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 August 2010
MARKET DATELINE

Market Technical Reading

Losing 1,350 Will Confirm A Bearish Breakdown…

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

Local Market Leads:

♦ Bursa Malaysia extended its decline for a second day on Wednesday, after Asian markets tumbled on renewed
concerns over the global economic prospects.

♦ In fact, investors overlooked the US Federal Reserve’s move to boost the US economy in more than a year, where
the Fed would reinvest the proceeds from the maturing mortgage-backed securities back into the US government
debt.

♦ Instead, focus was on the Fed’s downbeat assessment over the US economic outlook. It said the US economic
growth would be “more modest” than anticipated, after the FOMC meeting on Tuesday.

♦ As a result, regional investors rushed to unload stocks as the US DJIA futures plunged more than 100 pts in the
afternoon. Nikkei 225 suffered 2.70% loss, while KOSPI was knocked down by 1.29% yesterday.

♦ Locally, the FBM KLCI declined by another 6.80 pts or 0.50% to 1,352.91. Turnover increased to 770m shares
from Tuesday’s 676m shares. Market breadth was negative with losers beating gainers by more than 2 to 1.

Technical Interpretations:

♦ As profit-taking pressure accelerated, the FBM KLCI slid further and fell to below the 10-day SMA of 1,361.

♦ Technically, yesterday’s bearish candle has signalled a negative twist on the short-term technical outlook.

♦ And if selling momentum continues, it will lose the recent bullish breakout point of 1,350 again today.

♦ While we still expect the 1,350 resistance-turn-support level to buffer any additional selling pressure in the near
term, any unwanted breakdown from this crucial level will jeopardise the current uptrend.

♦ Below 1,350, the next support is seen near the 40-day SMA of 1,336.

♦ Meanwhile, its immediate resistance has been nudged down to the 10-day SMA.

Please read important disclosures at the end of this report.

A comprehensive range of market research reports by award-winning economists and analysts are exclusively Page 1 of 6
available for download from www.rhbinvest.com
 12 August 2010

Daily Trading Strategy:

♦ Yesterday’s decline to below the 10-day SMA of 1,361 indicates a decisive breakdown of the short-term technical
picture.

♦ Although the FBM KLCI managed to close at above the 1,350, off the day low of 1,349.50 yesterday, the technical
readings remained weak overall.

♦ The closing with a bearish candle at below the SMA suggests a negative short-term performance likely for today.

♦ Plus the poorer daily turnover, and the overnight Wall Street’s plunge, the risk is high for the index to lose the
critical 1,350 level in the immediate term.

♦ This if it occurs, it will mean a confirmation of a bearish breakdown from the recent uptrend.

♦ That will lead the index towards the 40-day SMA of 1,336, followed by the psychological support of 1,300.

Table 2 : Major Indices & Commodities

Table 1 : Daily Statistics Change Change
Scoreboard 5 Aug 6 Aug 9 Aug 10 Aug 11 Aug Local Key Indices Closing
(Pts) (%)
Gainers 362 328 293 255 207 FBM KLCI 1,352.91 -6.80 -0.5
Losers 349 367 402 409 464 FBM 100 8,908.76 -49.40 -0.6
Unchanged 276 281 256 281 279 FBM ACE 3,804.84 -6.03 -0.2
Untraded 378 390 416 421 424 Major Overseas
Indices
Market Cap Dow Jones 10,378.83 -265.42 -2.5
Turnover Nasdaq 2,208.63 -68.54 -3.0
(mln shares) 994 866 699 676 770 S&P 500 1,089.47 -31.59 -2.8
Value (RM FTSE 5,245.21 -131.20 -2.4
mln) 1,576 1,256 1,066 1,133 1,170 Hang Seng 21,294.54 -179.06 -0.8
Jakarta Composite 3,035.32 -21.84 -0.7
Currency Nikkei 225 9,292.85 -258.20 -2.7
MYR vs US Seoul Composite 1,758.19 -22.94 -1.3
Dollar 3.1540 3.1460 3.1405 3.1495 3.1710 Shanghai Composite 2,607.50 12.23 0.5
SET 862.16 0.21 0.0
Source: RHBInvest & Bloomberg Straits Times 2,949.26 -35.03 -1.2
Taiwan Weighted 7,895.03 -81.71 -1.0
India Sensex 18,070.19 -149.80 -0.8
Major Commodities
NYMEX Crude Oil
(US$/barrel) 78.02 -2.23 -2.8
MDEX CPO – Third
Month (RM/metric ton) 2,676.00 6.00 0.2
US Interest Rate Current Last Updated
10 Aug
Overnight Fed Fund Rate 0-0.25% Unch
2010
Next FOMC meeting 21 Sep 2010

A comprehensive range of market research reports by award-winning economists and analysts are exclusively Page 2 of 6
available for download from www.rhbinvest.com
 12 August 2010

Chart 3: FKLI Daily Chart 4: FKLI Intraday

Technical Interpretations:

♦ Clouded by the bearish overseas sentiment amid growing pessimism over the global economic outlook, the FKLI
extended its selling leg for a second consecutive day yesterday.

♦ Selling momentum mounted in the afternoon and pressed the FKLI to below the resistance-turn-support level of
1,350 in the wake of steep declines in the European markets and US futures market.

♦ Though it bounced back mildly from the intraday low of 1,345.50 (-10.50 pts) on late bargain-hunting support, the
FKLI for Aug contract still declined by 8.50 pts or 0.63% to 1,347.50.

♦ Registered with a second bearish candle at below the 10-day SMA of 1,361, the FKLI’s short-term outlook has
turned negative, in our view.

