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 17 September 2010
Market Technical Reading
Bullish Technical Rally To Resume After The Holiday Breaks!

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

Local Market Leads:

♦ Bursa Malaysia snapped the recent rally by taking a mild retreat on Wednesday, as most investors turned cautious
ahead of the Malaysia Day break on Thursday.

♦ Apart from that, trading sentiment cooled down after the ringgit weakened against the greenback amid the
Japanese government’s intervention on the currency market. It was the first time since 2004 that the government
had intervened. Japanese yen eased against the US dollar to above 85, from a level near 83.

♦ With the recent outperformed heavyweight stocks taking a breather, the FBM KLCI ended easier on Wednesday.
For the day, the local benchmark settled at 1,472.95 with a 1.49 pts or 0.10% loss.

♦ Daily turnover slowed to 725m shares, down from the previous day’s 1.04bn shares, and the market breadth
turned negative for the first time in four trading days.

♦ Jakarta Composite resumed trading by soaring 3.90% to a new historial high at 3,357.032, and Nikkei 225 also
soared 2.34%. However, Shanghai Composite tumbled 1.34% on worries over a possible rate hike by the
government.

Technical Interpretations:

♦ After enjoying a stunning rally, the FBM KLCI bowed to mild profit-taking pressure on Wednesday, with a retreat
from a fresh 32-month high of 1,474.44.

♦ On the chart, it recorded a “harami cross” candle to suggest a mild weakness today.

♦ But given the recent powerful breakthrough from the 1,450 technical barrier, we expect any pullback to be
temporary with a strong backing near the 1,450 resistance-turn-support level and the 10-day SMA of 1,445.

♦ And as long as these supports hold up firm, we remain bullish on the near-term direction and expect the index to
resume its rally towards the all-time high level of 1,524.69 soon.

Please read important disclosures at the end of this report.

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Daily Trading Strategy:

♦ As most investors turned away from the market ahead of the Malaysia Day’s public holiday on Thursday, the FBM
KLCI snapped the recent rally and closed slightly lower on Wednesday.

♦ The closing with a “harami cross” candle and the weaker trading volume on Wednesday, suggest a weaker
technical outlook in the next few sessions.

♦ But, in our view, we believe any retreat will be shortlived, and investors would likely take this opportunity to buy
on weakness. The recent breakout rally will stay intact as long as the FBM KLCI remains at above the trigger point
of 1,450 and the 10-day SMA of 1,445.

♦ A penetration at above the recent high of 1,474.44 with a healthy volume of between 800m and 1.0bn shares
mark will indicate a resumption of its rally towards the all-time high level of 1,524.69.

♦ Nevertheless, investors could continue to stay cautious today ahead of the weekend, before expecting a stronger
sentiment from next Monday onwards, when most of the traders returned from the recent holidays.

Table 2 : Major Indices & Commodities

Table 1 : Daily Statistics Change Change
Scoreboard 8 Sep 9 Sep 13 Sep 14 Sep 15 Sep Local Key Indices Closing
(Pts) (%)
Gainers 263 402 542 504 299 FBM KLCI 1,472.95 -1.49 -0.1
Losers 409 162 218 274 416 FBM 100 9,612.78 -9.55 -0.1
Unchanged 281 280 254 269 301 FBM ACE 3,798.15 14.01 0.4
Untraded 404 512 345 312 349 Major Overseas
Indices
Market Cap Dow Jones 10,594.83 22.10 0.2
Turnover Nasdaq 2,303.25 1.93 0.1
(mln shares) 607 450 843 1,040 725 S&P 500 1,124.66 -0.41 0.0
Value FTSE 5,540.14 -15.42 -0.3
(RM mln) 1,038 861 1,992 2,128 1,436 Hang Seng 21,691.45 -34.19 -0.2
Jakarta Composite 3,341.63 -15.40 -0.5
Currency Nikkei 225 9,509.50 -7.06 -0.1
MYR vs US Seoul Composite 1,811.85 -12.03 -0.7
Dollar 3.1110 3.1100 3.1000 3.1045 3.1150 Shanghai Composite 2,602.47 -50.03 -1.9
SET 924.81 3.71 0.4
Source: RHBInvest & Bloomberg Straits Times 3,067.11 -3.92 -0.1
Taiwan Weighted 8,099.75 -64.07 -0.8
India Sensex 19,417.49 -84.62 -0.4
Major Commodities
NYMEX Crude Oil
(US$/barrel) 74.57 -1.45 -1.9
FCPO – Third Month
(RM/metric ton) 2,615.00 -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

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Chart 3: FKLI Daily Chart 4: FKLI Intraday

Technical Interpretations:

♦ Led by steady buying support, the FKLI continued to push forward its recent rally by scaling to its highest level
since mid-Jan 2008 on Wednesday.

♦ This was despite a weaker performance in the regional markets, as well as the local cash market performance on
Wednesday.

♦ After the close, the FKLI for Sep contract rose 5.00 pts or 0.34% to end at 1,476.50.

♦ Still, the FKLI formed a “doji” candle, alike the FBM KLCI, to suggest uncertainty ahead.

♦ Given such candle pattern, coupled with the grossly overbought momentum readings, the futures index may turn
into a profit-taking leg, should the buying momentum retrace today.

