PP 7767/09/2010(025354)

3
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

30 June 2010
MARKET DATELINE

Market Technical Reading

Trading Sentiment To Stay Bearish...

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

Local Market Leads:

♦ The local bourse, in line with the regional market slump, fell on afternoon selldown in China’s SHComp (-4.3%)
and HSI (-2.3%) after the Confidence Board in China said its Leading Economic Indicator rose 0.3% in Apr, less
than the initial 1.7% gain reported on 15 Jun earlier.

♦ The regional indices like Nikkei 225 (-1.27%) and FTSTI (-1.38%) fell steeply, while the European key indices like
FTSE 100 (-2%), GDax (-2.2%) and CAC 40 (-2.7%) plunged in their early trading yesterday.

♦ Locally, the FBM KLCI benchmark reversed its early gain of 5.5 pts from 1,331.04 to a low of 1,315.84 with a loss
of 9.7 pts in the afternoon, before closing the day at 1,319.84, losing 5.7 pts or 0.43%.

♦ As investors turned nervous, recent speculative issues like KEuro (10.5sen), Gamuda-WD (-10sen) and Time (-
3.5sen) fell on strong profit-taking pressure.

♦ Overall turnover increased to 741m shares from Monday’s 535m shares, but market breadth deteriorated with
losers overwhelming gainers by a ratio of almost 3 to 1.

Technical Interpretations:

♦ The FBM KLCI registered a huge bearish candle on the chart, following a “negative harami” candle recorded a day
ago. This indicates a resumption of the previous selling momentum likely today.

♦ Yesetrday’s closing also marked the first day that the index dipped to below the 10-day SMA of 1,321 since early
Jun. This suggests that the index is now trading in a negative immediate-term trend.

♦ Technically, the index should head towards the 40-day SMA of 1,309, before retesting the strength of the
psychological level at 1,300.

♦ With both the momentum indicators remaining weak, the risk is fairly high for the index to fall below 1,300 if
buying support fails to return today. Further support is only seen at 1,250.

Please read important disclosures at the end of this report.

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Daily Trading Strategy:

♦ As expected, the index failed to maintain the sideways trend and sealed with a bearish candle on the chart
yesterday.

♦ Given yesterday’s fall to below the 10-day SMA of 1,321, the immediate-term trend for the FBM KLCI has turned
negative.

♦ In fact, the index is poised to revisit the crucial 1,300 psychological stronghold today, should the 40-day SMA of
1,309 fail to curb selling activities, in our view.

♦ Also, dampened further by the overnight plunge in Wall Street, as well as the global markets’ retreat yesterday,
trading sentiment is likely to stay bearish today.

♦ As a result, we remain bearish on the local market outlook.

Table 2 : Major Indices & Commodities

Table 1 : Daily Statistics Change Change
Scoreboard 23 June 24 June 25 June 28 June 29 June Local Key Indices Closing
(Pts) (%)
Gainers 360 318 251 227 175 FBM KLCI 1,319.84 -5.70 -0.4
Losers 275 332 370 340 514 FBM 100 8,678.97 -38.93 -0.4
Unchanged 271 294 278 241 252 FBM ACE 3,783.20 -50.98 -1.3
Untraded 456 418 463 505 423 Major Overseas
Indices
Market Cap Dow Jones 9,870.30 -268.22 -2.6
Turnover Nasdaq 2,135.18 -85.47 -3.8
(mln shares) 685 749 568 535 741 S&P 500 1,041.24 -33.33 -3.1
Value (RM FTSE 4,914.22 -157.46 -3.1
mln) 1,118 1077 923 778 1,059 Hang Seng 20,248.90 -477.78 -2.3
Jakarta Composite 2,893.37 -62.36 -2.1
Currency Nikkei 225 9,570.67 -123.27 -1.3
MYR vs US Seoul Composite 1,707.76 -24.27 -1.4
Dollar 3.2335 3.2310 3.2430 3.2230 3.2505 Shanghai Composite 2,427.05 -108.23 -4.3
SET 799.09 -5.31 -0.7
Source: RHBInvest & Bloomberg FT Straits Times 2,830.34 -39.65 -1.4
Taiwan Weighted 7,423.57 -77.22 -1.0
India Sensex 17,534.09 -240.17 -1.4
Major Commodities
NYMEX Crude Oil
(US$/barrel) 75.94 -2.31 -3.0
MDEX CPO – Third
Month (RM/metric ton) 2,366.00 -34.00 -1.4
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:

♦ Dampened by the global selldown yesterday, the local futures market gave back more than what it had gained on
the past two trading days.

♦ The FKLI fell sharply with a huge bearish candle, reversing its two positive candles recorded earlier.

♦ The closely watched FKLI for Jul contract fell 18 pts or 1.35% yesterday to 1,315, while the expiring Jun contract
closed the day at 1,315.5, losing 16.5 pts or 1.24% for the day.

♦ The futures index also closed the day at below the supportive 10-day SMA of 1,324, suggesting a likelihood of a
negative immediate-term trend ahead.

