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

6 April 2010
MARKET DATELINE

Market Technical Reading

Robust Rotational Plays To Return Soon...

Chart 1: KLCI Daily Chart 2: KLCI Intraday

Local Market Leads:

♦ Taking cues from the largest increase in the US monthly jobs in nearly 3 years on last Friday, the local market
expanded its bullish uptrend for the tenth day yesterday, on its longest winning streak in more than a decade.

♦ Apart from the encouragingly US jobs reports, local investors were encouraged by the merger & acquisition news
flow as well as a further appreciation in the ringgit. The ringgit surged against the US dollar to 3.2285 from last
Friday’s 3.2460, the currency’s strongest level since Jul 2008.

♦ HLBank went up 20sen after EONCap’s (+2sen) Board of Directors said it would table HL Bank’s revised cash offer
of RM5.06bn to shareholders in a general meeting. Meanwhile, Pos advanced further by 15sen on Khazanah’s
plan to dispose of its stake in the company.

♦ Led by gains in the banking heavyweights, like CIMB (+16sen) and PBBank (+20sen), the FBM KLCI gained
another 5.81 pts or 0.43% to 1,341.75. Trading volume improved for a second day with 1.05bn shares changing
hands. Market breadth remained positive, as 403 counters up outpaced 322 counters down.

Technical Interpretations:

♦ As the bulls pushed further, the FBM KLCI opened with a technical gap-up, climbed to an intraday high of
1,342.20, before settling the day with a small positive candle at 1,341.75.

♦ Backed by the constant upbeat momentum readings, a further run-up can be expected in the near term.

♦ This will set a stage for the FBM KLCI to march towards a previous technical gap at 1,344.46 – 1,354.79 soon.

♦ If it manages to cover the technical gap, its will push for the medium-term target of 1,390 next.

♦ In the short term, the immediate support can be expected near yesterday’s technical gap at 1,337.21 – 1,339.28.
A stronger level is at the supportive 10-day SMA near 1,321.

Please read important disclosures at the end of this report.

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Daily Trading Strategy:

♦ Technically, yesterday’s closing with another positive candle has confirmed last Friday’s chart breakout from Mar’s
high of 1,334.34. This suggests that the FBM KLCI’s current uptrend remains firmly intact.

♦ Aided with the daily turnover that has recovered to above the 1.0bn mark, the trading sentiment will likely
improve further.

♦ This means with stronger trading interests amongst the retail and institutional investors, the FBM KLCI has a
brighter chance to fill-up the pevious technical gap at 1,344.46 – 1,354.79 in the near term.

♦ In fact, we expect the healthy rotational play to return, with more lower liner stocks attracting fresh buying
interests.

♦ All these will eventually lead the index towards our medium-term target at 1,390, in our view.

Table 2 : Major Indices & Commodities

Table 1 : Daily Statistics Change Change
Scoreboard 30 Mar 31 Mar 1 Apr 2 Apr 5 Apr Local Key Indices Closing
(Pts) (%)
Gainers 279 275 423 430 403 FBM KLCI 1,341.75 5.81 0.4
Losers 486 441 316 244 322 FBM 100 8,842.19 42.66 0.5
Unchanged 225 274 295 306 289 FBM ACE 4,267.32 13.00 0.3
Untraded 357 362 319 373 339
Major Overseas
Market Cap Indices
Turnover Dow Jones 10,973.55 46.48 0.4
(mln shares) 1,047 961 807 828 1,053 Nasdaq 2,429.53 26.95 1.1
Value (RM S&P 500 1,187.44 9.34 0.8
mln) 1,331 1,540 1,349 1,180 1,308 FTSE 5,744.89 Closed Closed
Hang Seng 21,537.00 Closed Closed
Currency Jakarta Composite 2,887.25 57.25 2.0
MYR vs US Nikkei 225 11,339.30 53.21 0.5
Dollar 3.2670 3.2600 3.2560 3.2460 3.2285 Seoul Composite 1,724.99 1.50 0.1
Shanghai Composite 3,157.96 Closed Closed
Source: RHBInvest & Bloomberg SET 808.15 7.00 0.9
FT Straits Times 2,968.38 25.36 0.9
Taiwan Weighted 8,025.93 Closed Closed
India Sensex 17,935.68 243.06 1.4
Major Commodities
NYMEX Crude Oil
(US$/barrel) 86.62 1.75 2.1
MDEX CPO – Third
Month (RM/metric ton) 2,530.00 -29.00 -1.1
US Interest Rate Current Last Updated
Overnight Fed Fund 16 Mar
0-0.25% Unch
Rate 2010
Next FOMC meeting 27-28 Apr 2010

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 6 April 2010

Chart 3: FKLI Daily Chart 4: FKLI Intraday

Technical Interpretations:

♦ The local futures market finished higher for the third day on Monday, underpinned by a stream of positive news
flows locally and abroad.

♦ However, the reemergence of mild profit-taking activities forced the futures index to trim its gains in the
afternoon, after a successful closure of its previous technical gap at 1,348.

♦ For the day, the FKLI for Apr contract rose 3.50 pts or 0.26% to 1,346.00, off its high of 1,348.50.

