PP 7767/09/2011(028730)

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 October 2010
Market Technical Reading
Short-term Trading Sentiment Returned To Positive...

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

Local Market Leads:

♦ Bursa Malaysia quickly recovered from the previous day’s selldown and ended higher on Tuesday, after Digi
rebounded upon opening and led buying on other blue chips.

♦ Digi gained RM3.80 yesterday, and contributed nearly 6-pts to the FBM KLCI’s gain. Others like GenM (+7sen) and
Maybank (+4sen) were amongst the other key contributers.

♦ For the day, the local benchmark rebounded sharply by 9.92 pts or 0.68% to 1,472.19.

♦ Most regional bourses ended mixed in a choppy day in response to the unexpected interest rate cut in Japan and
the weak overnight performance in the US markets. Bank Of Japan cut its overnight call rate range to between
0.0% and 0.10%, from the previous 0.10%.

♦ Daily turnover eased to 986m shares, compared to Monday’s 1.37bn shares and market breadth turned negative,
with 411 losers outweighing 319 gainers.

Technical Interpretations:

♦ Thanks to a timely rebound, the FBM KLCI quickly reclaimed the 10-day SMA of 1,463 yesterday with a positive
candle to refresh hopes of a further technical rebound in the near term.

♦ However, due to the mixed momentum readings and slower trading volume, more confirmation is needed today.

♦ This means if the FBM KLCI can acquire another positive confirmation candle at above the 10-day SMA today, a
rechallenge of the recent high of 1,479.59 will be underway.

♦ Otherwise, it could struggle to build a base nearby the 10-day SMA.

♦ Stronger lower supports are a technical gap at 1,453.99 – 1,456.30 and the key technical level of 1,450.
Meanwhile, resistances beyond 1,479.59 are near the psychological level of 1,500 and 1,524.69.

Please read important disclosures at the end of this report.

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Daily Trading Strategy:

♦ With a timely rebound on the FBM KLCI back to above the 10-day SMA of 1,463, the short-term trading sentiment
has returned to positive.

♦ While we expect caution ahead due to the mixed technical momentum readings, a further rebound towards the
Sep high of 1,479.59 could be underway, if it can acquire a confirmation candle today on the back of the overnight
rally in the Wall Street.

♦ In other words, the FBM KLCI must remove 1,479.59 to confirm a further rally towards the higher technical gap
near 1,490.5 – 1,497.64 and the psychological level of 1,500.

♦ On sustained follow-through buying momentum, the index will likely march higher to the all-time high level of
1,524.69.

♦ Clearly, the immediate support level is at the 10-day SMA of 1,463, and the critical level of 1,450.

Table 2 : Major Indices & Commodities

Table 1 : Daily Statistics Change Change
Scoreboard 29 Sep 30 Sep 1 Oct 4 Oct 5 Oct Local Key Indices Closing
(Pts) (%)
Gainers 430 329 422 501 319 FBM KLCI 1,472.19 9.92 0.7
Losers 283 399 327 295 411 FBM 100 9,663.24 53.39 0.6
Unchanged 306 280 267 258 290 FBM ACE 3,975.44 -3.92 -0.1
Untraded 330 346 338 299 337 Major Overseas
Indices
Market Cap Dow Jones 10,944.72 193.45 1.8
Turnover Nasdaq 2,399.83 55.31 2.4
(mln shares) 905 1,052 974 1,369 986 S&P 500 1,160.75 23.72 2.1
Value FTSE 5,635.76 79.79 1.4
(RM mln) 1,449 1,718 1,469 1,707 1,505 Hang Seng 22,639.14 20.48 0.1
Jakarta Composite 3,591.70 22.20 0.6
Currency Nikkei 225 9,518.76 137.70 1.5
MYR vs US Seoul Composite 1,878.94 -0.35 0.0
Dollar 3.0835 3.0835 3.0855 3.0910 3.0963 Shanghai Composite 2,655.66 Closed Closed
SET 969.28 5.06 0.5
Source: RHBInvest & Bloomberg Straits Times 3,162.36 4.91 0.2
Taiwan Weighted 8,200.43 -45.67 -0.6
India Sensex 20,407.71 -68.02 -0.3
Major Commodities
NYMEX Crude Oil
(US$/barrel) 82.82 1.35 1.7
FCPO – Third Month
(RM/metric ton) 2,705.00 39.00 1.5
US Interest Rate Current Last Updated
21 Sep
Overnight Fed Fund Rate 0-0.25% Unch
2010
Next FOMC meeting 2-3 Nov 2010

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Chart 3: FKLI Daily Chart 4: FKLI Intraday

Technical Interpretations:

♦ In line with the strong rebound in the cash market, the FKLI bounced back from the previous day’s late selloff on
Tuesday.

♦ Upon closing, the FKLI for Oct contract surged 11.00 pts or 0.75% to 1,475.50 and ended with a solid positive
candle.

♦ Added with upticks on the short-term momentum indicators, the chart is pointing to a further recovery in the
immediate term.

