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

9 July 2010
MARKET DATELINE

Market Technical Reading

Volume Growth Crucial To Sustain This Rebound...

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

Local Market Leads:

♦ Bursa Malaysia extended its recent winning streak on Thursday, but gains were limited as investors turned
cautious ahead of Bank Negara’s Monetary Policy Committee (MPC) meeting announcement.

♦ The local benchmark FBM KLCI opened the day firmly in response to a 275-pts rally in the overnight US DJIA, but
profit-taking activities quickly stepped in in late morning prompting the index to pare its early gain.

♦ But thanks to the last-minute buying activities, the FBM KLCI settled higher for the third straight day at 1,316.03,
gaining 4.28 pts or 0.33% for the day.

♦ Regionally, investors were optimistic on the upcoming second-quarter earnings reporting season in the US, and
cheered on news that the International Monetary Fund (IMF) has raised the global economic growth forecast to
4.6% for 2010, from 4.2%.

♦ Trading interest, however, remained subdued with only 533m shares changing hands, compared with 540m
shares traded a day earlier. There were 365 gainers against 242 losers.

♦ After the market closed, Bank Negara announced its decision to hike its overnight policy rate (OPR) by 25bps to
2.75%.
Technical Interpretations:

♦ The FBM KLCI opened strongly with a 1-pt gap, and climbed to above the 10-day SMA of 1,314, before closing
the day with a small positive candle.

♦ Collecting its third positive candle on the chart, the index is likely to continue the current upswing, in our view.

♦ Further upside will lead the index to the recent high of 1,335.31 and to retest the 1,350 significant resistance
level.

♦ However, as the index merely closed 2 points above the 10-day SMA, further confirmation is needed to avoid a
sharp pullback to cover the 1-pt technical gap.

♦ For now, strong supports can be found near the 40-day SMA of 1,304 and the key psychological level of 1,300.
Please read important disclosures at the end of this report.

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Daily Trading Strategy:

♦ As highlighted earlier, the removal of the 10-day SMA of 1,314 with another positive candle on the chart has
confirmed that a technical rebound is underway for the FBM KLCI.

♦ Buoyed further by the upbeat momentum readings, the benchmark stands a good chance to extend its upside
towards June’s high of 1,335.31 and even to retest the tough hurdle of 1,350 in the near term.

♦ But critically, the index must sustain at above the 10-day SMA in the near term in order to avoid a sudden
pullback on profit-taking pressure.

♦ Also, crucially, the daily turnover should grow in the coming sessions for trading sentiment to improve further
and ultimately to sustain the current recovery leg.

♦ Otherwise, the index will risk falling back to below the 10-day SMA, which will threaten this rebound, in our view.

Table 2 : Major Indices & Commodities

Table 1 : Daily Statistics Change Change
Scoreboard 02 Jul 05 Jul 06 Jul 07 Jul 08 Jul Local Key Indices Closing
(Pts) (%)
Gainers 286 182 405 275 365 FBM KLCI 1,316.03 4.28 0.3
Losers 300 425 195 307 242 FBM 100 8,659.52 33.50 0.4
Unchanged 263 270 273 272 275 FBM ACE 3,769.85 12.48 0.3
Untraded 514 484 488 506 478 Major Overseas
Indices
Market Cap Dow Jones 10,138.99 120.71 1.2
Turnover Nasdaq 2,175.40 15.93 0.7
(mln shares) 626 450 622 540 533 S&P 500 1,070.25 9.98 0.9
Value (RM FTSE 5,105.45 90.63 1.8
mln) 974 718 970 919 971 Hang Seng 20,050.56 193.49 1.0
Jakarta Composite 2,915.91 13.87 0.5
Currency Nikkei 225 9,535.74 256.09 2.8
MYR vs US Seoul Composite 1,698.64 22.99 1.4
Dollar 3.2220 3.2060 3.2040 3.2185 3.2015 Shanghai Composite 2,415.15 -5.97 -0.2
SET 817.57 2.89 0.4
Source: RHBInvest & Bloomberg FT Straits Times 2,897.15 36.12 1.3
Taiwan Weighted 7,608.85 74.39 1.0
India Sensex 17,651.73 180.70 1.0
Major Commodities
NYMEX Crude Oil
(US$/barrel) 75.44 1.37 1.8
MDEX CPO – Third
Month (RM/metric ton) 2,290.00 20.00 0.9
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:

♦ Local futures market sentiment ran high on Wall Street’s overnight rally yesterday. The local futures index staged
a nearly 1% rally for the day.

♦ But just after hitting an intraday high of 1,322.50 (+18.0-pts), the FKLI began to encounter strong profit-taking
activities. The FKLI for Jul contract ended up by 12.00 pts or 0.92% to 1,316.50, with a 7.5-pt gap on the chart.

♦ As the futures index has successfully climbed to above the 10-day SMA of 1,312 yesterday, chances for a
sustainable recovery ahead have increased.

♦ Added with a renewed uptick signal on the short-term momentum indicators, the futures index could extend its
recovery momentum towards the recent high of 1,342 in the near term, if it sustains at above the 10-day SMA.

♦ Beyond that, it will rechallenge the 1,352.5 high recorded in May, which will then boost the medium-term outlook
on the FKLI.

