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Market Technical Reading - Uptrend Remains Intact… - 06/09/2010

Market Technical Reading - Uptrend Remains Intact… - 06/09/2010

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Publicado porRhb Invest
Local Market Leads:
♦ After the recent upsurge, Bursa Malaysia finally took a breather and ended lower on Friday, amid profit-taking activities on the key heavyweights.
♦ Despite the ringgit hitting a fresh 13-year high at 3.1200 against the US dollar and the solid performance in the overseas markets ahead of the key US jobs data on Friday night, the FBM KLCI slipped into the negative territory as investors decided to lock in their profits on the recent rallies of the core bluechips.
Local Market Leads:
♦ After the recent upsurge, Bursa Malaysia finally took a breather and ended lower on Friday, amid profit-taking activities on the key heavyweights.
♦ Despite the ringgit hitting a fresh 13-year high at 3.1200 against the US dollar and the solid performance in the overseas markets ahead of the key US jobs data on Friday night, the FBM KLCI slipped into the negative territory as investors decided to lock in their profits on the recent rallies of the core bluechips.

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Published by: Rhb Invest on Sep 06, 2010
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05/12/2014

PP 7767/09/2010(025354

)

Malaysia

Technical Research
Dail y Trad ing St rat eg y

8

RHB Research Institute Sdn Bhd A member of the RHB Banking Group
Company No: 233327 -M

MARKET DATELINE

Market Technical Reading
Uptrend Remains Intact…
Chart 2: FBM KLCI Intraday

6 September 2010

Chart 1: FBM KLCI Daily

Local Market Leads:

♦ ♦ ♦ ♦ ♦

After the recent upsurge, Bursa Malaysia finally took a breather and ended lower on Friday, amid profit-taking activities on the key heavyweights. Despite the ringgit hitting a fresh 13-year high at 3.1200 against the US dollar and the solid performance in the overseas markets ahead of the key US jobs data on Friday night, the FBM KLCI slipped into the negative territory as investors decided to lock in their profits on the recent rallies of the core bluechips. For the day, the FBM KLCI dropped 5.40 pts or 0.37% to end at 1,435.67, dragged down by losses in the big caps, Genting (-26sen), Sime (-14sen) and Maybank (-5sen). In spite of that, the second and third liners continued to outshine the heavyweights on the back of strong rotational plays. MRCB (+11sen), LMCemnt (+15sen), UEMLand (+7sen) and GenP (+13sen) were amongst the favourites. As a result, the overall market sentiment remained bullish, though the daily turnover eased to 922m shares on profit-taking ahead of the weekend. Market breadth stayed positive with 394 gainers against 325 losers.

Technical Interpretations:

♦ ♦ ♦ ♦ ♦

Following the previous two negative reversal candles, the FBM KLCI finally succumbed to a technical pullback, and ended with a negative candle on Friday. Plus a tick-down on the 14-day RSI, the index could head for more pullbacks in the near term. Further retreat will force the stochastic oscillators to cut a fresh “sell” signal on the chart, hence leading to further selling on the FBM KLCI. However, we continue to see solid support near the 10-day SMA of 1,415, the psychological level of 1,400 as well as the key pivotal point of 1,390. On the upside, the uptrend will resume if it cuts above the recent high of 1,441.80.

Please read important disclosures at the end of this report.

Page 1 of 6

A comprehensive range of market research reports by award-winning economists and analysts are exclusively available for download from www.rhbinvest.com

6 September 2010 Daily Trading Strategy:

♦ ♦ ♦ ♦ ♦ ♦

As we warned earlier, the profit-taking dip on the FBM KLCI was long overdue, and Friday’s technical pullback happened just ahead of the weekend. It also confirmed the previous “hangman” and “evening star” candles. Sealed with a negative candle and the weakened short-term momentum readings, we see a further pullback risk in the near term, if the key heavyweights encounter further profit-taking pressure. But, in our view, the firm uptrend on the FBM KLCI is likely to stay intact, as long as it can sustain at above the 10-day SMA of 1,415, the 1,400 psychological level and the trigger point at 1,390. As such, we believe that any pullback is likely to be shortlived. And once the index neutralises its overbought momentum, the upward momentum will resume. Nonetheless, given the extended rally on the US DJIA on late Friday, the buying support on the local benchmark may even resume today. We see its next resistance at 1,450, followed by the all-time high of 1,524.69. On the trading sentiment, we expect the second and third liners to lead trading course this week, on healthy rotational plays and robust daily turnover.