♦ On the chart, the futures index registered a “star-like” candle, indicating further profit-taking activities likely in
the near term.

♦ However, if the futures index manages to register another positive candle today, and surpasses yesterday’s high
of 1,348.50, it will resume its uptrend.

♦ This will propel the FKLI further towards its medium-term target at 1,390.

♦ Immediate support for the FKLI is near the 10-day SMA of 1,325, followed by a stronger support region at the
recent 7-point technical gap at 1,320.50 - 1,327.50.

Daily Trading Strategy:

♦ The FKLI encountered some profit-taking pressure after covering the technical gap at 1,348, but as it still
registered gains, the general trend of the FKLI remains upward.

♦ However, traders can expect supports near the 10-day SMA of 1,325, and a gap at 1,320.50 - 1,327.50.

♦ They should turn more aggressive if it records a fresh year high today. This will lead it towards 1,390 in the
longer run.

♦ The futures index is expected to fluctuate from 1,340 to 1,355 today.

Table 3: FKLI Closings

FKLI (Month)
Contracts Open High Low Close Chg (Pts) Settle Volume Open Interest
Apr 10 1344.50 1348.50 1343.00 1346.00 3.50 1346.00 2502 18226
May 10 1347.00 1348.00 1344.00 1346.00 3.50 1346.50 115 328
Jun 10 1347.50 1348.50 1343.00 1344.50 3.00 1345.50 66 486
Sep 10 1346.50 1347.00 1342.50 1342.50 2.50 1344.00 24 177

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:

♦ Bolstered by the strong turnaround in the US labour market as well as other positive economic reports, the Wall
Street resumed trading on Monday, ended higher at a fresh 18-month high.

♦ Investors rushed in to snap up stocks in reaction to the largest increase in jobs in nearly 3 years.

♦ Sentiment improved further when news reported that pending sales of existing homes unexpectedly jumped
8.2% in Feb, against expectation of a 0.5% decline. Separately, the Institute for Supply Management (ISM) said
its services index rose to 55.4 in Mar from 53.0 in Feb, touching its highest level since May 2006.

♦ Technology stocks rallied the most after Apple Inc advanced 1.1% to its all-time closing high. It said it sold more
than 300,000 iPads on the first day.

♦ With the latest round of buoyant economic data lifting optimism over the US economic recovery pace, the US light
sweet crude oil futures for May delivery shot up US$1.75 or 2.1% to US$86.62/barrel.

Technical Interpretations:

Dow Jones Industrial Average (DJIA)

♦ The US DJIA extended its bullish momentum for a second day, as it settled at 10,973.55 with a 46.48 pts or
0.43% gain on Monday.

♦ By hitting a fresh year high with a second positive candle, added with a fresh “buy” signal on the stochastic
oscillators, the Dow is ready to rally towards the 11,000 psychological level and the next upside target at 11,250
in the near term.

♦ Strong immediate support is pegged at 10,850, followed by the 21-day SMA of 10,752. The gains also marked a
breakout from the previous trading range of 10,150 - 10,850.

Nasdaq Composite (Nasdaq)

♦ The Nasdaq Composite Index also surged 26.95 pts or 1.12% to 2,429.53 on Monday, as it chalked up a bullish
candle to indicate more upside ahead this week.

♦ Supported further by the upticks in both the short-term momentum indicators, there is a great chance for it to
expand its rally towards 2,470 from the recent rangebound consolidation.

♦ And to do that, it needs to penetrate above the Mar’s high of 2,432.25. In the meantime, it will find solid supports
near the 21-day SMA of 2,383 and the resistance-turn-support level of 2,330.

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

Lion Industries Corporation (4235)

Could rechallenge the RM2.16 higher resistance soon…

♦ The share price of LionInd turned positive after a rebound from a low of RM0.57 in Mar 2009, before a
consolidation in May to Jul near the RM1.30 level.

♦ It resumed its uptrend to above RM1.60 in Aug 2009, but turned into a downtrend after touching the RM1.74
high. It only stabilised near the RM1.30 region in Dec 2009.

♦ The stock relaunched another rally to above the RM1.60 level in early Jan 2010, but this time round, it has
managed to sustain at above RM1.60.

♦ Following weeks of congestion at above the RM1.60 support level, it regenerated another push and pierced
through the RM1.87 tough resistance level yesterday.

♦ Given a huge bullish candle, with a 2sen gap-up on the chart, the stock is indicating a congestion breakout from
the RM1.87 technical hurdle.

♦ Coupled with the upbeat momentum readings and the uptick on the 10-day SMA near RM1.79, the stock could
rechallenge the RM2.16 higher resistance soon.

♦ Upon removing this hurdle, it will move into a higher trading range of RM2.16 to RM2.51, in our view.

♦ For now, the resistance-turn-support level of RM1.87 will cap short-term profit-taking pressure.

Technical Readings:

♦ 10-day SMA: RM1.789

♦ 40-day SMA: RM1.708

♦ Support: IS = RM1.87 S1 = RM1.60 S2 = RM1.30

♦ Resistance: IR = RM2.16 R1 = RM2.51 R2 = RM2.78

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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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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
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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.

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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