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

21 June 2010
MARKET DATELINE

Market Technical Reading

Further Upside Momentum Likely...

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

Local Market Leads:

Lifted by the late push-up in the core heavyweights, the FBM KLCI has pierced through the 40-day SMA of 1,311
on Friday, closing 13.22 pts up or 1.01% to 1,317.69.

The biggest booster to the benchmarks performance came from Tenaga, which shot up 45sen in the last-minute
push-up. Tenaga contributed almost 4pts to the indexs gain on Friday.

With the gain, the local market managed to chalk up gains for a ninth day on Friday, despite a mixed closing in
regional markets.

Overall trading activities improved marginally to 538m shares versus last Thursdays 516m shares. Market
breadth stayed positive, as gainers thrashed losers by 416 to 193.

Regionally, Shanghai Composite slumped 1.8% amid concerns over banks fund-raising plans and the upcoming
mega IPO of Agriculatural Bank of China. But Hang Seng managed to close higher with a 0.74% rise.

Technical Interpretations:

After two days of doji candles registered on the chart, the local benchmark secured a solid bullish candle by
overtaking the 40-day SMA of 1,311 successfully on last Friday.

The fresh technical breakout marks another breakthrough on the technical landscape, where the index has
confirmed its removal of the psychological level of 1,300.

Added with a fresh double buy signal on the chart, the FBM KLCI could push higher today if it can sustain at
above the 40-day SMA of 1,311 today.

Effectively, the index is now trading at the 1,300 - 1,350 range. Its next challenge is to remove the 1,350 hurdle.

Following last Fridays breakout, the immediate support level has been revised to the 40-day SMA, a firmer
stronghold is at the 1,300 resistance-turned-support level and the 10-day SMA near 1,297.

Please read important disclosures at the end of this report.

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 21 June 2010

Daily Trading Strategy:

The FBM KLCI remained resilient, as it advanced its way to above the 40-day SMA of 1,311 last Friday.

With a close successfully at above the 40-day SMA, the FBM KLCI has secured further upside momentum to retest
the key 1,350 resistance level in the near term.

Effectively, it has managed to confirm its breakout of the 1,300 psychological level recently, and it is now trading
within the range of 1,300 1,350.

Nonetheless, it must still sustain at above 1,300 and the 40-day SMA to avoid a sudden surge in profit-taking
activities. Otherwise, it could detour from the current recovery trend.

Meanwhile, given the poor volume participation of late, follow-through buying momentum will likely be limited
going forward. As such, we do not expect the index to remove the 1,350 level soon.

Any retreat should be well contained at the 40-day SMA, followed by the 1,300 psychological level and the 10-day
SMA of 1,297.

Table 2 : Major Indices & Commodities

Table 1 : Daily Statistics Change Change
Scoreboard 14 June 15 June 16 June 17 June 18 June Local Key Indices Closing
(Pts) (%)
Gainers 302 296 494 295 416 FBM KLCI 1,317.69 13.22 1.0
Losers 242 291 174 277 193 FBM 100 8,652.43 81.51 1.0
Unchanged 269 270 240 294 278 FBM ACE 3,875.73 51.30 1.3
Untraded 556 512 460 502 481 Major Overseas
Indices
Market Cap Dow Jones 10,450.64 16.47 0.2
Turnover Nasdaq 2,309.80 2.64 0.1
(mln shares) 502 512 663 516 538 S&P 500 1,117.51 1.47 0.1
Value (RM FTSE 5,250.84 -3.05 -0.1
mln) 665 891 1,012 757 1,160 Hang Seng 20,286.71 148.31 0.7
Jakarta Composite 2,929.59 38.49 1.3
Currency Nikkei 225 9,995.02 -4.38 0.0
MYR vs US Seoul Composite 1,711.95 4.03 0.2
Dollar 3.2600 3.2690 3.2590 3.2640 3.2490 Shanghai Composite 2,513.22 -47.03 -1.8
SET 791.85 2.51 0.3
Source: RHBInvest & Bloomberg FT Straits Times 2,833.40 -10.55 -0.4
Taiwan Weighted 7,493.11 -22.67 -0.3
India Sensex 17,570.82 -45.87 -0.3
Major Commodities
NYMEX Crude Oil
(US$/barrel) 77.18 0.39 0.5
MDEX CPO Third
Month (RM/metric ton) 2,400.00 2.00 0.1
US Interest Rate Current Last Updated
27-28 Apr
Overnight Fed Fund Rate 0-0.25% Unch
2010
Next FOMC meeting 22-23 June 2010

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 21 June 2010

Chart 3: FKLI Daily Chart 4: FKLI Intraday

Technical Interpretations:

Following last Thursdays clearance of the 40-day SMA near 1,310, the KL futures market recorded its
confirmation candle on Friday, as it marched higher to end the day at 1,318.5.

Despite a volatile session it was, the FKLI for June contract managed to gain 5.50 pts or 0.42% for the day, and
extended its winning streaks for a third consecutive day on Friday.