♦ As the FKLI remains steady at above the 10-day SMA of 1,464, it is also poised to retest the Sep high of 1,485.50
soon.

♦ It must penetrate 1,485.5 convincingly to resume the previous bullish rally on the chart.

♦ Failure to do so will still lure back profit-taking acitivites hence dragging the index backwards to the 10-day SMA
and possibly to the key support level at 1,450.

♦ In short, sustaining at above the 10-day SMA will be the key to sustaining any recovery attempt and thus to
refresh the previous rally.

Daily Trading Strategy:

♦ Bouncing back with a positive candle to deny the previous day’s negative candle, the FKLI is set to expand its
rebound today.

♦ Traders should prepare to turn even more positive if it removes the Sep high of 1,485.50.

♦ The futures index is likely to swing from 1,470 to 1,488 today.

Table 3: FKLI Closings

FKLI (Month)
Contracts Open High Low Close Chg (Pts) Settle Volume Open Interest
Oct 10 1467.50 1476.50 1466.50 1475.50 11.00 1475.00 3979 21201
Nov 10 1469.00 1476.00 1468.00 1475.00 11.00 1475.00 103 59
Dec 10 1473.00 1475.00 1467.50 1474.50 10.50 1474.50 48 392
Mar 11 1474.00 1495.00 1469.50 1470.50 5.50 1473.50 8 142

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:

♦ Powered by hopes of another round of economic stimulus by global central banks, the US stocks resumed its rally
by surging to a nearly 5-month high on Tuesday.

♦ Investors expect the Federal Reserve to announce more quantitative easing measures after the Bank Of Japan
unexpectedly cut its key interest rate and plan to buy US$60bn worth of assets to boost its economy.

♦ Fueling further rally was news that the Institute for Supply Management's non-manufacturing index rose to 53.2
in Sep, up from 51.5 in Aug.

♦ As a result, investors ramped up stocks and commodites, including crude oil and gold prices.

♦ US light sweet crude oil futures for Nov delivery jumped US$1.35 or 1.7% to US$82.82/barrel, partly also due to
a weaker greenback and a strike in French’s key oil port.

Technical Interpretations:

Dow Jones Industrial Average (DJIA)

♦ With the bulls returning in a big way, the DJIA smashed through the tough hurdle of 10,850 by rallying 193.45
pts or 1.80% to 10,944.72 yesterday.

♦ By staging a bullish breakout from 10,850 with a huge bullish candle, this suggests the immediate chart outlook
has turned bullish.

♦ Aided by a fresh “buy” signal on the stochastic oscillators, chances are high that the Dow will extend its rally
towards the immediate upside resistance of 11,250 soon.

♦ Beyond 11,250, the next higher resistance is 11,750. Meanwhile, 10,850 is now an immediate support to the Dow.

Nasdaq Composite (Nasdaq)

♦ The Nasdaq Composite index also kicked off a powerful comeback on Tuesday. It rallied 55.31 pts or 2.36% to
end at 2,399.83 with a huge bullish candle.

♦ As it managed to take out the recent high of 2,400.06, this boost further its odds of pushing for more upside
towards the 2,470 resistance level and the Apr’s high of 2,535.28.

♦ Its solid support is still pegged at the resistance-turn-support level of 2,330 and the 21-day SMA of 2,317.

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Daily Technical Watch:

Chart 7: Mulpha Daily Chart 8: Mulpha Intraday

Mulpha International (3905)

Ready to extend its upside to Jul’s high of RM0.485 and RM0.52…

♦ After a technical rebound from below the RM0.27 level in Apr 2009, the share price of Mulpha touched a high
near RM0.62 in Jun 2009, before falling into a consolidation to below the heavy resistance level at RM0.52.

♦ The stock trended sideways at between a support level of RM0.395 and a resistance of RM0.52 thereafter.

♦ In a series of selling momentum in recent months, the stock was pressed to below the RM0.395 level in late Aug
to a low of RM0.385 in early Sep 2010.

♦ However, it has managed to kick off a technical recovery leg in the recent sessions, as it trended smoothly at
along the ascending trend of the 10-day SMA.

♦ Yesterday, the stock closed higher with another bullish candle on the chart and prompted the 10-day SMA to
confirm its cut to above the 40-day SMA recently.

♦ Armed with the upbeat momentum readings, the stock looks ready to extend its upside to Jul’s high of RM0.485
soon, before it can rechallenge the RM0.52 tough resistance level next.

♦ Beyond that is a higher resistance level of RM0.66, followed by the RM0.885 level.

♦ Supports can be found near the 10-day and 40-day SMAs near RM0.414 and RM0.409, with a stronghold at
RM0.395.

Technical Readings:

♦ 10-day SMA: RM0.414

♦ 40-day SMA: RM0.4092

♦ Support: IS = RM0.395 S1 = RM0.27

♦ Resistance: IR = RM0.52 R1 = RM0.66 R2 = RM0.885

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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
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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
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“Connected Persons” means any holding company of RHBRI, the subsidiaries and subsidiary undertaking of such a holding company and the respective directors,
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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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