
momentum, further bolstered market sentiment.

♦ As a result, the regional bourses posted gains from 0.37% (SET) to 2.31% (Shanghai Composite) on Friday.

♦ Back home, the FBM KLCI shot up 8.28 pts or 0.63% to 1,324.31, thanks to gains in Axiata (+11sen), PPB
(+62sen) and PetGas (+31sen). Total turnover increased to 664m shares, up from Thursday’s 533m shares.
Market breadth stayed positive with 405 advancers surpassing 238 decliners.

Technical Interpretations:

♦ Fuelled by solid buying support, the FBM KLCI extended its gains from the 10-day SMA of 1,313, with a fourth
positive candle on the chart.

♦ Coupled with the robust momentum readings, a further run-up towards the recent high of 1,335.31 is well
underway.

♦ In fact, a penetration to above 1,335.31 will mean further upside to rechallenge the key resistance at 1,350.

♦ To recap, only by removing 1,350 convincingly, will the FBM KLCI’s medium-term outlook turn bullish.

♦ On the downside, the index should find solid support near the 10-day SMA of 1,313, followed the 40-day SMA near
1,303 and the key psychological level at 1,300.

Please read important disclosures at the end of this report.

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Daily Trading Strategy:

♦ Undoubtedly, the recent sharp technical rebound has turned the FBM KLCI’s technical landscape to a more positive
tone, especially after forming a bullish confirmation candle at above the 10-day SMA of 1,313 last Friday.

♦ Plus the continuous improvement in the local and overseas trading sentiment, the FBM KLCI is poised to take out
June’s high of 1,335.31 soon, before advancing further towards 1,350.

♦ More encouragingly, trading activities have increased, albeit at a slower pace, as rotational buying momentum has
brought in the lower liners. It was previously only centred amongst the bluechips.

♦ Post-World Cup, in our view, retail participation will likely come back if the market sentiment remains upbeat.

♦ If the average daily turnover reaches the 800m – 1.0bn shares mark, the current recovery strength on the FBM
KLCI will likely increase, in our view.

♦ Also, the sustainability of the current recovery will largely hinge on global investors’ response to the US’ second
quarter earnings reporting season, which will kick off beginning this week.

Table 2 : Major Indices & Commodities

Table 1 : Daily Statistics Change Change
Scoreboard 05 Jul 06 Jul 07 Jul 08 Jul 09 Jul Local Key Indices Closing
(Pts) (%)
Gainers 182 405 275 365 405 FBM KLCI 1,324.31 8.28 0.6
Losers 425 195 307 242 238 FBM 100 8,711.01 51.49 0.6
Unchanged 270 273 272 275 276 FBM ACE 3,761.73 -8.12 -0.2
Untraded 484 488 506 478 444 Major Overseas
Indices
Market Cap Dow Jones 10,198.03 59.04 0.6
Turnover Nasdaq 2,196.45 21.05 1.0
(mln shares) 450 622 540 533 664 S&P 500 1,077.96 7.71 0.7
Value (RM FTSE 5,132.94 27.49 0.5
mln) 718 970 919 971 1,440 Hang Seng 20,378.66 328.10 1.6
Jakarta Composite 2,943.90 27.99 1.0
Currency Nikkei 225 9,585.32 49.58 0.5
MYR vs US Seoul Composite 1,723.01 24.37 1.4
Dollar 3.2060 3.2040 3.2185 3.2015 3.1970 Shanghai Composite 2,470.92 55.77 2.3
SET 820.6 3.03 0.4
Source: RHBInvest & Bloomberg FT Straits Times 2,917.17 20.02 0.7
Taiwan Weighted 7,647.25 38.40 0.5
India Sensex 17,833.54 181.81 1.0
Major Commodities
NYMEX Crude Oil
(US$/barrel) 76.09 0.65 0.9
MDEX CPO – Third
Month (RM/metric ton) 2,300.00 10.00 0.4
US Interest Rate Current Last Updated
22-23 Jun
Overnight Fed Fund Rate 0-0.25% Unch
2010
Next FOMC meeting 10 Aug 2010

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Chart 3: FKLI Daily Chart 4: FKLI Intraday

Technical Interpretations:

♦ Tracking the regional bullish sentiment following another rally in the overnight US markets, the bulls continued to
push the local futures index higher on Friday.

♦ From a weak early start, buying momentum picked up steadily, and turned robust in the afternoon, when the
Chinese market closed bullishly on Friday. The SHComp index ended the day with a firm 2.3% gain.

♦ At the close, the FKLI for Jul contract jumped another 12.00 pts or 0.91% to 1,328.50.

♦ Chart wise, the closing with a positive confirmation candle at above the 10-day SMA near 1,312 last Friday has
significantly increased its odds to retest June’s high of 1,342 soon.