And backed by a positive confirmation candle, as well as the recent upbeat momentum readings, the futures
index still has further legs to climb this week.

This means a further run-up to close a 2.5-pt technical gap near 1,325.0 1,327.5 can be expected early this
week.

Thereafter, a rechallenge of Mays peak at 1,352.50 will be underway.

However, until it can take out Mays high of 1,352.50 convincingly, we expect strong resistance to reappear near
the 1,350 level.

On the downside, the 40-day SMA will provide an immediate support to the FKLI, followed by a lower technical
gap at 1,302.0 1,305.0 near the 1,300 psychological level. The 10-day SMA of 1,298 will double the defence for
the futures index.

Daily Trading Strategy:

Last Fridays positive confirmation candle signals a positive near-term technical outlook on the FKLI.

This should pave way for a further upside towards a technical gap near 1,325.0 1,327.5 and even to the solid
obstacle at 1,350 soon.

Traders can turn to long position, with a tight cut-loss point at the 40-day SMA.

We expect the futures index to trade from 1,315 to 1,330 today.

Table 3: FKLI Closings

FKLI (Month)
Contracts Open High Low Close Chg (Pts) Settle Volume Open Interest
Jun 10 1310.50 1320.00 1310.00 1318.50 5.50 1318.50 5421 17837
Jul 10 1310.00 1319.00 1310.00 1319.00 7.50 1319.00 440 538
Sep 10 1307.00 1317.00 1307.00 1317.00 7.00 1317.00 95 464
Dec 10 1309.50 1316.00 1309.50 1315.50 6.00 1315.50 50 235

Source: Bursa Malaysia

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 21 June 2010

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

US Market Leads:

US markets edged higher in a choppy session amid a quadruple-witching on Friday, as investors slowly returned
amid hopes that the recent Eurozone debt crisis is waning.

In Europe, European officials said Greece was heading towards cutting its deficit. Meanwhile, the EU added that
they would release results of bank "stress tests" soon.

Energy stocks, like ExxonMobil took the lead by climbing higher in the wake of a rebound in crude oil prices to
above US$77/barrel, as well as buying support picked up in the recent beaten-down energy stocks.

Stocks also got a boost from Caterpillars positive remarks on Asia after the heavy equipment giant posted a 38%
yoy growth in machine sales in Asia for May.

After Thursdays mild setback, the US light sweet crude oil futures for July delivery rebounded by US$0.39 or
0.5% to US$77.18/barrel.

Technical Interpretations:

Dow Jones Industrial Average (DJIA)

With another 16.47 pts or 0.16% gain to end at 10,450.64 on Friday, the US DJIA managed to seal its second
week of gain on Friday.

As the index closed of its intraday high of 10,483.44, it posts a small risk of a technical pullback early this week.

However, if it continues to gather fresh buying support, an extension of the current rebound is still possible with
an upside potential towards the upper band of the current trading range of 10,150 10,850.

Meanwhile, its immediate supports are still at the 21-day SMA near the solid support level at 10,150.

Nasdaq Composite (Nasdaq)

The recent rebound in the Nasdaq Composite entered a seventh day, as it added 2.64 pts or 0.11% to 2,309.80
on Friday.

However, closed with a doji candle on the chart, the index faces more uncertainties ahead.

Unless it can remove the 2,330 level quickly, profit-taking pressure is likely to return soon near 2,330 to pull it
down towards the 21-day SMA near 2,241. Key support is only seen at 2,190.

Beyond 2,330, the index sees a higher resistance at 2,470.

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

KKB Engineering (9466)

Further upside possible if it sustains at above RM1.80

After penetrating the tough resistance level at RM1.15 in Feb 2010, the upward momentum of KKB accelerated
and the share price pierced through another resistance level at RM1.43.

The stock reached the RM1.80 region in Mar 2010, but congested at around the resistance zone for another two
months, before it finally removed the hurdle in May

Upon breakout, the stock shot up to a fresh year high of RM2.25, near a tough hurdle at RM2.20.

However, as the stock fails to sustain at above RM2.20, it began a correction phase and headed towards the
RM1.43 support region.

Lately, the stock kicked off a technical rebound, removing both the 10-day and the 40-day SMAs, before ending
last Friday at RM1.91, at above the RM1.80 resistance level.

Added with a positive bullish candle, upbeat momentum readings and the crossing of RM1.80 technical hurdle,
the stock is poised to see further upside this week.

If the buying support persists and the stock sustains at above RM1.80, it will retest the RM2.20 tough hurdle and
the all-time high level of RM2.25 soon.

Only if it drops to below RM1.80 will it trigger a profit-taking leg on the recent rally, in our view.

Technical Readings:

10-day SMA: RM1.547

40-day SMA: RM1.731

Support: IS = RM1.80 S1 = RM1.43 S2 = RM1.15

Resistance: IR = RM2.20

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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 investors 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.

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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,
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 RHBRIs 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
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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 RHBRIs 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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