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 May 2010
MARKET DATELINE

Market Technical Reading

The FBM KLCI Is Ready To Trigger A Correction Now...

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

Local Market Leads:

♦ As fears over a contagion effect from the Greece debt crisis hit the global markets badly yesterday, Bursa
Malaysia extended its pullback for a second day on Wednesday.

♦ Asian markets bore another strong selling wave in the early session following massive selloff in the overnight
European and US markets amid speculation that Spain and Portugal could face debt default threats soon.

♦ Though bargain-hunting support picked up slowly in the afternoon after a positive reversal in the Shanghai
Composite (+0.77%), most of the other markets remained depressed on weak opening in the European markets.
As a result, Hang Seng shed 2.10%, while FTSTI slumped 1.41%.

♦ As for the local market, the FBM KLCI managed to secure mild buying support after sliding as much as 17.64 pts
in the early session. At the close, the benchmark finished down only 7.24 pts or 0.54% to 1,335.65.

♦ Overall turnover increased to 861m shares, compared to Tuesday’s 767m shares. There were 531 decliners
against 193 advancers.

Technical Interpretations:

♦ After falling sharply lower to below the 10-day SMA of 1,339, the FBM KLCI recovered from a low of 1,325.25
near the 40-day SMA of 1,327 on mild bargain-hunting support.

♦ This led to a formation of a huge bullish candle, suggesting a possible further recovery today.

♦ But as it still closed below the 10-day SMA yesterday, and short-term momentum readings remained bearish, any
rebound is not likely to be sustainable, in our opinion.

♦ In fact, upside will be limited by the 10-day SMA and a 5.25-pts technical gap created yesterday near 1,341.90.

♦ On the other hand, should the index resume its selling activities, it will retest the 40-day SMA and may even
continue its downtrend to the lower supports at the technical gap of 1,305 and the psychological 1,300 level.

Please read important disclosures at the end of this report.

A comprehensive range of market research reports by award-winning economists and analysts are exclusively Page 1 of 6
available for download from www.rhbinvest.com
 6 May 2010

Daily Trading Strategy:

♦ Yesterday’s breakdown from the 10-day SMA has confirmed our earlier worry that the “double top” formation on
the FBM KLCI near the 1,347 previous high level would trigger a pullback on the local market.

♦ But as the bargain-hunting activities returned mildly from yesterday’s low near the 40-day SMA of 1,327, with a
positive candle on the chart, the market may attempt to stage a technical rebound today.

♦ Having said that, we believe that the recent retreat from the “double top” formation region of 1,347 – 1,350 has
damaged the technical landscape. And this means the index is more ready to trigger a correction now.

♦ Moreover, as we maintain that the 10-day SMA will become a support-turn-resistance level for the FBM KLCI,
rebound should be capped by the 10-day SMA at 1,339 and a 5.25-pt gap near 1,341.90.

♦ Immediate lower support is seen at the 40-day SMA, followed by the 1,305 and 1,300 levels.

Table 2 : Major Indices & Commodities

Table 1 : Daily Statistics Change Change
Scoreboard 29 Apr 30 Apr 3 May 4 May 5 May Local Key Indices Closing
(Pts) (%)
Gainers 347 436 254 176 193 FBM KLCI 1,335.65 -7.24 -0.5
Losers 363 265 456 555 531 FBM T100 8,753.93 -50.83 -0.6
Unchanged 279 321 268 285 257 FBM ACE 4,023.83 -82.39 -2.0
Untraded 378 347 395 354 389
Major Overseas
Market Cap Indices
Turnover Dow Jones 10,868.12 -58.65 -0.5
(mln shares) 899 889 771 767 861 Nasdaq 2,402.29 -21.96 -0.9
Value (RM S&P 500 1,165.87 -7.73 -0.7
mln) 988 1,475 1,031 1,069 1,522 FTSE 5,341.93 -69.18 -1.3
Hang Seng 20,327.54 -435.51 -2.1
Currency Jakarta Composite 2,846.24 -112.78 -3.8
MYR vs US Nikkei 225 11,057.40 Closed Closed
Dollar 3.1960 3.1820 3.2085 3.2100 3.2310 Seoul Composite 1,718.75 Closed Closed
Shanghai Composite 2,857.15 21.87 0.8
Source: RHBInvest & Bloomberg SET 796.86 Closed Closed
FT Straits Times 2,860.31 -40.87 -1.4
Taiwan Weighted 7,696.90 -233.87 -2.9
India Sensex 17,087.96 -49.18 -0.3
Major Commodities
NYMEX Crude Oil
(US$/barrel) 79.97 -2.77 -3.3
MDEX CPO – Third
Month (RM/metric ton) 2,530.00 15.00 0.6
US Interest Rate Current Last Updated
Overnight Fed Fund 27-28 Apr
0-0.25% Unch
Rate 2010
Next FOMC meeting 22-23 June 2010

A comprehensive range of market research reports by award-winning economists and analysts are exclusively Page 2 of 6
available for download from www.rhbinvest.com
 6 May 2010

Chart 3: FKLI Daily Chart 4: FKLI Intraday

Technical Interpretations:

♦ After selling down heavily in the early session amid a 2% slide on the US DJIA overnight, the FKLI kicked off a
steady recovery and narrowed its losses on Wednesday.

♦ From the low of 1,321.50 (-17 pts), the FKLI for May contract worked its way up on fresh bargain-hunting
activities and closed the day losing just 6.50 pts or 0.49% at 1,332.00.

♦ The closing with a “hammer-like” candle points to a potential technical rebound today.

