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

15 July 2010
MARKET DATELINE

Market Technical Reading

The FBM KLCI Is Due To Rechallenge 1,350 Soon...

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

Local Market Leads:

♦ Lifted by the upbeat earnings results from the US Intel, as well as the strong quarterly GDP data from Singapore,
the bulls continued to drive Bursa Malaysia higher to a 2-month high on Wednesday.

♦ Investors cheered the overnight triple-digit rally on the US DJIA, after Intel announced stronger-than-expected
quarterly earnings and sales forecast on Tuesday.

♦ Singapore announced that its GDP expanded 19.3% yoy in the second quarter and as a result, its 2010 GDP
growth forecast was raised to between 13% and 15% from 7% and 9% yesterday.

♦ As a result, Asian stocks staged a strong rally, before giving way to some profit-taking activities in late session.

♦ Locally, the FBM KLCI ended at 1,341.08 with 8.21 pts or 0.62% gain. Gains were evenly spreaded across the
board.

♦ Overall volume increased to 802m shares compared to Tuesday’s 574m shares. Market breadth stayed in the
positive territory for a fifth day, with gainers topping losers by 506 to 194.

Technical Interpretations:

♦ As the bulls charged forward, the FBM KLCI surpassed June’s high of 1,335.31 effortlessly, with a 2.94-pt technical
gap on the chart yesterday. It ended with seven straight positive candles on the chart.

♦ Coupled with the robust short-term momentum readings, the current rebound should extend its target to the next
technical barrier at 1,350 soon.

♦ Note that the index must remove 1,350 to turn its medium-term cautious outlook bullish.

♦ Otherwise, profit-taking activities may still return to dampen this recovery.

Please read important disclosures at the end of this report.

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Daily Trading Strategy:

♦ Due to the undisturbed rally and a successful penetration of June’s high of 1,335.31, the FBM KLCI is due to
rechallenge the solid overhead resistance at 1,350 soon.

♦ Moreover, the breakthrough from 1,335.31 yesterday was accompanied by a significant improvement on the daily
turnover.

♦ In our view, if the trading volume can maintain at around 800m – 1.0bn shares mark, trading sentiment will turn
robust.

♦ For the chart to turn even more bullish, the FBM KLCI must overcome the key resistance at 1,350.

♦ Beyond that level, the FBM KLCI will gear-up towards the 1,390 level and overthrown the previously cautious
medium-term outlook.

♦ On the downside, immediate support can be found near the 10-day SMA of 1,318 and the 40-day SMA of 1,303.

Table 2 : Major Indices & Commodities

Table 1 : Daily Statistics Change Change
Scoreboard 08 Jul 09 Jul 12 Jul 13 Jul 14 Jul Local Key Indices Closing
(Pts) (%)
Gainers 365 405 371 363 506 FBM KLCI 1,341.08 8.21 0.6
Losers 242 238 265 284 194 FBM 100 8,823.87 55.25 0.6
Unchanged 275 276 277 289 269 FBM ACE 3,785.44 16.80 0.4
Untraded 478 444 451 428 395 Major Overseas
Indices
Market Cap Dow Jones 10,366.72 3.70 0.0
Turnover Nasdaq 2,249.84 7.81 0.3
(mln shares) 533 664 611 574 802 S&P 500 1,095.17 -0.17 0.0
Value (RM FTSE 5,253.52 -17.50 -0.3
mln) 971 1,440 991 1,085 1,538 Hang Seng 20,560.81 129.75 0.6
Jakarta Composite 2,981.06 19.55 0.7
Currency Nikkei 225 9,795.24 258.01 2.7
MYR vs US Seoul Composite 1,758.01 22.93 1.3
Dollar 3.2015 3.1970 3.2030 3.2055 3.1955 Shanghai Composite 2,470.44 20.15 0.8
SET 819.54 2.19 0.3
Source: RHBInvest & Bloomberg FT Straits Times 2,952.81 24.11 0.8
Taiwan Weighted 7,714.51 117.09 1.5
India Sensex 17,938.16 -47.74 -0.3
Major Commodities
NYMEX Crude Oil
(US$/barrel) 77.04 -0.11 -0.1
MDEX CPO – Third
Month (RM/metric ton) 2,381.00 28.00 1.2
US Interest Rate Current Last Updated
22-23 Jun
Overnight Fed Fund Rate 0-0.25% Unch
2010
Next FOMC meeting 10 Aug 2010

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Chart 3: FKLI Daily Chart 4: FKLI Intraday

Technical Interpretations:

♦ The local futures index traded higher in a choppy session on Wednesday, after taking positive cues from another
set of upbeat earnings from the US corporate giants.

♦ Though mild profit-taking pressure was seen in the early session, the FKLI managed to regather buying support in
the afternoon session.

♦ But just after hitting an intraday high of 1,347.50, the FKLI for Jul contract eased lower and finished the day 4.50
pts or 0.34% higher to 1,343.50.

♦ This led to a formation of a potential “evening star” candle on the chart, implying a possible short-term weakness
today.

