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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


23 June 2010
MARKET DATELINE

Market Technical Reading


Risk Appetite To Reduce In The Near Term...

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

Local Market Leads:

♦ As the previous day’s euphoric buying sentiment eased, the local market, in line with the regional indices fell on
profit-taking pullback on Tuesday.

♦ Hang Seng Index (-0.4%), Nikkei 225 (-1.2%), FTSTI (-0.5%) and KOSPI (-0.5%) closed lower on profit-taking
pullback amid uncertainties over the pace of the Yuan’s appreciation after China’s central bank announced that it
would increase the currency’s flexibility.

♦ Locally, investors unloaded stocks that gained on Monday’s rally. CIMB (-7sen), Tenaga (-15sen) and Maybank (-
7sen) eased on mild selling pressure yesterday.

♦ Overall trading volume reduced from 921m shares on Monday to 673m shares yesterday, while market breadth
turned negative as losers led gainers by 434 to 226.

♦ Trading sentiment in general, turned cautious quickly as investors fear that the recent recovery would end soon.

Technical Interpretations:

♦ Chart wise, the FBM KLCI registered a “negative harami” candle, pointing to a weaker upward momentum in the
near term. It lost 11.85 pts or 0.89% to 1,323.44.

♦ Given that both the momentum indicators have turned lower from the “overbought” region, and that the index
has failed its attempt to rechallenge the previous tough hurdle of 1,347 – 1,350 zone, it could see a reversal from
the recent uptrend if selling continues today.

♦ We expect the FBM KLCI to retract the 10-day and 40-day SMAs near 1,306 and 1,310 respectively, and even to
the critical psychological support level at 1,300 in the near term.

♦ However, the technical outlook of the FBM KLCI has not turn entirely bearish, as we still expect the index to meet
mild bargain-hunting activities near 1,300 and the SMAs in the next few sessions.

Please read important disclosures at the end of this report.

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Daily Trading Strategy:

♦ The FBM KLCI was weaker than expected, reversing its upswing before even closing the last technical gap from
1,341.23 to 1,344.27. We had earlier expected that it could retest the tough hurdle from 1,347 – 1,350 region.

♦ Given yesterday’s retreat, the index has indicated that it could ease towards the 10-day and 40-day SMAs near
1,306 and 1,310 or even to retract the 1,300 psychological level soon.

♦ As overall market turnover fell back to the 500 - 600m shares mark, short-term risk appetite is poised to reduce
in the near term.

♦ As a result, we expect the index to be stuck within 1,300 to 1,350 region for now, pending clearer breakout
pattern ahead.

Table 2 : Major Indices & Commodities


Table 1 : Daily Statistics Change Change
Scoreboard 16 June 17 June 18 June 21 June 22 June Local Key Indices Closing
(Pts) (%)
Gainers 494 295 416 591 226 FBM KLCI 1,323.44 -11.85 -0.9
Losers 174 277 193 161 434 FBM 100 8,698.60 -70.53 -0.8
Unchanged 240 294 278 208 255 FBM ACE 3,886.28 -36.81 -0.9
Untraded 460 502 481 401 446 Major Overseas
Indices
Market Cap Dow Jones 10,293.52 -148.89 -1.4
Turnover Nasdaq 2,261.80 -27.29 -1.2
(mln shares) 663 516 538 921 673 S&P 500 1,095.31 -17.89 -1.6
Value (RM FTSE 5,246.98 -52.13 -1.0
mln) 1,012 757 1,160 1,515 1,100 Hang Seng 20,819.98 -92.20 -0.4
Jakarta Composite 2,934.59 -7.31 -0.2
Currency Nikkei 225 10,112.89 -125.12 -1.2
MYR vs US Seoul Composite 1,731.48 -8.20 -0.5
Dollar 3.2590 3.2640 3.2490 3.1965 3.1990 Shanghai Composite 2,588.70 2.49 0.1
SET 804.13 -1.94 -0.2
Source: RHBInvest & Bloomberg FT Straits Times 2,872.30 -13.34 -0.5
Taiwan Weighted 7,612.68 -22.88 -0.3
India Sensex 17,749.69 -126.86 -0.7
Major Commodities
NYMEX Crude Oil
(US$/barrel) 77.21 -0.61 -0.8
MDEX CPO – Third
Month (RM/metric ton) 2,377.00 -28.00 -1.2
US Interest Rate Current Last Updated
27-28 Apr
Overnight Fed Fund Rate 0-0.25% Unch
2010
Next FOMC meeting 22-23 June 2010

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Chart 3: FKLI Daily Chart 4: FKLI Intraday

Technical Interpretations:

♦ Overshadowed by the turn of the sentiment in the regional markets, following Monday’s strong rally, the local
futures market halted its four-day rally yesterday.

♦ The FKLI for Jun contract gave up 11.5 pts or 0.86% to 1,330.0 on Tuesday, after chalking up a 23-pt gain on
the previous day.

♦ On the chart, the FKLI registered a negative candle, indicating negative trading is likely for today.

