PP 7767/09/2010(025354)

RHB Research

Malaysia
Technical Research Institute Sdn Bhd
A member of the
8 RHB Banking Group
Company No: 233327 -M

Dail y Trad ing St rat eg y

MARKET DATELINE
1 September 2010

Market Technical Reading

Volatility Likely To Increase In The Near Term…

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

Local Market Leads:

♦ The local benchmark FBM KLCI rallied to its highest level since mid-Feb 2008 on Monday, lifted by the constant
buying stream on the key heavyweights after Wall Street staged a powerful rebound on last Friday.

♦ Genting was the single largest contributer to the FBM KLCI’s gain for the day, adding 3.10 pts to the day’s gain,
after soaring 41sen to end at its all-time high at RM9.45.

♦ Sentiment on Monday was also lifted by the strong rally in the regional markets after the US Federal Reserve
chairman Ben Bernanke pledged to act boldly to stop the US economy from slipping into another recession.

♦ But gains were reduced in the afternoon session on strong profit-taking pressure, after the Bank of Japan
announced less aggressive moves to boost its economy and counter the yen’s rapid rise.

♦ Still, the FBM KLCI ended with 11.44 pts or 0.81% gain to 1,422.49 on Monday, but with lower daily turnover at
769m shares ahead of the Tuesday’s Merdeka Day holiday. Market breadth stayed bearish with losers beating
gainers by 377 to 334.

Technical Interpretations:

♦ As the bulls continued to charge forward, the FBM KLCI extended its rally for a third day on Monday.

♦ Technically, the formation of a third bullish candle and a “double buy” signal on the short-term momentum
indicators point to an extended buying support in today’s trading.

♦ As such, the FBM KLCI is likely to push further towards the next upside target at 1,450 in the next few sessions,
before giving in to the storng profit-taking leg.

♦ On the downside, the FBM KLCI will continue to see immediate support at the 10-day SMA near the 1,400
psychological level, and the important technical level at 1,390.

Please read important disclosures at the end of this report.

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Daily Trading Strategy:

♦ As buying momentum on the key heavyweights continued, the FBM KLCI shot up further to a more than 30-month
high on Monday.

♦ Although the benchmark closed off its day high of 1,428.44 (+17.39 pts) at 1,422.49, and the stochastic
oscillators have rebounded into the “overbought” region, there is still upside for the FBM KLCI towards the 1,450
resistance target due to the sustained buying support on the core bluechips, in our view.

♦ However, based on our observation, investors should expect higher volatility in the near term, as buying appears
overstretched in the heavyweight bluechips.

♦ Moreover, with the dwindling daily turnover of late plus the constant negative market breadth, the market may roll
into a profit-taking leg should investors decide to lock in profits on the core bluechips.

♦ Nevertheless, with the index sustaining at above the 10-day SMA near the 1,400 psychological level, as well as the
1,390 key technical level, upside is still possible in the immediate term.

Table 2 : Major Indices & Commodities

Table 1 : Daily Statistics Change Change
Scoreboard 24 Aug 25 Aug 26 Aug 27 Aug 30 Aug Local Key Indices Closing
(Pts) (%)
Gainers 206 186 353 286 334 FBM KLCI 1,422.49 11.44 0.8
Losers 585 585 333 405 377 FBM 100 9,279.63 72.70 0.8
Unchanged 241 268 294 285 281 FBM ACE 3,694.55 -25.59 -0.7
Untraded 335 328 385 389 372 Major Overseas
Indices
Market Cap Dow Jones 10,014.72 4.99 0.0
Turnover Nasdaq 2,114.03 -5.94 -0.3
(mln shares) 894 873 685 762 769 S&P 500 1,049.33 0.41 0.0
Value (RM FTSE 5,225.22 23.66 0.5
mln) 1,651 1,732 1,292 1,532 1,760 Hang Seng 20,536.49 -200.73 -1.0
Jakarta Composite 3,081.88 -17.69 -0.6
Currency Nikkei 225 8,824.06 -325.20 -3.6
MYR vs US Seoul Composite 1,742.75 -17.38 -1.0
Dollar 3.1435 3.1393 3.1410 3.1420 3.1380 Shanghai Composite 2,638.80 -13.86 -0.5
SET 913.19 3.54 0.4
Source: RHBInvest & Bloomberg Straits Times 2,950.33 -6.73 -0.2
Taiwan Weighted 7,616.28 -124.92 -1.6
India Sensex 17,971.12 -60.99 -0.3
Major Commodities
NYMEX Crude Oil
(US$/barrel) 71.92 -2.78 -3.7
MDEX CPO – Third
Month (RM/metric ton) 2,570.00 28.00 1.1
US Interest Rate Current Last Updated
10 Aug
Overnight Fed Fund Rate 0-0.25% Unch
2010
Next FOMC meeting 21 Sep 2010

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Chart 3: FKLI Daily Chart 4: FKLI Intraday

Technical Interpretations:

♦ The FKLI continued to rally on Monday, hitting its highest level since Feb 2008 amid the powerful rally in the US
markets on the previous Friday.

♦ In spite of the constant profit-taking pressure throughout the day, the FKLI held steady and ended the day near its
day high of 1,425.

♦ The FKLI for Aug contract advanced another 10.00 pts or 0.71% to 1,424.00, but the forward month Sep contract
jumped 14.00 pts or 0.99% to finish at 1,426.50.

