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PP 7767/09/2010(025354)

RHB Research

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

30 August 2010

Market Technical Reading

Stay Cautious On Market’s Near-term Direction…

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

Local Market Leads:

♦ Powered by sharp gains in Sime and other key blue chips, Bursa Malaysia extended its recent rally to another fresh
year high on Friday.

♦ The day started in a weaker note, as investors took the negative cues from the overnight slump in Wall Street, as
the DJIA broke below the 10,000 psychological level for the first time since early Jul.

♦ But the local market built up its upward momentum and shrugged off the early selldown after the core
heavyweights, like Sime (+22sen), PBBank (+12sen) and Maybank (+4sen) climbed higher on solid buying
support. Sime rose as much as 43sen to RM8.31, before narrowing its gain to RM8.10 after announcing a better-
than-expected earnings.

♦ Other than the local market, Asian stocks performed firmer than expected ahead of the US major 2Q GDP data and
a key speech on the US economic outlook by the Federal Reserve chairman Ben Bernanke on Friday.

♦ The regional sentiment lifted the FBM KLCI by another 3.05 pts or 0.22% gain to 1,411.05. However, volume
remained weak with 763m shares changing hands versus Thursday’s 685m shares. But market breadth turned
negative again with 405 counters down against 286 counters up.

Technical Interpretations:

♦ As buyers took advantage on the early weakness, the FBM KLCI bounced back from the 1,402.36 low (-5.53 pts)
and continued its bullish run-up to another new year high of 1,415.28 (+7.28 pts).

♦ Chalking up with a positive confirmation candle last Friday, the index is poised for further upside ahead, despite
the weak daily turnover and mixed short-term momentum readings.

♦ This means it is poised to expand its rally towards the next upside target of 1,450 if buying momentum continues.

♦ Meanwhile, the benchmark will find an immediate support near the 1,400 psychological level, followed by a solid
support at the 10-day SMA near the 1,390 technical level.

Please read important disclosures at the end of this report.

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Daily Trading Strategy:

♦ Despite an early weakness, the local benchmark continued to surprise investors on the upside by recording a
positive confirmation candle to a fresh year high last Friday.

♦ Added with a strong bounce in the Wall Street last Friday, the market should open to more upside room towards
the next upside target at 1,450 soon.

♦ Still, we remain cautious on the market’s near-term direction, in view of the poorer daily turnover, the
deteriorating momentum readings, as well as the weaker overall market tone.

♦ In other words, until we see a significant improvement on the daily turnover to between 800m and 1.0bn shares
mark and the technical momentum, further rally will invite stronger profit-taking activities, in our view.

♦ Also, with the local quarterly earnings reporting season coming to an end on Monday, we expect investors to shift
their focus to the external leads going forward.

♦ Currently, it should find a good support near the 1,400 psychological level. But in the event of a sudden selldown
that breaks below 1,400, the index will head to the 10-day SMA near 1,395 and the 1,390 critical level.

Table 2 : Major Indices & Commodities

Table 1 : Daily Statistics Change Change
Scoreboard 23 Aug 24 Aug 25 Aug 26 Aug 27 Aug Local Key Indices Closing
(Pts) (%)
Gainers 291 206 186 353 286 FBM KLCI 1,410.69 2.69 0.2
Losers 465 585 585 333 405 FBM 100 9,205.43 6.55 0.1
Unchanged 270 241 268 294 285 FBM ACE 3,701.57 -39.52 -1.1
Untraded 345 335 328 385 389 Major Overseas
Market Cap Dow Jones 10,150.65 164.84 1.7
Turnover Nasdaq 2,153.63 34.94 1.6
(mln shares) 805 894 873 685 762 S&P 500 1,064.59 17.37 1.7
Value (RM FTSE 5,201.56 45.72 0.9
mln) 1,338 1,651 1,732 1,292 1,532 Hang Seng 20,597.35 -14.71 -0.1
Jakarta Composite 3,104.73 -40.41 -1.3
Currency Nikkei 225 8,991.06 84.58 0.9
MYR vs US Seoul Composite 1,729.56 -0.20 0.0
Dollar 3.1310 3.1435 3.1393 3.1410 3.1386 Shanghai Composite 2,610.74 7.26 0.3
SET 900.37 14.27 1.6
Source: RHBInvest & Bloomberg Straits Times 2,938.74 12.87 0.4
Taiwan Weighted 7,722.91 33.17 0.4
India Sensex 17,998.41 -227.94 -1.3
Major Commodities
NYMEX Crude Oil
(US$/barrel) 75.17 1.81 2.5
MDEX CPO – Third
Month (RM/metric ton) 2,543.00 13.00 0.5
US Interest Rate Current Last Updated
10 Aug
Overnight Fed Fund Rate 0-0.25% Unch
Next FOMC meeting 21 Sep 2010

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Chart 3: FKLI Daily Chart 4: FKLI Intraday

Technical Interpretations:

♦ In tandem with the solid cash market’s performance, the KL futures market shrugged off the early weakness by
ending higher for a second day in a row on Friday.

♦ From the 1,401.50 day low (-8.00 pts), the FKLI worked its way up and restored its bullish uptrend on firm
bargain-hunting support throughout most of the day.

♦ It even extended its gain to as much as 9.50 pts to a fresh year high of 1,419.00, before closing off the high on
mild profit taking amid a weaker European markets in the afternoon.

