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

26 July 2010
MARKET DATELINE

Market Technical Reading

Next Challenge Is To Confirm The 1,350 Breakout Pattern!

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

Local Market Leads:

♦ Buoyed by the overnight US and European markets’ rallies, Bursa Malaysia finished higher on Friday amid the
return of fresh bargain-hunting support.

♦ Investors cheered on the strong earnings from US major corporates, as well as the better-than-expected
manufacturing data in the Eurozone, that have prompted the US and European markets to soar more than 2%.

♦ This has paved way for a rally in Asian markets, though mild profit-taking activities were seen in the afternoon
ahead of the release of the stress tests results on the major European banks in late Friday.

♦ Locally, the FBM KLCI ended firmly at 1,345.68, gaining 9.63 pts or 0.72%, as buyers reemerged on strong
bargain-hunting activities after the overnight gains in the overseas markets.

♦ Turnover improved to 993m shares, up from Thursday’s 873m shares on Thursday. There were 491 counters up
against 268 counters down.

Technical Interpretations:

♦ With the return of fresh bargain-hunting support, the FBM KLCI staged a technical rebound following a retest of
the 10-day SMA on Thursday.

♦ Chart wise, it formed a tiny technical gap on the chart and overturned the recent high of 1,344.96 with a day high
of 1,345.68.

♦ Backed by a robust turnover and the firmer momentum readings, the positive closing with a positive candle points
to a possible further run-up to rechallenge the tough resistance level at 1,350 today.

♦ But until it can convincingly take out 1,350, the medium-term technical view on the FBM KLCI remains uncertain,
though the short-term environment continues to improve.

Please read important disclosures at the end of this report.

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Daily Trading Strategy:

♦ Instead of taking a further breather, the FBM KLCI resumed its recovery momentum by staging a timely rebound
following a retest of the 10-day SMA near 1,337.

♦ Overall, the technical landscape is now looking more appealing, especially the decisive clearance of the recent high
of 1,344.96, which suggests a likely challenge of 1,350 soon.

♦ Added with the healthy turnover of late, at above 800m – 1.0bn shares, as well as the fresh “double buy” signal on
the short-term momentum indicators, the current rebound looks durable.

♦ Moreover, with another rally in the US markets on Friday, the index could start this week with a jump-start to
above 1,350. The next challenge will then be to sustain its gains at above this level.

♦ Having said that, we prefer to stay cautious on the medium-term outlook, until we see a confirmation breakout
pattern at above 1,350. The next effective resistance is seen at 1,390.

♦ Firm support stays solidly at the 10-day SMA near 1,337, followed by the medium-term stronghold at 1,300.

Table 2 : Major Indices & Commodities

Table 1 : Daily Statistics Change Change
Scoreboard 19 Jul 20 Jul 21 Jul 22 Jul 23 Jul Local Key Indices Closing
(Pts) (%)
Gainers 327 466 442 318 491 FBM KLCI 1,345.68 9.63 0.7
Losers 324 278 298 387 268 FBM 100 8,870.12 57.53 0.7
Unchanged 269 250 277 251 285 FBM ACE 3,816.01 19.27 0.5
Untraded 444 371 348 410 320 Major Overseas
Indices
Market Cap Dow Jones 10,424.62 102.32 1.0
Turnover Nasdaq 2,269.47 23.58 1.0
(mln shares) 849 1,126 875 873 993 S&P 500 1,102.66 8.99 0.8
Value (RM FTSE 5,312.62 -1.19 0.0
mln) 1,331 1,322 1,269 1,146 1,430 Hang Seng 20,815.33 225.63 1.1
Jakarta Composite 3,042.02 32.10 1.1
Currency Nikkei 225 9,430.96 210.08 2.3
MYR vs US Seoul Composite 1,758.06 22.53 1.3
Dollar 3.2240 3.2080 3.2135 3.2070 3.1985 Shanghai Composite 2,572.03 9.62 0.4
SET 840.24 7.23 0.9
Source: RHBInvest & Bloomberg FT Straits Times 2,973.47 17.80 0.6
Taiwan Weighted 7,761.22 94.88 1.2
India Sensex 18,130.98 17.83 0.1
Major Commodities
NYMEX Crude Oil
(US$/barrel) 78.98 -0.32 -0.4
MDEX CPO – Third
Month (RM/metric ton) 2,498.00 -21.00 -0.8
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:

♦ After a tight ranged trading throughout the first half of the day, the futures index launched a rally in the afternoon
on Friday, with the FKLI hitting its highest closing since end-Feb 2008.

♦ From 1,343.50 low, the sudden resurgence of buying momentum lifted the FKLI for Jul contract higher towards the
closing and ended the week at 1,354.00. For the day, it surged 11.50 pts or 0.86%.

♦ As it broke out from the recent high of 1,347.50 and May’s high of 1,352.5 with a bullish candle, it paints to a
fresh bullish breakout on the chart.

♦ Momentum wise, both the 14-day RSI and stochastic oscillators also tweaked higher, displaying more strength to
follow in sessions to come.