♦ Technically, with a solid close of another bullish candle and the upbeat signal on the short-term indicators, the
chart is suggesting a continuous rally in sessions to come.

♦ With the persistent buying momentum in recent trading, we see a good chance for the FKLI to accelerate towards
1,450 soon.

♦ On the other hand, we continue to see firm support near the 1,400 psychological level, nearer to the 10-day SMA
of 1,399. The stronghold support is at the 1,390 key level.

Daily Trading Strategy:

♦ So far, all technical indicators are pointing to a further rally ahead, with an upside target of 1,450.

♦ In our view, aggressive traders can bet for an extended rally towards 1,450. But be prepared to lock in profit if the
momentum slows down significantly. A “sell” signal should be triggered if it loses 1,400 and 1,390.

♦ For today, the futures index is projected to trade from 1,419 to 1,434.

Table 3: FKLI Closings

FKLI (Month)
Contracts Open High Low Close Chg (Pts) Settle Volume Open Interest
Aug 10 1415.50 1425.00 1415.50 1424.00 10.00 1424.50 4824 7557
Sep 10 1415.00 1428.00 1415.00 1426.50 14.00 1426.50 6242 15354
Dec 10 1415.00 1427.00 1415.00 1425.50 15.50 1425.50 275 423
Mar 11 1420.00 1425.00 1420.00 1424.00 14.50 1424.00 50 177

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:

♦ Wall Street pared down its early gains by closing mixed in a volatile trading day on Tuesday, after the release of
the Federal Reserve’s FOMC meeting minutes.

♦ Earlier, market sentiment was boosted by a rise in the US consumer confidence and national home prices. The
Conference Board's index of consumer confidence rose more than expected to 53.5 in Aug from Jul’s 51, while
the S&P/Case-Shiller Home Price Index increased 4.2% from Jun 2009.

♦ However, sentiment turned cautious after the recent FOMC meeting minutes suggested that the US economic
outlook would have to deteriorate "appreciably" to win new stimulus support from the Fed. Also, tech stocks
encountered fresh selling after research firm Gartner cut its forecast for PC sales in the 2H 2010.

♦ Due to worries over the US economic outlook, the US light sweet crude oil futures for Oct delivery plunged
US$2.78 or 3.7% to US$71.92/barrel.

Technical Interpretations:

Dow Jones Industrial Average (DJIA)

♦ A day after a 140-pt slide on Monday, the US DJIA struggled to hold the 10,000 psychological level by inching up
4.99 pts or 0.05% to end at 10,014.72 on Tuesday.

♦ On the chart, it formed a possible “doji star-like” candle to suggest a potential rebound ahead.

♦ Plus its ability to hold the 10,000 level and a slight improvement in the short-term momentum readings, it is set
to kick off a further rebound towards the 10,150 hurdle soon.

♦ However, if a rebound fails to take off, any further loss of the 10,000 level will trigger fresh selling pressure
towards the next lower supports at 9,700 and the Jul’s low of 9,614.32.

Nasdaq Composite (Nasdaq)

♦ Despite losing another 5.94 pts or 0.28% to end at 2,114.03, the Nasdaq Composite index managed to chalk up
a potential “inverted hammer” candle yesterday.

♦ Added with a successful defense at above 2,100, this shows that a technical rebound could be underway soon.
And the rebound targets are seen at the recent technical gap near 2,159.44 and the 2,190 tough hurdle.

♦ On the downside, fresh selling pressure towards the Jul’s low of 2,061.14 will be triggered upon breaching to
below the key support level of 2,100.

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Daily Technical Watch:

Chart 7: UMW Daily Chart 8: UMW Intraday

UMW Holdings (4588)

Breaking the RM6.64 level will mark a fresh chart breakout on the stock…

♦ The share price of UMW rebounded from below the RM4.80 level in Dec 2008, and continued on with a strong
uptrend until Sep 2009.

♦ The stock halted its uptrend and moved sideways following a successful crossover of the RM6.26 important level
in Sep 2009.

♦ In Jan 2010, the stock encountered a strong selling pressure, pressing its share price to a low of RM5.90 in Feb
2010, but it swiftly recovered to above the RM6.26 level before tipping a high of RM6.69 in Apr 2010.

♦ However, as it failed to sustain at above RM6.64, it trimmed its gain and settled back near to the support of
RM6.26 in May.

♦ Beginning from early Aug, the stock regained its upward momentum and trended higher along the improved 10-
day and 40-day SMAs, and reached a high of RM6.62 on Monday, before closing the day at RM6.60.

♦ Sealed with its fifth positive candle in the last seven trading days, plus the upticks on the short-term momentum
indicators, the stock is ready to retest the important resistance level again at RM6.64 soon, in our view.

♦ Though this level is expected to attract strong selling pressure on the stock, a successful removal of the level will
mark a fresh chart breakout for the stock.

♦ If it succeeds in removing this level, it will be aiming for a further upside to the RM7.01 – RM7.29 region on
follow-through buying support.

Technical Readings:

♦ 10-day SMA: RM6.466

♦ 40-day SMA: RM6.343

♦ Support: IS = RM6.26 S1 = RM5.95 S2 = RM5.54

♦ Resistance: IR = RM6.64 R1 = RM7.01 R2 = RM7.29

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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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