♦ At the close, the FKLI for Aug contract rose another 4.50 pts or 0.32% to 1,414.00, while the Sep contract gained
3.00 pts or 0.21% to 1,412.50.

♦ And like the cash market, the FKLI has secured its positive confirmation candle to suggest a likely continuation of
the current bullish uptrend ahead.

♦ In other words, the FKLI’s technical outlook has turned even more bullish now, and the next upside target is set at

♦ And until it breaches below the 1,400 psychological level, the 1,390 support level and the 10-day SMA of 1,394,
the current uptrend is likely to remain intact.

Daily Trading Strategy:

♦ As it acquired a positive confirmation candle on last Friday, the chart is now pointing to a possible extension of its
rally towards 1,450 soon.

♦ A stop-loss, however, should be placed at below 1,400, in case of a surprise bearish reversal in the current volatile

♦ For today, the FKLI’s trading range should be between 1,404 and 1,420.

Table 3: FKLI Closings

FKLI (Month)
Contracts Open High Low Close Chg (Pts) Settle Volume Open Interest
Aug 10 1404.50 1419.00 1401.50 1414.00 4.50 1414.00 7833 10566
Sep 10 1406.00 1419.00 1403.00 1412.50 3.00 1412.50 8383 11758
Dec 10 1402.50 1415.50 1402.50 1410.00 2.00 1410.00 212 429
Mar 11 1407.00 1415.00 1405.00 1410.00 2.00 1409.50 13 178

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 staged a powerful rebound, lifted by a smaller-than-expected decline in the 2Q GDP data and as the
Federal Reserve chairman Ben Bernanke said the central bank was ready to do whatever it can to prevent the US
economy from slipping into a recession again.

♦ The US government revised lower the 2Q GDP to an annual growth rate of 1.6%, from the initial reading of 2.4%.
Still, the latest revised data topped expectation of a decline to 1.4%.

♦ Meanwhile, Bernanke in the Federal Reserve’s annual meeting said the economic recovery has slowed more than
expected, but the Fed was ready to provide more stimulus if needed to spur the economic growth.

♦ In fact, the positive news has successfully neutralised the initial selloff on Intel due to a revenue warning that its
3Q revenue could miss its own estimate by more than US$1bn.

♦ In line with the rally in the US equity markets, as well as some short covering ativities on a possible hurricane in
the Gulf coast ahead, the US light sweet crude oil futures for Oct delivery climbed US$1.81 or 2.5% to

Technical Interpretations:

Dow Jones Industrial Average (DJIA)

♦ As the bulls made its timely return, the US DJIA rallied 164.84 pts or 1.65% to 10,150.65 on Friday. This has
effectively saved the index from falling to below the 10,000 psychological level.

♦ And sealed with a huge bullish candle and the fresh uptick signals on the momentum indicators, we expect the
rebound to continue in the early part of this week.

♦ This means if it can remove 10,150 today, a further rise to the 21-day SMA of 10,408 is possible. However, the
previous correction mode will stay intact until the index removes the SMA.

Nasdaq Composite (Nasdaq)

♦ After retesting the 2,100 immediate support level in the early session, the Nasdaq Composite index staged a
sharp reversal by ending up 34.94 pts or 1.65% to 2,153.63 on Friday.

♦ With a positive candle and the uptick on the short-term momentum indicators, the index is likely to climb higher
to cover the recent technical gap at 2,159.44 soon. The next tough resistance is seen at the 2,190 hurdle.

♦ Meanwhile, its immediate support is at 2,100 level, followed by the Jul’s low of 2,061.14.

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Daily Technical Watch:

Chart 7: CIMB Daily Chart 8: CIMB Intraday

CIMB Group Holdings (1023)

Losing the 40-day SMA and RM7.41 will trigger a major technical correction on the stock…

♦ The share price of CIMB has been trading on an uptrend since it recovered from the RM3.00 support region in Mar
2009, as the 10-day SMA cut above the 40-day SMA to highlight a bullish medium-term outlook.

♦ The stock trended along the uptrend line and pierced through a tough resistance level of RM6.70 approximately
one year later, and turned even more bullish on its technical outlook.

♦ The rally continued and the stock hit a high of RM7.41 in Apr 2010, before it finally settled for a profit-taking
consolidation at between RM6.70 and RM7.41.

♦ But, the stock regained its upward momentum and resumed the positive push that fueled a breakout of the
RM7.41 level in mid-Aug.

♦ Following that, it touched an all-time high of RM8.00, before encountering strong profit-taking activities
throughout last week.

♦ It plunged 18sen on Friday, to end with a bearish candle at RM7.74, just above the 10-day SMA of RM7.69.

♦ Friday’s signal, plus a “double hook-down” on the momentum indicators from the “overbought” region suggest a
likelihood of a fresh downtrend after the more-than-one-year uptrend to a high of RM8.00.

♦ Immediate support is at the 10-day SMA, but the crucial level is at the 40-day SMA and near RM7.41. Losing
these levels will confirm a major technical correction phase towards the RM6.00 – RM6.70 region.

Technical Readings:

♦ 10-day SMA: RM7.688

♦ 40-day SMA: RM7.359

♦ Support: IS = RM7.41 S1 = RM6.70 S2 = RM6.00

♦ Resistance: IR = RM8.00

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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
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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
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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.

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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