♦ As such, if the FKLI secures another positive confirmation candle today, the FKLI’s medium-term outlook will turn
bullish as a fresh uptrend appears.

♦ The chart’s next upside target is set at 1,390.

♦ For now, the rising 10-day SMA of 1,341 will continue to support the current uptrend.

Daily Trading Strategy:

♦ In line with our expectation, the FKLI continued to enjoy a firm recovery from the 10-day SMA of 1,341.

♦ In fact, with a decisive breakout from the recent high of 1,347.5 and May’s high of 1,352.50, traders can turn
“long” in expectation that it will defend the resistance-turn-support region of 1,350 going forward. Next target is
set at 1,390.

♦ The FKLI’s trading range is expected to be between 1,350 and 1,370 today.

Table 3: FKLI Closings

FKLI (Month)
Contracts Open High Low Close Chg (Pts) Settle Volume Open Interest
Jul 10 1346.00 1355.00 1343.50 1354.00 11.50 1354.00 6507 19539
Aug 10 1346.50 1354.00 1342.50 1352.00 11.00 1352.00 1006 1600
Sep 10 1344.50 1353.00 1343.00 1349.50 9.00 1352.00 275 541
Dec 10 1344.00 1362.00 1343.00 1362.00 21.50 1352.00 91 302

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 markets extended its gains for a second day on Friday after the majority of European banks passed the stress
test and as investors turned their focus back to positive earnings news.

♦ The Committee of European Banking Supervisors on Friday said only 7 out of 91 banks failed in the stress test,
which had a total capital shortfall of US$4.5bn.

♦ In the US, investors cheered after General Electric (GE) (+3.3%) raised its quarterly dividends by 20%, and Ford
Motors, Honeywell International and Verizon announced second-quarter earnings that surpassed expectations.

♦ Also, news that the French drugmaker Sanofi-Aventis plans to acquire Genzyme (+15.4%) restored hopes of
more merger & acquisition (M&A) activities ahead.

♦ But the US light sweet crude oil futures for Sep delivery eased 32cents or 0.4% to US$78.98/barrel.

Technical Interpretations:

Dow Jones Industrial Average (DJIA)

♦ Led by follow-through buying support, the US DJIA continued its bullish momentum by gaining another 102.32
pts or 0.99% to 10,424.62 on Friday.

♦ Fuelled by a steady improvement on the short-term momentum readings, as well as its ability to surpass beyond
the recent high of 10,407.82, more upside strength ahead can be anticipated.

♦ Going forward, it must overcome another immediate hurdle at Jun’s high of 10,594.16 in order to push the
current upswing leg towards the heavy resistance barrier at 10,850.

♦ Any selling pressure will now be well-absorbed by the resistance-turned-support level at 10,150 and the 21-day
SMA of 10,100.

Nasdaq Composite (Nasdaq)

♦ The Nasdaq Composite index shot up another 23.58 pts or 1.05% to 2,269.47 on Friday, and added a second
bullish candle on the chart to indicate more follow-through buying momentum ahead.

♦ Not only that, the removal of the recent high of 2,260.33 on Friday also signals readiness of the index to
rechallenge the tough hurdle at 2,330 soon.

♦ Breaking out from 2,330 will confirm the end of the recent correction phase.

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Daily Technical Watch:

Chart 7: MMCCorp Daily Chart 8: MMCCorp Intraday

MMC Corporation (2194)

Poised to stage a powerful chart breakout from RM2.55 soon…

♦ MMCCorp halted its 8-month uptrend after hitting a high of RM2.77 in Aug 2009, and fell into a corrective wave to
a low of RM2.25 in early Sep 2009.

♦ It found a firm support near RM2.30 eventually, and since then, it has been trading sideways within RM2.30 to
RM2.55.

♦ In May 2010, the stock fell to below the RM2.30 support level to a low of RM2.20, but again, it was lifted back to
above the RM2.30 level on timely buying support.

♦ The stock has been wondering at around the RM2.40 – RM2.50 region for the past few weeks, before closing
strongly at RM2.55 on the dot of the key resistance level on last Friday. It recorded a huge bullish candle on the
chart.

♦ With the bullish candle pattern, coupled with the strong trading volume and the “double tick-up” signals on the
momentum indicators, the stock is poised to stage a powerful chart breakout, if buying continues.

♦ Technically, a removal of RM2.55 will mark a fresh rally from the previous sideways consolidation trend from
RM2.30 – RM2.55.

♦ Going forward, it will head towards last year’s Aug high of RM2.77, before rechallenging the RM2.80 resistance
level next.

♦ If it fails to cross over RM2.55 today, it will entice profit-taking activities, hence prolonging the sideways
rangebound movement ahead.

Technical Readings:

♦ 10-day SMA: RM2.445

♦ 40-day SMA: RM2.442

♦ Support: IS = RM2.30 S1 = RM1.98 S2 = RM1.65

♦ Resistance: IR = RM2.55 R1 = RM2.80 R2 = RM3.08

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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
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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
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The research analysts, economists or research associates principally responsible for the preparation of this research report have received compensation based
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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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actions of third parties in this respect.

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