♦ Added with the reversal on both the momentum indicators, the futures index is ready to retreat to cover
Monday’s huge 10-pt technical gap soon, in our opinion.

♦ This, if it occurs, will pose a threat to the recent recovery.

♦ However, key support is seen at the 10-day and 40-day SMAs near 1,310, followed by a psychological level of
1,300.

♦ Only if it loses 1,300 will it fall back into the consolidation phase, lingering around 1,270 to 1,300 region.

♦ On the upside, the futures index must breakout the 1,350 level and the previous high of 1,352.5 before it can
attract more aggressive buyers.

Daily Trading Strategy:

♦ Yesterday’s disappointing performance came earlier than we had expected. We had earlier expected that the
resistance will appear near the 1,350 level.

♦ Now, we foresee a possible retreat to cover the 10-pt technical gap soon.

♦ Nonetheless, we see strong support at the 10-day and 40-day SMAs near the 1,300 level.

♦ We expect the FKLI to range between 1,320 and 1,333 today.

Table 3: FKLI Closings


FKLI (Month)
Contracts Open High Low Close Chg (Pts) Settle Volume Open Interest
Jun 10 1335.00 1336.00 1329.00 1330.00 -11.50 1330.00 4623 20214
Jul 10 1334.00 1335.00 1329.00 1330.00 -11.50 1330.00 481 974
Sep 10 1333.00 1333.50 1328.00 1329.00 -12.00 1328.50 135 467
Dec 10 1330.00 1331.50 1326.50 1326.50 -12.50 1326.50 57 210

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:

♦ US stocks slumped on Tuesday, giving up their early gains on worse-than-expected existing home sales figure
and a renewed worry on European debt crisis.

♦ Throughout the day, trading was volatile pending the announcement of the housing stats, but selling accelerated
in the late hours.

♦ Existing home sales fell to a seasonally-adjusted annual unit rate of 5.66m in May from 5.77m in Apr. Forecasters
had expected an increase to 6.1m units.

♦ European markets fell after Fitch Ratings downgraded French Bank BNP Paribas and Standard & Poor’s boosted its
forecast on loan losses for Spain’s banking sector.

♦ Meanwhile, the US light sweet crude oil futures for July delivery fell US$0.61 to US$77.21/barrel in Nymex.

Technical Interpretations:

Dow Jones Industrial Average (DJIA)

♦ The US DJIA overnight continued its weakness from Monday’s selling, losing 148.89 pts or 1.43% to 10,293.52.

♦ On the chart, the index registered a huge bearish candle, confirming Monday’s “shooting star” candle that has
suggested a likely reversal pattern on the immediate term.

♦ As the momentum indicators moved lower, the 14-day RSI added another “sell” signal to point to more weakness
ahead.

♦ On follow-through selling momentum, the index is ready to revisit the 21-day SMA of 10,172 near the 10,150
range support level in the near term.

Nasdaq Composite (Nasdaq)

♦ In line with our expectation, the Nasdaq Composite continued to slide on Tuesday, reversing its early gains with
another bearish candle on the chart. It lost 27.29 pts or 1.19% to 2,261.80.

♦ The 14-day RSI added to the misery when it triggered another “sell” signal to suggest further weakness ahead.

♦ Expectedly, it will retest the 21-day SMA today at 2,246. Losing this immediate support will lead to a revisit to
the 2,190 lower support level on follow-through selling momentum.

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Daily Technical Watch:


Chart 7: MyEG Daily Chart 8: MyEG Intraday

My E.G. Services (0138)

Volatility to increase in the immediate term, with a negative bias…

♦ The share price of MyEG has always met a resistance at the RM0.56 level, prior to a fresh uptrend triggered in
late Apr 2010.

♦ The renewed upward momentum led the stock to a breakout above the RM0.56 level in May and touched a high
of RM0.66, before settling for a consolidation phase.

♦ After congesting within a triangle formation, the stock broke out of the triangle in mid-Jun, before rushing over
the RM0.66 high, to another resistance at RM0.695.

♦ It took a short breather, but recharged wth another powerful push in recent trading. It roared all the way to a
fresh high of RM0.875 yesterday, before closing the day at RM0.825.

♦ Technically, though the recent action seemed like a convincing rally that could last for a longer while, yesterday’s
close, which was significantly off the day’s high suggests strong profit-taking activities near the high of RM0.875.

♦ Furthermore, with a record of a “long legged star-like” candle on the chart, volatility is likely to increase in the
immediate term, with a negative bias, in our view.

♦ If it loses the immediate support at RM0.80, selling activities will accelerate, hence dragging the stock to retract
the RM0.695 resistance-turn-support level and the 10-day SMA nearby at RM0.70.

♦ To refresh its bullish sentiment, it must retake the high of RM0.895, before it could lure back the buying
supports.

Technical Readings:

♦ 10-day SMA: RM0.6985

♦ 40-day SMA: RM0.5761

♦ Support: IS = RM0.80 S1 = RM0.695 S2 = RM0.62

♦ Resistance: IR = RM0.875

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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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