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

12 March 2010
MARKET DATELINE

Market Technical Reading

In Cautious Mode!

Chart 1: KLCI Daily Chart 2: KLCI Intraday

Local Market Leads:

♦ The local bourse finished sharply lower yesterday, weighed down by the T+3 selling pressure from Monday’s
1.16bn shares traded, as well as fears of a possible tightening move in China.

♦ Earlier, the FBM KLCI climbed to another fresh 2-year high at 1,334.34 following another overnight rebound in
the Wall Street.

♦ But the buying momentum fizzled out in mid-morning when Chinese markets, Shanghai Composite and Hang
Seng staged a negative reversal on fears that China’s higher-than-expected inflation data could spark more
tightening measures from Beijing.

♦ Even with a recovery in Chinese markets later in the afternoon, the FBM KLCI remained under pressure, due to
the T+3 selling pressure on big cap stocks. For the day, it closed 6.79 pts or 0.51% lower at 1,321.43.

♦ Compared to Wednesday’s 934m shares, turnover slowed to 792m shares yesterday. There were 440 decliners
against 274 advancers.

Technical Interpretations:

♦ With the steep reversal from the fresh 2-year high of 1,334.34, the FBM KLCI turned negative and ended with a
“negative harami” candle yesterday.

♦ The candlestick pattern indicates a slowdown in the recent bullish momentum.

♦ Plus the downtick in the momentum indicators, a near-term technical pullback is in sight.

♦ This means it could trend lower to cover a technical gap at the 1,300.74 - 1,312.18 region soon.

♦ But our medium-term bullish view stays intact, so long as the benchmark can sustain at above the 1,300
psychological level.

♦ To revive its bullish momentum, the index must remove yesterday’s high of 1,334.34.

Please read important disclosures at the end of this report.

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 12 March 2010

Daily Trading Strategy:

♦ Yesterday’s sharp negative reversal on the FBM KLCI calls for a temporary consolidation ahead.

♦ Dampened further by the T+4 forced-selling activities from Monday’s 1.16bn shares high volume, the index could
see follow-through retracement towards a lower technical gap near the 1,300.74 - 1,312.18 region soon.

♦ Apart from that, with the March school holiday just around the corner, coupled with the upcoming US FOMC
meeting next Tuesday, investors are likely to take a cautious stance for the near term, in our view.

♦ Nevertheless, we stay bullish on the FBM KLCI’s medium-term outlook on expectation that the 1,300
psychological level will cap immediate bearish momentum.

♦ Following yesterday’s sharp reversal, the 1,334.34 high will become the immediate resistance for the index,
followed by the upper technical gap near 1,354.79.

♦ Medium-term target resistance remains at 1,390.

Table 2 : Major Indices & Commodities

Table 1 : Daily Statistics Change Change
Scoreboard 5 Mar 8 Mar 9 Mar 10 Mar 11 Mar Local Key Indices Closing
(Pts) (%)
Gainers 547 583 253 451 274 FBM KLCI 1,321.43 -6.79 -0.5
Losers 194 194 455 292 440 FBM 100 8,639.80 -39.91 -0.5
Unchanged 236 256 258 270 276 FBM ACE 4,232.13 -30.13 -0.7
Untraded 359 304 375 330 354 Major Overseas
Indices
Market Cap Dow Jones 10,611.84 44.51 0.4
Turnover Nasdaq 2,368.46 9.51 0.4
(mln shares) 942 1,161 798 934 792 S&P 500 1,150.24 4.63 0.4
Value (RM FTSE 5,617.26 -23.31 -0.4
mln) 1,564 2,259 1,453 1,619 1,347 Hang Seng 21,228.20 19.91 0.1
Jakarta Composite 2,676.52 6.30 0.2
Currency Nikkei 225 10,664.95 101.03 1.0
MYR vs US Seoul Composite 1,656.62 -5.62 -0.3
Dollar 3.3620 3.3380 3.3410 3.3180 3.3170 Shanghai Composite 3,051.28 2.35 0.1
SET 725.95 5.11 0.7
Source: RHBInvest & Bloomberg FT Straits Times 2,873.91 11.62 0.4
Taiwan Weighted 7,749.66 -29.42 -0.4
India Sensex 17,167.96 69.63 0.4
Major Commodities
NYMEX Crude Oil
(US$/barrel) 82.11 0.02 0.0
MDEX CPO – Third
Month (RM/metric ton) 2,660.00 -25.00 -0.9
US Interest Rate Current Last Updated
Overnight Fed Fund 26-27 Jan
0-0.25% Unch
Rate 2010
Next FOMC meeting 16 Mar 2010

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 12 March 2010

Chart 3: FKLI Daily Chart 4: FKLI Intraday

Technical Interpretations:

♦ The FKLI staged a surprise reversal and gave up the entire gain registered on Wednesday, after hitting a more
than 2-year high of 1,337.0 in early yesterday.

♦ In fact, selling pressure excerbated in the afternoon, partly due to the poor start in the European markets, as well
as a weaker performance on US futures market.

♦ The FKLI for Mar contract settled at 1,321.00, down sharply by 12.00 pts or 0.90%.

♦ Despite the earlier “bullish engulfing” candle, it formed a bearish candle to indicate follow-through selling
activities ahead.