Table 1 : Daily Statistics Scoreboard 27 Aug Gainers 286 Losers 405 Unchanged 285 Untraded 389 Market Cap Turnover (mln shares) Value (RM mln) Currency MYR vs US Dollar

30 Aug 334 377 281 372

1 Sep 307 476 270 312

2 Sep 511 256 258 341

3 Sep 394 325 291 352

762 1,532

769 1,760

949 2,077

1,075 1,873

922 1,718

3.1420

3.1380

3.1290

3.1260

3.1200

Source: RHBInvest & Bloomberg

Table 2 : Major Indices & Commodities Change Change Local Key Indices Closing (Pts) (%) FBM KLCI 1,435.67 -5.40 -0.4 FBM 100 9,381.76 -18.38 -0.2 FBM ACE 3,749.36 32.93 0.9 Major Overseas Indices Dow Jones 10,447.93 127.83 1.2 Nasdaq 2,233.75 33.74 1.5 S&P 500 1,104.51 14.41 1.3 FTSE 5,428.15 57.11 1.1 Hang Seng 20,971.50 102.58 0.5 Jakarta Composite 3,164.28 42.13 1.3 Nikkei 225 9,114.13 51.29 0.6 Seoul Composite 1,780.02 4.29 0.2 Shanghai Composite 2,655.39 -0.39 0.0 SET 929.9 9.36 1.0 Straits Times 3,002.56 15.90 0.5 Taiwan Weighted 7,830.21 109.39 1.4 India Sensex 18,221.43 -16.88 -0.1 Major Commodities NYMEX Crude Oil (US$/barrel) 74.60 -0.42 -0.6 MDEX CPO – Third Month (RM/metric ton) 2,570.00 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

Page 2 of 6
A comprehensive range of market research reports by award-winning economists and analysts are exclusively available for download from www.rhbinvest.com

6 September 2010

Chart 3: FKLI Daily

Chart 4: FKLI Intraday

Technical Interpretations:

♦ ♦ ♦ ♦ ♦ ♦ ♦ ♦

Local futures market ended lower for the first time in six trading days on Friday, in tandem with the weaker cash market’s performance. After opening higher on a further rebound in the overnight US markets, the FKLI turned lower on continued selling activities. But as the mild bargain-hunting support returned in the late session, the FKLI for Sep contract bounced back from the intraday low of 1,430.50. For the day, it closed down by 4.50 pts or 0.31% to 1,432.50. Still, the futures index ended the day with a second negative candle, indicating further weakness in the immediate term. Compounded with the weakened short-term momentum readings, it should see further pullback towards the 10day SMA of 1,414 soon. Having said that, we are confident that the 10-day SMA, the 1,400 psychological level and the breakout point of 1,390 will keep sellers in check and will protect the overall uptrend on the futures index. Instead, for the FKLI to restore its upbeat momentum, it only needs to remove last Thursday’s high of 1,444. Immediate resistance is at 1,450, followed by the all-time high resistance at 1,536.

Daily Trading Strategy:

♦ ♦ ♦

With last Friday’s retreat, further weakness is still possible, unless it can retake the recent high of 1,444. However, traders should only turn bearish if it loses the 10-day SMA of 1,414, 1,400 and 1,390. We expect the futures index to swing from 1,427 to 1,440 today.

Table 3: FKLI Closings FKLI (Month) Contracts Open Sep 10 1440.00 Oct 10 1442.00 Dec 10 1440.00 Mar 11 1439.50 Source: Bursa Malaysia

High 1441.00 1442.00 1440.00 1439.50

Low 1430.50 1431.00 1430.00 1429.00

Close 1432.50 1431.50 1431.00 1429.00

Chg (Pts) -4.50 -5.50 -5.50 -6.50

Settle 1432.50 1431.50 1430.50 1429.50

Volume 5455 307 202 102

Open Interest 18743 222 415 154

Page 3 of 6
A comprehensive range of market research reports by award-winning economists and analysts are exclusively available for download from www.rhbinvest.com

