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

13 July 2010
MARKET DATELINE

Market Technical Reading

Likely To Take A Breather After The Recent Rally...

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

Local Market Leads:

♦ Bursa Malaysia continued its rally on Monday, underpinned by continuous bullish sentiment in the US markets on
high hopes that the US second-quarter earnings season would see favourable results beginning this week.

♦ However, most regional bourses succumbed to fresh profit-taking pressure, as some investors turned cautious
ahead of the US Alcoa’s earnings announcement after the closing bell on Monday. Hang Seng only upped 0.44%,
off its early gains of 0.79% at one stage.

♦ Investors also shrugged off news that banks in Beijing and Shanghai have resumed lending to buyers of third
homes. This indicates that China government might have eased property tightening measures.

♦ Locally, the FBM KLCI also narrowed its gains to only 2.43 pts or 0.18% to 1,326.74. Turnover, however, eased to
611m shares, versus last Friday’s 664m shares. There were 371 gainers against 265 losers.

Technical Interpretations:

♦ After a weak opening, buying momentum quickly restored and drove the FBM KLCI to 1,331.74 high (+7.43 pts),
before paring down its early gains to end with a possible “shooting star” candle.

♦ On the candlestick chart, this points to a potential retreat today, after enjoying a strong run-up recently.

♦ Coupled with the lack of follow-through buying support, the index is at risk of facing fresh profit-taking dips soon.

♦ Nevertheless, given the upbeat momentum readings, any downside should be well contained by the 10-day SMA of
1,314, followed by the 40-day SMA of 1,304 and the 1,300 psychological level.

♦ On the upside, the Jun high of 1,335.31 will remain its immediate-term obstacle to trigger an extended rally
towards the major resistance barrier at 1,350.

Please read important disclosures at the end of this report.

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Daily Trading Strategy:

♦ Though the FBM KLCI’s recent stunning rally entered its fifth day yesterday, the afternoon profit-taking activities
have pressured it with a potential “shooting star” candle on the chart.

♦ Also, the daily turnover that had failed to improve yesterday post-FIFA World Cup Finals suggests most investors
were still in doubt over a sustainable technical rebound ahead. Investors appeared to be waiting for more positive
news flow, particularly from the US’ earnings reporting season ahead before commiting more resources.

♦ Moreover, with the “shooting star-like” candlestick pattern on the local futures index yesterday, sentiment in Bursa
Malaysia may take a breather after the recent rally.

♦ Therefore, unless the FBM KLCI can swiftly take out June’s high of 1,335.31 with a stronger daily turnover soon,
the risk of an immediate pullback in the near term will increase.

♦ Having said that, the immediate support near the 10-day SMA of 1,314, followed by the 40-day SMA near 1,304
and 1,300 will buffer the selling pressure in the near term, unless there is a sharp pullback in the US and regional
markets.

Table 2 : Major Indices & Commodities

Table 1 : Daily Statistics Change Change
Scoreboard 06 Jul 07 Jul 08 Jul 09 Jul 12 Jul Local Key Indices Closing
(Pts) (%)
Gainers 405 275 365 405 371 FBM KLCI 1,326.74 2.43 0.2
Losers 195 307 242 238 265 FBM 100 8,731.22 20.21 0.2
Unchanged 273 272 275 276 277 FBM ACE 3,741.06 -20.67 -0.5
Untraded 488 506 478 444 451 Major Overseas
Indices
Market Cap Dow Jones 10,216.27 18.24 0.2
Turnover Nasdaq 2,198.36 1.91 0.1
(mln shares) 622 540 533 664 611 S&P 500 1,078.75 0.79 0.1
Value (RM FTSE 5,167.02 34.08 0.7
mln) 970 919 971 1,440 991 Hang Seng 20,467.43 88.77 0.4
Jakarta Composite 2,958.79 14.89 0.5
Currency Nikkei 225 9,548.11 -37.21 -0.4
MYR vs US Seoul Composite 1,734.05 11.04 0.6
Dollar 3.2040 3.2185 3.2015 3.1970 3.2030 Shanghai Composite 2,490.72 19.80 0.8
SET 819.61 -0.99 -0.1
Source: RHBInvest & Bloomberg FT Straits Times 2,925.32 8.15 0.3
Taiwan Weighted 7,639.55 -7.70 -0.1
India Sensex 17,937.20 103.66 0.6
Major Commodities
NYMEX Crude Oil
(US$/barrel) 74.95 -1.14 -1.5
MDEX CPO – Third
Month (RM/metric ton) 2,338.00 38.00 1.7
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:

♦ As buyers bowed to the afternoon profit-taking pressure on the back of nervousness ahead of the US quarterly
earnings season, the FKLI finished unchanged in a volatile trading yesterday.

♦ From advancing as much as 8.50 pts to a high of 1,337.00, the futures index trimmed down its entire gain
towards the closing.

♦ By the end of the day, the FKLI for Jul contract was flat at 1,328.50.

♦ This resulted in a formation of a “shooting star-like” candle. This means if there is no fresh buying support, a
further pullback could happen today.

♦ This in turn, will spark further decline towards the 10-day SMA near 1,312 in the immediate term.