♦ Its recent bullish momentum also abated, as both the stochastic oscillators and 14-day RSI have ticked
downward from the “very overbought” and “overbought” region respectively.

♦ If the FKLI fails to launch an instant rebound today, it will see further downside to the lower technical gap near
1,305 - 1,311 region.

♦ Having said that, we remain convinced that the recent bullish medium-term technical breakout from the 1,300
psychological level has remained intact.

♦ As such, we expect 1,300 to buffer any negative momentum in the near term.

♦ Its immediate resistance stays at 1,337, followed by the upper technical gap at 1,348.

Daily Trading Strategy:

♦ As traders were caught off guard with yesterday’s unexpected reversal, trading sentiment is likely to turn
cautious today.

♦ Though we maintain that the 1,300 resistance-turn-support level should cap further downside, we reckon short-
term traders will cut loss if selling momentum continues today.

♦ Today, a fluctuation between 1,311 and 1,328 can be expected on the FKLI.

Table 3: FKLI Closings

FKLI (Month)
Contracts Open High Low Close Chg (Pts) Settle Volume Open Interest
Mar 10 1332.50 1337.00 1318.00 1321.00 -12.00 1321.00 6657 20023
Apr 10 1333.00 1335.00 1317.00 1318.50 -12.50 1318.50 465 634
Jun 10 1326.00 1333.00 1315.00 1319.50 -7.00 1318.50 208 572
Sep 10 1329.00 1333.00 1315.00 1317.50 -8.50 1318.00 53 201

Source: Bursa Malaysia

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 12 March 2010

Chart 5: US Dow Jones Industrial Average (DJIA) Daily Chart 6: US Nasdaq Composite Daily

US Market Leads:

♦ Wall Street expanded its gains for a third day on Thursday, as a late rally led by banks outweighed concerns of a
possible interest rate hike in China to cool down its overheating economy.

♦ Financial stocks received a boost from Citigroup’s CEO Vikram Pandit predicted the bank is "well positioned to
return to sustained profitability”. Citigroup’s share shot up another 5.6%, extending its recent winning streaks.

♦ This has offset the market’s early weakness which was triggered by renewed worries over more tightening
measures in China following its inflation spiked to a 16-month high.

♦ Meanwhile, healthcare-related stocks, including Aetna (+3.3%) climbed higher on speculation that Obama’s
healthcare reform could meet an obstacle.

♦ On the commodity market, the US light sweet crude oil for Apr delivery inched up 2 cents to US$82.11/barrel.

Technical Interpretations:

Dow Jones Industrial Average (DJIA)

♦ The US DJIA made a late comeback and bounced from its early decline. It rose 44.51 pts or 0.42% to 10,611.84
for the day.

♦ As a result, with a positive candle on the chart and the improved momentum readings, it could be well in place to
extend its gains in coming sessions.

♦ But first, a removal of the recent high of 10,612.60 is crucial for it to rechallenge the Jan high of 10,729.89 and
the key 10,850 resistance hurdle.

♦ The 21-day SMA near 10,374 will continue to be the support of the current uptrend.

Nasdaq Composite (Nasdaq)

♦ As the bulls pressed forward, the Nasdaq Composite Index extended its rally by climbing another 9.51 pts or
0.40% to 2,368.46 yesterday.

♦ With another solid positive candle, this points to further gains toward its next upside target at 2,470, even though
the short-term momentum indicators have reached the “overbought” region.

♦ On the downside, the resistance-turn-support of the 2,330 level will buffer strong profit-taking pressure.

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Daily Technical Watch:
Chart 7: Unisem Daily Chart 8: Unisem Intraday

Unisem (M) Bhd (5005)

Possible setbacks towards the 40-day SMA and RM2.10 soon…

♦ The technical chart for Unisem turned bullish following a successful penetration of a strong overhead resistance
level of RM1.80 in early Jan 2010.

♦ The breakout rally lifted the stock to the RM2.60 high in mid-Jan, before succumbing to a steep correction swing
shortly afterward.

♦ From the RM1.86 low recorded in early Feb, the stock engineered another impressive rebound and successfully
avoided a negative crossover between the 10-day and 40-day SMAs in late Feb.

♦ The recovery sent the stock to a high of RM2.56, but failed to challenge the RM2.60 hurdle.

♦ This prompted fresh profit-taking pressure on the stock, dargging it to below the RM2.40 support level and the
10-day SMA of RM2.378 yesterday. It tumbled 12 sen to end at RM2.35 for the day.

♦ As it has lost its key support with a third negative candle, plus a sharp retreat in the short-term momentum
readings, the stock is now at high risk for more setbacks to the 40-day SMA of RM2.233 and the next support
level at RM2.10 soon.

♦ It must at least stabilise at above the 40-day SMA and the RM2.10 level to avoid further selling pressure, in our
view.

Technical Readings:

♦ 10-day SMA: RM2.378

♦ 40-day SMA: RM2.233

♦ Support: IS = RM2.10 S1 = RM1.80 S2 = RM1.59

♦ Resistance: IR = RM2.40 R1 = RM2.60

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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
of persons who receive it. The securities discussed in this report may not be suitable for all investors. RHBRI recommends that investors independently evaluate
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“Connected Persons” means any holding company of RHBRI, the subsidiaries and subsidiary undertaking of such a holding company and the respective directors,
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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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