♦ Given the poorer momentum readings on the indicators, the futures index is due to retest the 40-day SMA near
1,308 and to cover the technical gap formed in mid Jun at 1,302 to 1,304.5, before rechallenging the
psychological support at 1,300.

♦ Technically, with the current negative tone on the short-term chart layout, chances are high that the futures
index may lose the 1,300 stronghold on strong follow-through selling momentum in the near term.

♦ Upon further breakdown, we expect the FKLI to retreat further to the 1,270 support level, with an additional
support at May’s low of 1,240.5.

Daily Trading Strategy:

♦ Immediate-term negative outlook ahead, due to a sudden reversal from the recent positive candles.

♦ Traders should exit from their recent “long” call, as there is a strong likelihood that the futures index may ease
further in the next few sessions.

♦ For today, the futures index is likely to fluctuate from 1,307 to 1,320.

Table 3: FKLI Closings

FKLI (Month)
Contracts Open High Low Close Chg (Pts) Settle Volume Open Interest
Jun 10 1329.50 1334.50 1312.00 1315.50 -16.50 1315.50 8680 10783
Jul 10 1329.50 1335.00 1312.00 1315.00 -18.00 1315.00 9601 9240
Sep 10 1330.50 1334.00 1311.00 1314.50 -16.50 1314.50 262 505
Dec 10 1331.00 1331.50 1313.00 1315.00 -15.50 1315.00 31 196

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 plunged on Tuesday, sending the US benchmark DJIA down by as much as 326 pts before ending the
day at 9,870.30 with 268 pts or 2.7% loss.

♦ Investors turned nervous and sold off shares after a big drop in consumer confidence and signs of a sharper
slowdown in the global economy, following huge losses in key European and Asian markets overnight.

♦ The market opened very weak yesterday, but selling picked up after Consumer Confidence Index for Jun was
reported. It fell to 52.9 versus 62.7 in May. The decline reflects worries about the labor market and the ongoing
economic outlook. The street had expected it to fall to 62.

♦ Meanwhile, the US light sweet crude oil futures for August delivery fell further by US$2.31 to US$75.94 a barrel
in Nymex.

Technical Interpretations:

Dow Jones Industrial Average (DJIA)

♦ The US DJIA tumbled on Tuesday, after recording two consecutive “doji” candles, resembling a resumption of
strong selling momentum on the technical perspective.

♦ The fall also confirmed the index losing the key 21-day SMA near 10,178. The loss of the key psychological level
of 10,000 suggests that the chart has moved into a short-term bearish territory.

♦ Going forward, with the momentum indicators dipping towards the “oversold” region, the index is likely to retest
the support region of 9,200 – 9,700 soon.

♦ In our view, more bearish signals could emerge as the DJIA moves lower to trigger the major “Head & Shoulders”
formation upon losing 9,700.

Nasdaq Composite (Nasdaq)

♦ The Nasdaq Composite index plunged 85.47 pts or 3.85% to 2,135.18 yesterday, with a huge technical gap to
below the 2,190 key support level.

♦ The swing effectively dragged the index into the short- to medium-term bearish chart outlook as it confirmed
losing the 21-day SMA of 2,242.

♦ 2,190 becomes its immediate-term resistance, while the 2,000 and 2,100 supports will be revisited soon, in our
view.

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Daily Technical Watch:

Chart 7: IRCB Daily Chart 8: IRCB Intraday

Integrated Rubber Corporation (2127)

Likely to retreat towards the RM0.56 – RM0.70 region in the near term…

♦ The share price of IRCB turned bullish after breaking out from the RM0.83 resistance level in Jan 2010 and rolled
out a powerful rally.

♦ It soared to a multi-year high of RM1.87, but immediately triggered a constant profit-taking leg.

♦ The profit-taking pressure pressed it to below the RM1.31 level, which eventually drifted to the region of RM0.97
in Mar 2010.

♦ After a swift rebound that hit the resistance at RM1.31 failed to attract follow-through support, the stock trended
lower and breached below the RM0.97 level.

♦ It regained its footing only near the RM0.70 level in May, before recovering slowly along the 10-day SMA.

♦ However, after days of trying, the stock registered a bearish candle on the chart yesterday, as it closed at
RM0.78 with a 4.5sen loss.

♦ Yesterday’s close was just below the 10-day SMA of RM0.79. Added with the retreat on the momentum
indicators, the stock is poised to ease further and fall below the 40-day SMA of RM0.76 soon on follow-through
selling momentum.

♦ Unless it can supprise with a technical rebound to above the RM0.83 immediate resistance level, it is likely to
retreat towards the RM0.56 – RM0.70 support region in the near term.

Technical Readings:

♦ 10-day SMA: RM0.7905

♦ 40-day SMA: RM0.7604

♦ Support: IS = RM0.70 S1 = RM0.56

♦ Resistance: IR = RM0.83 R1 = RM0.97 R2 = RM1.31

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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
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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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