♦ On the other hand, if it can acquire a positive candle today, it will resume its rally and head towards an upper
technical gap at 1,490 – 1,502.50.

♦ Clearing this technical gap will trigger more bullish buying support to the all-time high of 1,536.

♦ And even if the profit-taking activities do set in, the FKLI will still be well-supported by the strong resistance-turn-
support level at 1,450 and the 10-day SMA of 1,446, in our view.

♦ As a result, we keep our bullish view on the FKLI and expet it to retest the all-time high of 1,536 soon.

Daily Trading Strategy:

♦ The “doji” candle suggests indecision among traders whether to continue their purchases.

♦ However, in our view, traders will return soon when more investors return from the ecent holidays.

♦ We project the futures index to swing from 1,470 to 1,490 today.

Table 3: FKLI Closings

FKLI (Month)
Contracts Open High Low Close Chg (Pts) Settle Volume Open Interest
Sep 10 1476.00 1479.00 1471.50 1476.50 5.00 1476.50 4070 20802
Oct 10 1480.50 1480.50 1471.50 1477.50 6.00 1477.00 220 349
Dec 10 1475.00 1478.00 1471.00 1474.50 4.50 1475.50 114 409
Mar 11 1473.50 1475.50 1470.50 1474.50 6.00 1475.00 40 97

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:

♦ Wall Street recouped its early losses by ending slightly higher on Thursday, as a fall in the weekly jobless claims
renewed hopes that a double-dip recession could be avoided.

♦ Earlier in the day, US stocks took a beating after FedEx (-3.8%) issued quarterly profit that missed expectations
and warned the economy recovery may be slow. Also, sentiment turned cautious in reaction to a surprise
contraction for a second month in manufacturing activities in the Mid-Atlantic region.

♦ Nevertheless, mild bargain-hunting support resurfaced in the afternoon, as investors bet that a further decline of
3,000 in the weekly jobless claims could signal that the economy might have avoided a double-dip recession.

♦ On the NYMEX, the US light sweet crude oil futures for Oct delivery sank for a third day by stumbling US$1.45 or
1.9% to US$74.57/barrel.

♦ On a bright side, Research In Motion and Oracle rallied in after-hours trading on better-than-expected earnings.
Texas Instrument also ended higher on higher dividend and a US$7.5bn share buyback plan.

Technical Interpretations:

Dow Jones Industrial Average (DJIA)

♦ The US DJIA continued its recent upswing momentum by rising 22.10 pts or 0.21% to 10,594.83 on Thursday.

♦ But on the chart, it registered a “hangman-like” candle to indicate possible pullback today.

♦ Having said that, given the improved short-term momentum readings, it is still possible for it to rally towards the
Jul high of 10,719.94 soon, before having a mild pullback.

♦ Its solid resistance barrier is at 10,850, while the 21-day SMA of 10,296 and 10,150 will act as firm supports.

Nasdaq Composite (Nasdaq)

♦ The Nasdaq Composite index reversed its early selldown by inching up 1.93 pts or 0.08% to 2,303.25 yesterday.

♦ And with the accumulation of a series of positive candles, aided by further improvement in the momentum
indicators, the index is well underway to rechallenge the tough resistance obstacle at 2,330 soon.

♦ And if it could be lifted beyond 2,330, this will end many months of consolidation within the huge range by
flashing a possible breakout of 2,330 towards 2,470.

♦ Its immediate supports stay at a lower technical gap near the 21-day SMA of 2,204 and the 2,190 support level.

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Daily Technical Watch:

Chart 7: IOICorp Daily Chart 8: IOICorp Intraday

IOI Corporation (1961)

The recent positive breakout signal from RM5.60 remains firmly intact…

♦ Since breaking out from the tough resistance level of RM4.85 in Aug 2009, the share price of IOICorp has been
trapped within the range of RM4.85 to RM5.60.

♦ The stock hit a high of RM5.63 in Jan 2010, and again at RM5.72 in Mar, but the stock was later pressed down to
below the resistance level of RM5.60.

♦ But after a steep fall in May to a low of RM4.67, the stock rebounded quickly to above RM4.85, and since then, it
has been trading steadily along its 10-day and 40-day SMAs.

♦ In recent trading, as its upward momentum increased, the stock staged a powerful breakout of the RM5.60 level
on 13 Sep 2010, and hit a high of RM5.75 on 14 Sep.

♦ Although it closed at RM5.71 on Wednesday, and the momentum readings have turned slightly off the high, its
uptrend remains firmly intact.

♦ In our view, the stock’s uptrend and the positive breakout signal will stay as long as it can sustain at above the
RM5.60 breakout point and the 10-day SMA of RM5.48.

♦ As a result, we expect just a mild pullback to neutralise the current overbought momentum, and buying should
resume soon when the turnover improved.

♦ Next resistance level is seen at RM6.40.

Technical Readings:

♦ 10-day SMA: RM5.478

♦ 40-day SMA: RM5.227

♦ Support: IS = RM5.60 S1 = RM4.85 S2 = RM3.88

♦ Resistance: IR = RM6.40 R1 = RM7.20 R2 = RM8.15

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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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