6 September 2010

Chart 5: US Dow Jones Industrial Average (DJIA) Daily

Chart 6: US Nasdaq Composite Daily

US Market Leads:

♦ ♦ ♦ ♦ ♦ ♦

US stocks extended their rallies for a fourth day on Friday, as the better-than-expected monthly jobs data spurred hopes that the US economy could avoid a double dip reccession. The US Labour Department said the non-farm payrolls declined 54,000 in Aug, compared to consensus estimation of 100,000 jobs lost. Meanwhile, the unemployment rate rose to 9.6% of labour force, as expected. The fewer jobs losses were mainly due to the 67,000 jobs added in the private sector after an upwardly revised 107,000 increase in Jul. Economists were forecasting an increase of 40,000 jobs in the private sector. JP Morgan Chase (+2.7%), Caterpillar (+2.3%) and IBM (+2.0%) were amongst the leaders of Friday’s gain. However, the US light sweet crude oil futures for Oct delivery eased 42cents or 0.6% to US$74.60/barrel. All US financial markets will be closed on Monday, in conjunction with the Labour Day holiday.

Technical Interpretations: Dow Jones Industrial Average (DJIA)

♦ ♦ ♦ ♦

As the bulls charged forward, the US DJIA pierced through the 21-day SMA of 10,320 decisively on Friday, after surging 127.83 pts or 1.24% to 10,447.93. Added with a bullish candle and the upbeat short-term momentum readings, the index is likely to extend its rally towards Jul’s high of 10,719.94 soon. If it sustains at above the 21-day SMA, its trading sentiment will turn positive bias. Now, the immediate support has notched up to the 21-day SMA, followed by the 10,150 technical level.

Nasdaq Composite (Nasdaq)

♦ ♦ ♦

As buying continues, the Nasdaq Composite index formed a second technical gap in three trading days and rallied another 33.74 pts or 1.53% to 2,233.75 on Friday. It, however, formed a potential “hangman” candle to imply a possible retreat in the next session. The immediate supports are near the 21-day SMA of 2,196 and the 2,190 support level. But, we will remain bullish on the short-term outlook if it sustains at above these supports. And upon resumption of the buying momentum, the index will challenge the tough resistance level at 2,330 soon.

Page 4 of 6
A comprehensive range of market research reports by award-winning economists and analysts are exclusively available for download from www.rhbinvest.com

6 September 2010 Daily Technical Watch:
Chart 7: Pos Daily Chart 8: Pos Intraday

Pos Malaysia (4634) Further upside towards RM3.54 soon, if it can sustain at above RM3.26…

♦ ♦ ♦ ♦ ♦ ♦ ♦ ♦

The share price of Pos kicked off a powerful rally in late Mar 2010, after the 10-day SMA cut steeply to above the 40-day SMA near the RM2.00 region. The rally led the stock to a fresh multi-year high of RM3.21, but fell to below the RM3.07 level in a consolidation move. Near the support region of RM2.54 in May 2010, the stock regained its momentum and slowly plotted for a technical recovery leg. By mid-Jun 2010, it broke out from the RM2.80 level and started a recovery leg that eventually hit a fresh multiyear high of RM3.34, near a key resistance level of RM3.26 in Jul. Although the stock encountered a series of profit-taking activities shortly afterward, it has been firmly supported near the RM3.07 level thoughout Aug. Due to the improved momentum in recent sessions, the stock closed last Friday at RM3.28, above the RM3.26 significant level with a bullish candle. Given the firm supports along the 10-day and 40-day SMAs near RM3.20 and RM3.12, the medium-term uptrend on the chart has remained intact. As such, if it manages to sustain at above the RM3.26 important breakout level, its momentum will accelerate towards the next level of RM3.54 soon, before heading to the RM3.85 all-time high level.

Technical Readings:

♦ ♦ ♦ ♦

10-day SMA: 40-day SMA: Support: Resistance:

RM3.204 RM3.116 IS = RM3.26 IR = RM3.54 S1 = RM3.07 R1 = RM3.85 S2 = RM2.80

Page 5 of 6
A comprehensive range of market research reports by award-winning economists and analysts are exclusively available for download from www.rhbinvest.com

6 September 2010

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. securities, subject to the duties of confidentiality, will be made available upon request. Additional information on recommended

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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