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 6 September 2010
Market Technical Reading
Uptrend Remains Intact…

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

Local Market Leads:

♦ After the recent upsurge, Bursa Malaysia finally took a breather and ended lower on Friday, amid profit-taking
activities on the key heavyweights.

♦ Despite the ringgit hitting a fresh 13-year high at 3.1200 against the US dollar and the solid performance in the
overseas markets ahead of the key US jobs data on Friday night, the FBM KLCI slipped into the negative territory
as investors decided to lock in their profits on the recent rallies of the core bluechips.

♦ For the day, the FBM KLCI dropped 5.40 pts or 0.37% to end at 1,435.67, dragged down by losses in the big caps,
Genting (-26sen), Sime (-14sen) and Maybank (-5sen).

♦ In spite of that, the second and third liners continued to outshine the heavyweights on the back of strong
rotational plays. MRCB (+11sen), LMCemnt (+15sen), UEMLand (+7sen) and GenP (+13sen) were amongst the
favourites.

♦ As a result, the overall market sentiment remained bullish, though the daily turnover eased to 922m shares on
profit-taking ahead of the weekend. Market breadth stayed positive with 394 gainers against 325 losers.

Technical Interpretations:

♦ Following the previous two negative reversal candles, the FBM KLCI finally succumbed to a technical pullback, and
ended with a negative candle on Friday.

♦ Plus a tick-down on the 14-day RSI, the index could head for more pullbacks in the near term.

♦ Further retreat will force the stochastic oscillators to cut a fresh “sell” signal on the chart, hence leading to further
selling on the FBM KLCI.

♦ However, we continue to see solid support near the 10-day SMA of 1,415, the psychological level of 1,400 as well
as the key pivotal point of 1,390.

♦ On the upside, the uptrend will resume if it cuts above the recent high of 1,441.80.

Please read important disclosures at the end of this report. Page 1 of 6

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

Daily Trading Strategy:

♦ As we warned earlier, the profit-taking dip on the FBM KLCI was long overdue, and Friday’s technical pullback
happened just ahead of the weekend. It also confirmed the previous “hangman” and “evening star” candles.

♦ Sealed with a negative candle and the weakened short-term momentum readings, we see a further pullback risk in
the near term, if the key heavyweights encounter further profit-taking pressure.

♦ But, in our view, the firm uptrend on the FBM KLCI is likely to stay intact, as long as it can sustain at above the
10-day SMA of 1,415, the 1,400 psychological level and the trigger point at 1,390.

♦ As such, we believe that any pullback is likely to be shortlived. And once the index neutralises its overbought
momentum, the upward momentum will resume.

♦ Nonetheless, given the extended rally on the US DJIA on late Friday, the buying support on the local benchmark
may even resume today. We see its next resistance at 1,450, followed by the all-time high of 1,524.69.

♦ On the trading sentiment, we expect the second and third liners to lead trading course this week, on healthy
rotational plays and robust daily turnover.

Table 2 : Major Indices & Commodities

Table 1 : Daily Statistics Change Change
Scoreboard 27 Aug 30 Aug 1 Sep 2 Sep 3 Sep Local Key Indices Closing
(Pts) (%)
Gainers 286 334 307 511 394 FBM KLCI 1,435.67 -5.40 -0.4
Losers 405 377 476 256 325 FBM 100 9,381.76 -18.38 -0.2
Unchanged 285 281 270 258 291 FBM ACE 3,749.36 32.93 0.9
Untraded 389 372 312 341 352 Major Overseas
Indices
Market Cap Dow Jones 10,447.93 127.83 1.2
Turnover Nasdaq 2,233.75 33.74 1.5
(mln shares) 762 769 949 1,075 922 S&P 500 1,104.51 14.41 1.3
Value (RM FTSE 5,428.15 57.11 1.1
mln) 1,532 1,760 2,077 1,873 1,718 Hang Seng 20,971.50 102.58 0.5
Jakarta Composite 3,164.28 42.13 1.3
Currency Nikkei 225 9,114.13 51.29 0.6
MYR vs US Seoul Composite 1,780.02 4.29 0.2
Dollar 3.1420 3.1380 3.1290 3.1260 3.1200 Shanghai Composite 2,655.39 -0.39 0.0
SET 929.9 9.36 1.0
Source: RHBInvest & Bloomberg Straits Times 3,002.56 15.90 0.5
Taiwan Weighted 7,830.21 109.39 1.4
India Sensex 18,221.43 -16.88 -0.1
Major Commodities
NYMEX Crude Oil
(US$/barrel) 74.60 -0.42 -0.6
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

Page 2 of 6

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

Chart 3: FKLI Daily Chart 4: FKLI Intraday

Technical Interpretations:

♦ Local futures market ended lower for the first time in six trading days on Friday, in tandem with the weaker cash
market’s performance.

♦ After opening higher on a further rebound in the overnight US markets, the FKLI turned lower on continued selling
activities.

♦ But as the mild bargain-hunting support returned in the late session, the FKLI for Sep contract bounced back from
the intraday low of 1,430.50. For the day, it closed down by 4.50 pts or 0.31% to 1,432.50.

♦ Still, the futures index ended the day with a second negative candle, indicating further weakness in the immediate
term.