♦ But for the futures index to engineer a sustainable rally, it must take out May’s high of 1,352.5 in the near term.

♦ Only by then, the chart’s medium-term outlook will turn bullish.

♦ For the short term, the FKLI is expected to be well-supported near the 10-day SMA of 1,312 and a 7.5-pt gap at
1,307.50 – 1,315.0.

♦ The 40-day SMA of 1,303 near the 1,300 psychological level will buffer the downside, if it ever loses the 10-day
SMA.

Daily Trading Strategy:

♦ Based on the latest chart development, the FKLI is ready to rechallenge June’s high of 1,342 soon.

♦ More upside towards 1,352.50 can be expected upon the removal of 1,342.

♦ The FKLI’s trading band will be between 1,323 and 1,338 today.

Table 3: FKLI Closings

FKLI (Month)
Contracts Open High Low Close Chg (Pts) Settle Volume Open Interest
Jul 10 1321.00 1332.50 1316.50 1328.50 12.00 1328.50 8370 15992
Aug 10 1319.00 1331.00 1315.50 1327.00 12.50 1327.50 505 294
Sep 10 1320.00 1330.00 1316.00 1326.00 10.00 1327.00 184 533
Dec 10 1317.00 1330.00 1317.00 1326.00 10.00 1326.50 21 246

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:

♦ Led by renewed late buying momentum, the US markets ended Friday higher by posting their biggest weekly gain
since Jul 2009, on optimism over the second-quarter earnings season which will begin this week.

♦ This quarterly earnings season will kick-off with Alcoa announcing its results after the closing bell on Monday. The
aluminium giant is expected to return to the black. Other Dow components, JPMorgan Chase, Bank of America,
Intel and GE are also due to report earnings this week.

♦ Besides, news that China government has renewed Google’s licence to continue operating its China Internet
search service boosted the tech sector. Google’s share advanced 2.4% on Friday.

♦ On the crude oil markets, the US light sweet crude oil futures for August delivery added US$0.65 or 0.9% to
US$76.09/barrel.

Technical Interpretations:

Dow Jones Industrial Average (DJIA)

♦ After a choppy session, the US DJIA regrouped its buying momentum and closed up by another 59.04 pts or
0.58% to 10,198.03 on Friday.

♦ Closed with four bullish candles in a row, the index is pointing to a further upside potential this week.

♦ More encouragingly, the closing to above the 10,150 key hurdle suggests another important technical breakout
on the chart.

♦ This means if the index can hold at above 10,150, it will see further rally to the recent high of 10,594.16 and to
rechallenge the major technical barrier of 10,850 soon.

♦ Its immediate support is now set at 10,150, followed by the 21-day SMA of 10,138.

Nasdaq Composite (Nasdaq)

♦ Instead of taking a breather, the Nasdaq Composite index rose another 21.05 pts or 0.97% to 2,196.45 on
Friday, surpassing its immediate resistance of 2,190.

♦ As the index formed a positive candle after the previous “doji” candle, this shows a resumption of upward
momentum towards the 21-day SMA of 2,213 soon.

♦ A further penetration of the 21-day SMA will trigger more rallies towards 2,330, in our view.

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Daily Technical Watch:

Chart 7: Titan Daily Chart 8: Titan Intraday

Titan Chemicals Corp (5103)

Further rally to RM1.85 and RM1.98 if momentum continues…

♦ The share price of Titan penetrated the tough RM1.14 resistance level in Aug 2009, but stuck near the level in a
consolidation move.

♦ In Dec 2009, the stock tried to launch a technical rally, hitting a high of RM1.36 in Jan 2010, but failed to sustain
at above the RM1.35 resistance level.

♦ Thereafter, it has been trending within RM1.14 to RM1.35 for most of the time until in early Jun 2010, when it
kicked off a powerful rally.

♦ The stock hit a high of RM1.74 on last Friday, before closing the week at RM1.70, with two consecutive positive
candles on the chart, and marginally higher than a resistance level of RM1.68.

♦ Fuelled with the upbeat short-term momentum readings and the increase in daily trading volume of late, the
stock is poised to continue its rally towards the RM1.85 resistance level, and possibly rechallenging its historical
high of RM1.98 soon on follow-through buying support.

♦ Cautiously, however, it must not ease to below the RM1.68 immedaite support level in the next few sessions, as
that will induce profit-taking pressure, hence fracturing the current uptrend.

♦ A lower and stronger support should be near the RM1.51 level, closer to the 10-day SMA of RM1.55.

Technical Readings:

♦ 10-day SMA: RM1.55

♦ 40-day SMA: RM1.404

♦ Support: IS = RM1.68 S1 = RM1.51 S2 = RM1.35

♦ Resistance: IR = RM1.85 R1 = RM1.98

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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
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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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