♦ In addition, the recent bullish uptrend is under serious threat following a mild breakdown to below the 1,350
resistance-turn-support level yesterday.

♦ Therefore, more setbacks towards the 40-day SMA near 1,337 can be expected soon, if it fails to kick off a surprise
rebound to above 1,350 today.

♦ On the upside, any rebound attempt will meet an immediate hurdle near 1,350 and the 10-day SMA.

Daily Trading Strategy:

♦ The selling pressure is stronger than what we had expected earlier, as the FKLI even lost the important level of
1,350 yesterday.

♦ Based on the latest technical breakdown, the recent uptrend might have ended. Therefore, traders should stay out
of “long” positions if there is no immediate recovery to above 1,350 today.

♦ The futures index is expected to move from 1,340 to 1,352 today.

Table 3: FKLI Closings

FKLI (Month)
Contracts Open High Low Close Chg (Pts) Settle Volume Open Interest
Aug 10 1352.00 1355.50 1345.50 1347.50 -8.50 1347.50 6237 18261
Sep 10 1355.00 1355.50 1345.50 1347.00 -9.00 1347.00 482 719
Dec 10 1354.00 1356.00 1345.00 1347.00 -9.50 1346.50 157 298
Mar 11 1355.00 1355.00 1348.00 1348.00 -10.00 1347.50 9 160

Source: Bursa Malaysia

A comprehensive range of market research reports by award-winning economists and analysts are exclusively Page 3 of 6
available for download from www.rhbinvest.com
 12 August 2010

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

US Market Leads:

♦ US major gauges finished sharply lower on Wednesday, as the US Federal Reserve’s negative comments and the
UK central bank’s bearish comment stoked fears of a global economic slowdown.

♦ Bank of England Governor Mervyn King said the UK economic growth will be weaker than the previous forecast.
Separately, a weak factory output report in China increased investors’ worries over the global economic recovery
prospects.

♦ This sparked a flight of capital from equity and commodity markets to safer assets, like bonds and the US dollar.

♦ Besides the growing pessimism over the global economic outlook, news of a rise in US gasoline inventories also
hammered the US light sweet crude oil futures for Sep delivery down by US$2.23 or 2.8% to US$80.25/barrel.

♦ After the close, Cisco’s share price slumped 8% in extended trading after posting weaker-than-expected revenue.

Technical Interpretations:

Dow Jones Industrial Average (DJIA)

♦ With the bears making a comeback, the US DJIA plunged 265.42 pts or 2.49% to end at 10,378.83 yesterday.

♦ Clearly, yesterday’s huge bearish candle has led to a significant breakdown to below the recent breakout point at
Jun’s high of 10,594.16.

♦ Not only that, it breached below the 21-day SMA of 10,458 with a “double sell” signal on the short-term
momentum indicators. This indicates a bearish technical breakdown.

♦ This heightened the risk of it facing more downside towards the next key technical support level at 10,150 and
the 10,000 psychoplogical level.

♦ On the upside, any rebound will meet instant resistance at the 21-day SMA.

Nasdaq Composite (Nasdaq)

♦ The Nasdaq Composite index gapped down sharply by plummeting 68.54 pts or 3.01% to settle at 2,208.63
yesterday with a huge bearish candle.

♦ Technically, the loss of the important 21-day SMA of 2,259 marks a possible end of the recent uptrend.

♦ If the next support at 2,190 fails to buffer selling pressure, further corrections towards 2,100 and the Jul’s low of
2,061.14 can be expected next.

A comprehensive range of market research reports by award-winning economists and analysts are exclusively Page 4 of 6
available for download from www.rhbinvest.com
 12 August 2010

Daily Technical Watch:

Chart 7: Supermx Daily Chart 8: Supermx Intraday

Supermax Corporation (7106)

Prepare to turn bearish on the stock’s technical outlook…

♦ The share price of Supermx began to trend upward since its 10-day SMA cut above the 40-day SMA near RM0.70
in Apr 2009.

♦ The upsurge later transformed into a steeper uptrend, when the 10-day SMA survived its first cut to below the
40-day SMA in Oct 2009.

♦ Following that, the stock rallied to a high of RM4.94 in Jan 2010, before a retracement happened in late Jan.

♦ But thanks to the supportive 40-day SMA and the firm Uptrend Line support (UTL), the stock resumed its uptrend
in early Feb.

♦ Another pullback occurred in Apr when it first tested the key reisstance of RM5.96, but again, it was saved by the
UTL near RM4.97.

♦ Recently, in late Jul, after touching a high of RM6.60, the stock began a retreating trend, drifting slowly and
reached a low of RM5.82, before closing yesterday at RM5.99.

♦ Technically, the stock closed marginally below the 40-day SMA and merely ended higher than the long-term
supportive UTL.

♦ Given the negative candle and the poor momentum readings, investors should prepare to turn bearish on the
stock’s technical outlook, if it breaches the UTL and the key support level of RM5.96 soon, in our view.

♦ Moreover, the 10-day SMA will be dragged below the 10-day SMA if selling presists, thus adding another bearish
signal on the medium-term outlook.

Technical Readings:

♦ 10-day SMA: RM6.11

♦ 40-day SMA: RM6.03

♦ Support: IS = RM5.96 S1 = RM4.97 S2 = RM3.90

♦ Resistance: IR = RM6.60

A comprehensive range of market research reports by award-winning economists and analysts are exclusively Page 5 of 6
available for download from www.rhbinvest.com
 12 August 2010

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.

A comprehensive range of market research reports by award-winning economists and analysts are exclusively Page 6 of 6
available for download from www.rhbinvest.com