♦ Compounded with the weakened short-term momentum readings, it should see further pullback towards the 10-
day SMA of 1,414 soon.

♦ Having said that, we are confident that the 10-day SMA, the 1,400 psychological level and the breakout point of
1,390 will keep sellers in check and will protect the overall uptrend on the futures index.

♦ Instead, for the FKLI to restore its upbeat momentum, it only needs to remove last Thursday’s high of 1,444.

♦ Immediate resistance is at 1,450, followed by the all-time high resistance at 1,536.

Daily Trading Strategy:

♦ With last Friday’s retreat, further weakness is still possible, unless it can retake the recent high of 1,444.

♦ However, traders should only turn bearish if it loses the 10-day SMA of 1,414, 1,400 and 1,390.

♦ We expect the futures index to swing from 1,427 to 1,440 today.

Table 3: FKLI Closings

FKLI (Month)
Contracts Open High Low Close Chg (Pts) Settle Volume Open Interest
Sep 10 1440.00 1441.00 1430.50 1432.50 -4.50 1432.50 5455 18743
Oct 10 1442.00 1442.00 1431.00 1431.50 -5.50 1431.50 307 222
Dec 10 1440.00 1440.00 1430.00 1431.00 -5.50 1430.50 202 415
Mar 11 1439.50 1439.50 1429.00 1429.00 -6.50 1429.50 102 154

Source: Bursa Malaysia

Page 3 of 6

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

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

US Market Leads:

♦ US stocks extended their rallies for a fourth day on Friday, as the better-than-expected monthly jobs data
spurred hopes that the US economy could avoid a double dip reccession.

♦ The US Labour Department said the non-farm payrolls declined 54,000 in Aug, compared to consensus estimation
of 100,000 jobs lost. Meanwhile, the unemployment rate rose to 9.6% of labour force, as expected.

♦ The fewer jobs losses were mainly due to the 67,000 jobs added in the private sector after an upwardly revised
107,000 increase in Jul. Economists were forecasting an increase of 40,000 jobs in the private sector.

♦ JP Morgan Chase (+2.7%), Caterpillar (+2.3%) and IBM (+2.0%) were amongst the leaders of Friday’s gain.

♦ However, the US light sweet crude oil futures for Oct delivery eased 42cents or 0.6% to US$74.60/barrel.

♦ All US financial markets will be closed on Monday, in conjunction with the Labour Day holiday.

Technical Interpretations:

Dow Jones Industrial Average (DJIA)

♦ As the bulls charged forward, the US DJIA pierced through the 21-day SMA of 10,320 decisively on Friday, after
surging 127.83 pts or 1.24% to 10,447.93.

♦ Added with a bullish candle and the upbeat short-term momentum readings, the index is likely to extend its rally
towards Jul’s high of 10,719.94 soon.

♦ If it sustains at above the 21-day SMA, its trading sentiment will turn positive bias.

♦ Now, the immediate support has notched up to the 21-day SMA, followed by the 10,150 technical level.

Nasdaq Composite (Nasdaq)

♦ As buying continues, the Nasdaq Composite index formed a second technical gap in three trading days and rallied
another 33.74 pts or 1.53% to 2,233.75 on Friday.

♦ It, however, formed a potential “hangman” candle to imply a possible retreat in the next session. The immediate
supports are near the 21-day SMA of 2,196 and the 2,190 support level.

♦ But, we will remain bullish on the short-term outlook if it sustains at above these supports. And upon resumption
of the buying momentum, the index will challenge the tough resistance level at 2,330 soon.

Page 4 of 6

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

Daily Technical Watch:

Chart 7: Pos Daily Chart 8: Pos Intraday

Pos Malaysia (4634)

Further upside towards RM3.54 soon, if it can sustain at above RM3.26…

♦ The share price of Pos kicked off a powerful rally in late Mar 2010, after the 10-day SMA cut steeply to above the
40-day SMA near the RM2.00 region.

♦ The rally led the stock to a fresh multi-year high of RM3.21, but fell to below the RM3.07 level in a consolidation
move.

♦ Near the support region of RM2.54 in May 2010, the stock regained its momentum and slowly plotted for a
technical recovery leg.

♦ By mid-Jun 2010, it broke out from the RM2.80 level and started a recovery leg that eventually hit a fresh multi-
year high of RM3.34, near a key resistance level of RM3.26 in Jul.

♦ Although the stock encountered a series of profit-taking activities shortly afterward, it has been firmly supported
near the RM3.07 level thoughout Aug.

♦ Due to the improved momentum in recent sessions, the stock closed last Friday at RM3.28, above the RM3.26
significant level with a bullish candle.

♦ Given the firm supports along the 10-day and 40-day SMAs near RM3.20 and RM3.12, the medium-term uptrend
on the chart has remained intact.

♦ As such, if it manages to sustain at above the RM3.26 important breakout level, its momentum will accelerate
towards the next level of RM3.54 soon, before heading to the RM3.85 all-time high level.

Technical Readings:

♦ 10-day SMA: RM3.204

♦ 40-day SMA: RM3.116

♦ Support: IS = RM3.26 S1 = RM3.07 S2 = RM2.80

♦ Resistance: IR = RM3.54 R1 = RM3.85

Page 5 of 6

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

Page 6 of 6

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