♦ However, a strong follow-through buying momentum is still required today, to avoid a sudden plunge on the
trading sentiment. If not, selling may return to press the futures index lower to below the 10-day SMA and to
cover the technical gap created recently.

♦ Further support is seen near the 40-day SMA of 1,304, closer to the 1,300 psychological level.

Daily Trading Strategy:

♦ Yesterday’s clearance of the 10-day SMA marks a confirmation for further technical recovery ahead.

♦ Still, the FKLI must sustain at above the 10-day SMA to prolong this rebound, in our view.

♦ Meanwhile, the futures index is projected to swing from 1,310 to 1,324 today.

Table 3: FKLI Closings

FKLI (Month)
Contracts Open High Low Close Chg (Pts) Settle Volume Open Interest
Jul 10 1319.00 1322.50 1315.00 1316.50 12.00 1316.50 5578 16243
Aug 10 1319.00 1321.50 1314.50 1314.50 11.50 1314.50 298 267
Sep 10 1316.50 1320.50 1315.00 1316.00 12.50 1316.00 157 538
Dec 10 1317.50 1317.50 1315.50 1315.50 11.50 1316.00 6 244

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:

♦ As the bulls charged forward, the US stocks expanded its rally for a third day on Thursday, buoyed by a fall in
jobless claims as well as improved June sales data from most of the retailers.

♦ According to the US Labour Department, initial claims for jobless benefits dropped by 21,000 to 454,000 in the
week ended July 3, exceeding the expectation of a 12,000 decline.

♦ Retailer, Abercrombie & Fitch surged 7.8% after same-store sales rose 9%, beating expectation of 5.5%. Limited
Brands advanced 2.2% after its sales increased 6%.

♦ Also, investors reacted positively to the IMF’s hike on the 2010 global economic growth forecast.

♦ In response to a decline in the US crude inventories and jobless claims, the US light sweet crude oil futures for
August delivery rose another US$1.37 or 1.8% to US$75.44/barrel.

Technical Interpretations:

Dow Jones Industrial Average (DJIA)

♦ As buying momentum revived in late session, the US DJIA pushed for further gain by posting another solid
120.71 pts or 1.20% gain, ending at 10,138.99 on Thursday.

♦ With that, it has successfully crossed above the 21-day SMA of 10,124 with a third bullish candle on the chart.
Technically, the solid closing with an uptick on the 21-day SMA points to further upside ahead.

♦ But as we stressed earlier, the DJIA must cross above the immediate resistance of 10,150 to confirm a
meaningful technical rebound towards the recent high of 10,594.16 and the major hurdle at 10,850.

♦ If it fails, profit-taking pressure could reemerge quickly with the immediate supports seen at the 21-day SMA and
the 10,000 psychological level.

Nasdaq Composite (Nasdaq)

♦ The Nasdaq Composite index added 15.93 pts or 0.74% to 2,175.40 yesterday on follow-through buying support.

♦ Chart wise, it recorded a “doji-like” candle, indicating the current rebound could take a pause.

♦ Still, based on the recent buoyant recovery strength, it is still capable to retest the 2,190 level and to close a
technical gap near the 21-day SMA of 2,211 soon.

♦ Immediate support is now at 2,100, followed by the 2,000 level.

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Daily Technical Watch:

Chart 7: Magna Daily Chart 8: Magna Intraday

Magna Prima (7617)

Still need to remove RM0.87 and the 40-day SMA of RM0.86 to turn bullish…

♦ The share price of Magna kicked off a powerful rebound after breaking out from the sideways consolidation trend
at between RM0.485 and RM0.60 in Nov 2009.

♦ The stock rallied across the RM0.87 level in Jan 2010 and hit a high of RM1.05 in early Feb 2010, prior to a profit-
taking phase where it congested around the region of RM0.87 to RM1.05.

♦ In late Mar 2010, after it failed its second attempt to cross the RM1.05 tough hurdle, it fell lower to below the 10-
day and 40-day SMAs, prompting a series of selling waves since Apr 2010.

♦ During that period, the stock’s 10-day SMA has fallen to below the 40-day SMA, indicating a medium-term
bearish signal on the chart.

♦ Its technical outlook continued to deteriorate in Jun, when it gave up the key support at RM0.87.

♦ However, in recent trading, after hitting a low of RM0.73, the stock launched a strong technical rebound, rallying
for three straight days in a row, reclaiming the RM0.75 level and closed near the RM0.87 support-trun-resistance
level at RM0.855 yesterday.

♦ Sealed with “Three White Soldiers” candle, and the reversal signals on the momentum indicators, the sotck is due
to stage further climb in the near term.

♦ However, given a tough overhead resistance at RM0.87, and the 40-day SMA near RM0.86, its technical outlook
has yet to turn bullish, in our view.

♦ It must first secure these hurdles, before it can move into the RM0.87 – RM1.05 higher trading range.

Technical Readings:

♦ 10-day SMA: RM0.81

♦ 40-day SMA: RM0.862

♦ Support: IS = RM0.75 S1 = RM0.60 S2 = RM0.485

♦ Resistance: IR = RM0.87 R1 = RM1.05 R2 = RM1.15

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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
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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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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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