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

10 August 2010
MARKET DATELINE

Market Technical Reading

Volume Must Stay Robust To Avoid T+3 Sellings…

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

Local Market Leads:

♦ Taking cues from the positive turnaround in the regional sentiment, the FBM KLCI benchmark shrugged off the
earlier weakness and inched higher amid renewed bargain-hunting support on Monday.

♦ Earlier, as profit-taking activities continued, investors stayed in cautious mode following the poor US jobs report
and ahead of the US Federal Reserve’s FOMC meeting on Tuesday.

♦ But the local market recovered, after the regional indices bounced back on expectation that the US jobs data will
force the Fed to do more to sustain the economic recovery momentum. Besides, sentiment was aided by a more
than 1% rally in the early opening in the European markets.

♦ Upon closing, the FBM KLCI inched up 0.21 pt or 0.02% to 1,360.66, after easing for the past three sessions.

♦ Still, daily turnover declined for the second day to 699m shares amid growing cautiousness of investors, from
866m shares previously. Market breadth remained depressed, as decliners outnumbered advancers by a ratio of
402 to 293.

♦ Regionally, Taiwan Weighted index, Sensex and Jakarta Composite gained 0.89%, 0.72% and 0.79% each.

Technical Interpretations:

♦ After breaching the 10-day SMA near 1,360 to an intraday low of 1,358.35 (-2.10 pts) at one stage, the local
benchmark slowly recovered before ending the day with a “doji” candle to paint more uncertainties ahead.

♦ This also means that the index could stage a technical rebound from the 10-day SMA, if it collects a positive candle
today.

♦ But given the mixed signal in the short-term momentum indicators, and the weakening daily turnover, a smooth
removal of the recent high of 1,370.52 might not be as easy as thought.

♦ In fact, the index may need to linger near the 10-day SMA and the major resistance-turned-support level of 1,350
before it can rebuild a base for the resumption of the recent buying momentum.

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Daily Trading Strategy:

♦ The FBM KLCI retested the 10-day SMA of 1,360 yesterday but managed to sustain at above the SMA at day end.
This signals a bullish underlying tone for the market going forward.

♦ Although the closing with a “doji” candle and the weak technical indicators still point to more uncertainties ahead,
we believe the recent uptrend is still intact, and the index can still install a fresh rally in the near term, if it
rebuilds a base near the 10-day SMA and the key resistance-turn-support level of 1,350.

♦ Rather, more important to the short-term sentiment is that the daily turnover must stay robustly near the 800m to
1.0bn shares in the near term. This is important to avoid the T+3 selling pressure in sessions ahead.

♦ Upon resumption of the buying supports, the index will likely retest the recent high of 1,370.52, before moving
higher to the next upside target at 1,390.

♦ On the downside, our bullish view will be threatened only if the FBM KLCI unexpectedly breaches below the
breakout point of 1,350.

Table 2 : Major Indices & Commodities

Table 1 : Daily Statistics Change Change
Scoreboard 3 Aug 4 Aug 5 Aug 6 Aug 9 Aug Local Key Indices Closing
(Pts) (%)
Gainers 250 322 362 328 293 FBM KLCI 1,360.66 0.21 0.0
Losers 479 363 349 367 402 FBM 100 8,966.57 1.23 0.0
Unchanged 270 286 276 281 256 FBM ACE 3,816.70 -10.96 -0.3
Untraded 367 399 378 390 416 Major Overseas
Indices
Market Cap Dow Jones 10,698.75 45.19 0.4
Turnover Nasdaq 2,305.69 17.22 0.8
(mln shares) 1,106 811 994 866 699 S&P 500 1,127.79 6.15 0.5
Value (RM FTSE 5,410.52 78.13 1.5
mln) 1,463 1,188 1,576 1,256 1,066 Hang Seng 21,801.59 122.79 0.6
Jakarta Composite 3,082.60 22.01 0.7
Currency Nikkei 225 9,572.49 -69.63 -0.7
MYR vs US Seoul Composite 1,790.17 6.34 0.4
Dollar 3.1590 3.1660 3.1540 3.1460 3.1405 Shanghai Composite 2,672.53 14.14 0.5
SET 875.18 0.11 0.0
Source: RHBInvest & Bloomberg Straits Times 2,995.06 Closed Closed
Taiwan Weighted 8,034.49 71.19 0.9
India Sensex 18,287.50 143.51 0.8
Major Commodities
NYMEX Crude Oil
(US$/barrel) 81.48 0.78 1.0
MDEX CPO – Third
Month (RM/metric ton) 2,730.00 69.00 2.6
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:

♦ Buoyed by the improvement in the regional sentiment, the KL futures market managed to overcome the early
retreat by staging a steady comeback in the afternoon session.

♦ From a day low of 1,357.50, the FKLI gradually recovered and extended its rebound from the 10-day SMA of 1,362
towards the 1,367.00 high on mild buying support.

♦ At the close, the FKLI for Aug contract settled at 1,365.50, gaining 2.50 pts or 0.18% for the day.

♦ On the chart, the futures index acquired a “bullish engulfing” candle to suggest a further recovery in the
immediate term.

♦ This means if it can secure enough follow-through buying momentum, a rechallenge of the recent high of 1,374.50
can be expected soon.

♦ Lifting beyond 1,374.50 will restore and extend the recent rally towards 1,390.

♦ Support wise, the 10-day SMA near 1,362 will continue to underpin the futures trading sentiment in the near term.