♦ Leveraged further by the immediate-term support of the 40-day SMA near 1,328, the FKLI might attempt to
cover a 6.5-pts technical gap at 1,338.50 near the 10-day SMA of 1,338.

♦ However, given a “double sell” signal on the momentum indicators, we do not expect a strong rebound today, as
the 10-day SMA is expected to limit recovery potential going forward.

♦ In fact, we expect the futures index to continue its downswing if the selling resumes, possibly near the 10-day
SMA in the near term.

♦ Should it lose the 40-day SMA due to the return of selling momentum, it will speed-up the retracement move
towards the 1,300 psychological level.

Daily Trading Strategy:

♦ Based on yesterday’s candlestick pattern, the FKLI is poised to stage a further recovery today.

♦ But the rebound should be capped by the 10-day SMA of 1,338.

♦ Unless the FKLI reclaims the 10-day SMA and the recent high of 1,352.50, traders should keep their negative
tone on the futures market sentiment, in our view.

♦ The trading band for the FKLI is likely to range from 1,328 to 1,339 today.

Table 3: FKLI Closings

FKLI (Month)
Contracts Open High Low Close Chg (Pts) Settle Volume Open Interest
May 10 1327.50 1332.00 1321.50 1332.00 -6.50 1332.00 11996 19668
Jun 10 1327.00 1331.50 1321.00 1331.00 -7.00 1331.00 459 578
Sep 10 1327.00 1331.50 1322.50 1331.00 -7.50 1331.00 99 217
Dec 10 1325.00 1332.00 1325.00 1331.50 -7.50 1331.50 8 61

Source: Bursa Malaysia

A comprehensive range of market research reports by award-winning economists and analysts are exclusively Page 3 of 6
available for download from www.rhbinvest.com
 6 May 2010

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

US Market Leads:

♦ Overnight US stocks extended its bearish momentum for a second day on Wednesday, as escalating European
debt crisis overshadowed positive economic data.

♦ Moody's Investors Service warned of a possible downgrade on Portugal’s debt rating, while European Central
Bank council member Axel Weber said there is a threat of “grave contagion effects”.

♦ In Greece, protests against the government’s austerity measures turned violent.

♦ As a result, this shrugged off positive news on the US service sector and jobs data. The Institute for Supply
Management’s service index held steady at a nearly 4-year high of 55.4 in Apr, while US ADP data showed that
private employers added 32,000 jobs in Apr.

♦ On the commodity markets, the US light sweet crude oil futures for June delivery breached below the $80 level
by falling another US$2.77 or 3.35% to end at US$79.97/barrel as the US dollar continued to gather strength.

Technical Interpretations:

Dow Jones Industrial Average (DJIA)

♦ Last night, the US DJIA continued its selling momentum by losing 58.65 pts or 0.54% to 10,868.12.

♦ Ending with another negative candle, plus the continued weakness on the momentum readings, it could stand to
lose the 10,850 important level soon on follow-through selling pressure.

♦ Losing 10,850 will signal a correction mode for the Dow with a lower trading zone of between 10,150 and 10,850.

♦ For now, the 21-day SMA of 11,053 will stay as a strong immediate resistance.

Nasdaq Composite (Nasdaq)

♦ As selling accelerated, the Nasdaq Composite Index slipped another 21.96 pts or 0.91% to 2,402.29 yesterday.

♦ On the chart, it chalked up a possible “morning star” candle to suggest a possible rebound ahead.

♦ Having said that, given the current bearish technical readings as well as the recent technical breakdown to below
the 21-day SMA of 2,477 and the 2,470 key level, any rebound is likely to be weak and short-lived.

♦ Instead, the risk of extending its losing streak towards the next support target of 2,330 remains high.

A comprehensive range of market research reports by award-winning economists and analysts are exclusively Page 4 of 6
available for download from www.rhbinvest.com
Daily Technical Watch:
Chart 7: Evergrn Daily Chart 8: Evergrn Intraday

Evergreen Fibreboard (5101)

Further retreat if it fails to recover back to above RM1.59 and the 10-day SMA…

♦ The share price of Evergrn began its uptrend in Apr 2009, when the 10-day SMA cut above the 40-day SMA to
highlight a medium-term bullish sign on the chart.

♦ Thereafter, the stock trended along the UTL and was constantly supported by the 40-day SMA.

♦ In Oct 2009, its upward momentum intensified as it rallied through the RM1.10 and RM1.34 resistance levels,
before reaching a high of RM1.62 in Nov 2009.

♦ Since then, the stock encountered more profit-taking activities and started to move sideways, though it still
managed to chalk-up new highs at RM1.76 and RM1.80 respectively in Jan and Apr 2010.

♦ Lately, the stock has been riding on a retreating trend, and fell below the RM1.59 strong level early this week.

♦ Closed with three negative candles in the last four trading days, and newly cutting the 10-day SMA to below the
40-day SMA, trading sentiment is likely to stay negative in the near term.

♦ If it fails to recover to above the RM1.59 level, also near the 10-day SMA, it will see further retreat to the UTL
near the RM1.34 solid support level.

♦ Only from the UTL, will we expect a significant technical rebound on the stock to rechallenge the RM1.59 level.

♦ The additional lower support level is at RM1.10.

Technical Readings:

♦ 10-day SMA: RM1.592

♦ 40-day SMA: RM1.633

♦ Support: IS = RM1.34 S1 = RM1.10

♦ Resistance: IR = RM1.59 R1 = RM1.75 R2 = RM1.86

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

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