♦ Should selling take place today, the FKLI will head towards the 10-day SMA near 1,317 on increased profit-taking
activities.

♦ On the other hand, if selling activities are well-absorbed, the FKLI will refresh its buying momentum and extend
the current rally towards the year high of 1,352.50.

♦ From a technical viewpoint, further breakout of 1,352.50 will bring back the bullish market sentiment and push the
futures index towards the 1,390 higher resistance level.

Daily Trading Strategy:

♦ The “evening star” candle on the chart spells profit-taking activities today, but the FKLI still holds a chance to turn
even more bullish.

♦ As long as it can hold at above the previous high of 1,342 and the 10-day SMA near 1,317, the upswing remains
intact.

♦ The FKLI is likely to swing from 1,337 to 1,350 today.

Table 3: FKLI Closings

FKLI (Month)
Contracts Open High Low Close Chg (Pts) Settle Volume Open Interest
Jul 10 1345.00 1347.50 1340.00 1343.50 4.50 1343.50 7937 17690
Aug 10 1342.00 1347.00 1340.00 1344.50 5.50 1343.50 315 716
Sep 10 1341.50 1346.00 1339.00 1346.00 8.50 1342.50 147 513
Dec 10 1342.00 1345.00 1339.50 1340.50 2.50 1342.00 39 253

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:

♦ Most US gauges continued to inch higher on Wednesday, but overall market tone turned cautious after the US
Federal Reserve revised downward 2010’s economic forecasts.

♦ Fed’s latest meeting minutes showed officials noted "relatively modest" worsening in economic outlook, and they
would consider whether further monetary stimulus is needed if economy shows more signs of slowing. The Fed
also lowered its forecast for GDP growth to a range of 3% to 3.5%, against 3.2% to 3.7% in April.

♦ Compounded with a larger-than-expected drop of 0.5% in June’s retail sales, this dented optimism over Intel
Corp’s upbeat earnings and sales optimism on Tuesday.

♦ As the Fed’s chilly forecast on the economic outlook outweighed a sharp drop on the weekly US crude inventory
report, the US light sweet crude oil futures for August delivery eased 11cents or 0.1% to US$77.04/barrel.

Technical Interpretations:

Dow Jones Industrial Average (DJIA)

♦ The US DJIA traded between positive and negative territories throughout the day, before inching 3.70 pts or
0.04% higher to 10,366.72 on Wednesday.

♦ On the chart, it finished with a “doji-like” candle, showing more uncertainties ahead.

♦ Plus a fresh marginal “sell” signal on the stochastic oscillators, the index could settle with a breather soon.

♦ But any weakness will be shallow and brief, in our view, as we see strong supports at the 10,150 level near the
21-day SMA to buffer near-term downside. On the upside, the next target is near June’s high of 10,594.16.

Nasdaq Composite (Nasdaq)

♦ On Wednesday, the Nasdaq Composite index extended its recent winning streak by adding 7.81 pts or 0.35% to
close at 2,249.84.

♦ Technically, the closing with a “star-like” candle implies possible weakness today.

♦ Nevertheless, according to the chart pattern, the current rebound will stay intact as long as the index can hold at
above the 21-day SMA near 2,211 and the 2,190 support.

♦ Its near-term upside target is still pegged at 2,330.

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Daily Technical Watch:

Chart 7: IJM Daily Chart 8: IJM Intraday

IJM Corporation (3336)

Revisiting the RM5.30 – RM5.76 region on follow-through buying momentum…

♦ IJM halted its uptrend since Dec 2008 after hitting a high of RM5.04, near a tough resistance level at RM5.00 in
Oct 2009.

♦ The stock kicked off a sideways consolidation trend and twice touching a low near the RM4.30 region in Dec 2009
and Feb 2010.

♦ It recharged to above the RM5.00 resistance level again, to a more-than-two year high of RM5.15 in Apr 2010.
But, the stock fell swiftly to below the RM5.00 level on profit-taking activities.

♦ In the following month, it eased further to a low of RM4.38, prior to a recovery trend that eventually led the stock
to a powerful breakout of RM5.00 again on Wednesday.

♦ On the chart, the stock registered a huge bullish candle, and gained 2.8% to RM5.12 on strong buying support.

♦ Although the “overbought” momentum on the 14-day RSI and the stochastic oscillators may prompt some profit-
taking pressure on the stock in the immediate term, volume growth in recent sessions appeared steady and
sustainable.

♦ If it manages to hold at above RM5.00, it has high chance to revisit the RM5.30 – RM5.76 region on follow-
through buying momentum.

♦ Technically, given the removal of the consolidation region of RM4.57 - RM5.00 yesterday, a solid resistance-turn-
support level can be expected at RM5.00 going forward.

Technical Readings:

♦ 10-day SMA: RM4.962

♦ 40-day SMA: RM4.824

♦ Support: IS = RM5.00 S1 = RM4.57 S2 = RM4.17

♦ Resistance: IR = RM5.30 R1 = RM5.76 R2 = RM6.16

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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
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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.

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