Daily Trading Strategy:

♦ As expected, the FKLI staged a timely rebound from below the 10-day SMA of 1,362 with a positive candle
yesterday to suggest a further recovery today.

♦ Therefore, in our view, traders should stay “long” amid expectation of a fresh rally to kick-off anytime soon.

♦ Today, the FKLI is expected to trade from 1,361 to 1,373.

Table 3: FKLI Closings

FKLI (Month)
Contracts Open High Low Close Chg (Pts) Settle Volume Open Interest
Aug 10 1361.00 1367.00 1357.50 1365.50 2.50 1365.50 3962 17930
Sep 10 1362.00 1366.50 1358.00 1366.50 1.00 1366.00 160 667
Dec 10 1361.00 1365.00 1358.50 1364.50 1.50 1365.50 15 274
Mar 11 1360.00 1360.00 1360.00 1360.00 -4.00 1367.00 1 138

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:

♦ Overnight US markets bounced back on Monday amid growing expectation that the Fed might introduce new
measures to stimulate the US economy.

♦ The Fed is widely expected to keep the current record low interest rate environment on Tuesday’s FOMC meeting.
But investors bet it could take additional measures to revive the sluggish economy and jobs market, especially
following the announcement of poor jobs data last Friday.

♦ Apart from that, buying interest increased after McDonald’s edged up 1.6% to an all-time high on its stronger-
than-expected Jul sales data. However, the market gains were offset partially by an 8% slide in Hewlett-Packard.

♦ After the recent setbacks, the US light sweet crude oil futures for Sep delivery staged a rebound by rising 78
cents or 1.0% to US$81.48/barrel on expectation that the Fed may print more money to boost its economy.

Technical Interpretations:

Dow Jones Industrial Average (DJIA)

♦ As last Friday’s afternoon recovery momentum continued, the US DJIA hit a fresh nearly 3-month high of
10,719.94, before paring down its gains to 10,698.75 on Monday. For the day, it added 45.19 pts or 0.42%.

♦ By ending with a positive candle, it has overruled the previous “hangman” candle to suggest more upside ahead.

♦ But due to the mixed momentum readings, a further removal of yesterday’s intraday high of 10,719.94 is
required to trigger a new rally towards 10,850.

♦ Meanwhile, its solid supports stay at its recent breakout point at the Jun high of 10,594.16 and the 21-day SMA
of 10,437.

Nasdaq Composite (Nasdaq)

♦ The Nasdaq Composite index scaled to a fresh 6-week high of 2,309.43, before ending at 2,305.69 with a 17.22
pts or 0.75% gain yesterday.

♦ Based on a second positive candle, another retest of yesterday’s day high of 2,309.43 can be expected.

♦ But in order to turn the chart around, a further penetration to above the next tough resistance line at 2,330 is
needed.

♦ For now, the uptrend will continue to be underpinned by the 21-day SMA near 2,256.

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Daily Technical Watch:

Chart 7: LionCor Daily Chart 8: LionCor Intraday

Lion Corporation (3581)

A “double buy” signal on the momentum indicators…

♦ The share price of LionCor moved into a downtrend after chalking up a high of RM0.595 in May 2009.

♦ Trending the Downtrend Resistance Line (DRL), the stock turned lower to below the RM0.48 level in Aug 2009
and trended lower towards the key support level of RM0.31 in Dec 2009.

♦ The stock tried to recover in Jan and in early Apr 2010, but its upside was constantly capped by the DRL.

♦ In fact, the stock hit a 14-mth low in May when it lost the RM0.31 key support level.

♦ However, after flooring near the RM0.265 support level for more than two months, it struck a right cord with a
huge bullish candle on the chart yesterday.

♦ The stock closed with a “double buy” signal on the momentum indicators, at the same time securing its medium-
term positive signal on a cut of the 10-day SMA over the 40-day SMA, which happened recently.

♦ The positive technical readings suggest a retest of the key support-turn-resistance level of RM0.31 and the DRL
at RM0.30 is imminent this week.

♦ If it manages to remove these levels, it will trigger a chart breakout from the current downtrend, and cause a
rally towards the RM0.36 – RM0.40 resistance region soon.

♦ Key support is at the 10-day and 40-day SMAs near RM0.28.

Technical Readings:

♦ 10-day SMA: RM0.2845

♦ 40-day SMA: RM0.2791

♦ Support: IS = RM0.265 S1 = RM0.215

♦ Resistance: IR = RM0.31 R1 = RM0.36 R2 = RM0.40

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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
any liability for any loss or damage arising out of the use of all or any part of this report.

RHBRI and the Connected Persons (the “RHB Group”) are engaged in securities trading, securities brokerage, banking and financing activities as well as providing
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
securities or loans of any company that may be involved in this transaction.

“Connected Persons” means any holding company of RHBRI, the subsidiaries and subsidiary undertaking of such a holding company and the respective directors,
officers, employees and agents of each of them. Investors should assume that the “Connected Persons” are seeking or will seek investment banking or other
services from the companies in which the securities have been discussed/covered by RHBRI in this report or in RHBRI’s previous reports.

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
information known to, professionals in other business areas of the “Connected Persons,” including investment banking personnel.

The research analysts, economists or research associates principally responsible for the preparation of this research report have received compensation based
upon various factors, including quality of research, investor client feedback, stock picking, competitive factors and firm revenues.

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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