♦ Below that level, we see a firm support near a 7.5-pt gap at 1,307.50 – 1,315.0, as well as the 40-day SMA near
1,303.

♦ For now, any upside will be limited by the previous high of 1,342, and yesterday’s high of 1,337.

♦ And until it can completely remove May’s high of 1,352.5, the medium-term view on the FKLI will remain
uncertain.

Daily Trading Strategy:

♦ The close with the “shooting star-like” candle could dampen the FKLI’s chance to advance further.

♦ To shrug off a pullback risk, the futures index must quickly remove June’s high of 1,342 to regain confidence.

♦ If not, a retreat towards the 10-day SMA of 1,312 could be underway.

♦ Today, the FKLI is likely to fluctuate from 1,315 to 1,330.

Table 3: FKLI Closings

FKLI (Month)
Contracts Open High Low Close Chg (Pts) Settle Volume Open Interest
Jul 10 1330.00 1337.00 1327.00 1328.50 Unch 1328.50 4475 16948
Aug 10 1331.50 1336.00 1326.50 1327.50 Unch 1327.50 324 459
Sep 10 1330.00 1335.00 1326.50 1329.50 2.50 1328.00 172 527
Dec 10 1330.50 1333.50 1327.00 1327.00 0.50 1328.00 43 237

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:

♦ Thanks to brokers’ upgrades on technology stocks, the US markets managed to recoup its early declines by
closing slightly higher for the fifth day on Monday.

♦ The day started on a weak note amid cautious sentiment ahead of Alcoa’s quarterly earnings, but fresh buying
support resurfaced in late session.

♦ SanDisk Corp advanced 6.8% after UBS AG recommended a “buy” on the stock, while Qualcomm rose 3.5% after
Goldman Sachs Group upgraded it to a “buy” call.

♦ Following the recent strong rebound, the US light sweet crude oil futures for August delivery settled down
US$1.14 or 1.5% to US$74.95/barrel on profit-taking activities ahead of the US earnings reporting season.

♦ After the close, Alcoa unofficially kick-started the second-quarter earnings reporting season by announcing
stronger-than-expected earnings. The share price gained 3.9% in after hour trading.

Technical Interpretations:

Dow Jones Industrial Average (DJIA)

♦ On Monday, the US DJIA shrugged off the early weakness, ending up another 18.24 pts or 0.18% to 10,216.27.

♦ It, however, acquired a “hangman-like” candle and a nearly “complete overbought” reading on the stochastic
oscillators, indicating a possible weakness today.

♦ Hence, a mild retreat can be expected in the near term, with the 21-day SMA support near the key technical level
at 10,150.

♦ And as long as the 21-day SMA and 10,150 hold, chances for the index to resume its rally remain high. A major
technical barrier is seen at 10,850.

Nasdaq Composite (Nasdaq)

♦ The Nasdaq Composite index extended its recent rally and closed at above 2,190, inching up 1.91 pts or 0.09%
to end at 2,198.36. The index registered a “star-like” candle.

♦ The candlestick suggests a near-term reversal is in the pipeline.

♦ It must quickly overtake the 21-day SMA of 2,216 in order to expand its recovery momentum towards 2,330.
Otherwise, it could lose the 2,190 support level and trigger more falls ahead to 2,100, in our view.

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Daily Technical Watch:

Chart 7: TmeCom Daily Chart 8: TmeCom Intraday

Time dotCom (5031)

Further rally to RM0.60 and RM0.705 if it removes RM0.54 on the next push…

♦ The share price of TimeCom began to trade sideways after hitting a high of RM0.46 in May 2009, and fell within
the range of RM0.345 to RM0.47 region.

♦ In Mar 2010, the trading momentum of the stock accelerated as it pierced through the RM0.41 level and
propelled to above the RM0.47 heavy resistance level on persistent buying support. It then moved on to scale a
high of RM0.545 in early Apr 2010.

♦ However, as it failed to secure its gain at above the RM0.54 resistance level, it turned into a downtrend, and fell
to below RM0.47 in May. But, from a low of RM0.375, the stock managed to build up its upward momentum and
kicked-off a steady technical rebound.

♦ It retook the RM0.47 level last week and touched a high of RM0.53 yesterday, before ending the day at RM0.51.

♦ However, due to a close that was significantly off its day high, it registered a “shooting star-like” candle on the
chart, pointing to a likely pullback after the recent run-up.

♦ As both the momentum indicators remain upbeat, a mild pullback on the chart is healthy if it still sustains at
above the RM0.47 key support level in the near term, in our view.

♦ When buying momentum resumes after the pullback, the stock may resume its rally and rechallenge the RM0.54
tough technical hurdle again.

♦ A successful removal of RM0.54 will lead to a further run-up to RM0.60 and RM0.705 hurdles next.

Technical Readings:

♦ 10-day SMA: RM0.462

♦ 40-day SMA: RM0.4304

♦ Support: IS = RM0.47 S1 = RM0.41 S2 = RM0.345

♦ Resistance: IR = RM0.54 R1 = RM0.60 R2 = RM0.705

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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
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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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