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 August 2010
MARKET DATELINE

Market Technical Reading

Another Round Of Rally Once Consolidation Ends…

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

Local Market Leads:

♦ Bursa Malaysia extended its consolidation mode by easing lower for a second day on Thursday amid continued
profit-taking activities.

♦ Beside that, market sentiment was affected by the lacklustre sentiment in the regional markets, as most regional
investors turned cautious ahead of the key US weekly and monthly jobs reports due on Thursday and Friday.

♦ Also, a plunge in Mudajya caused investors to become jittery. Mudajya plunged RM1.01 or 20.5% on strong selling
pressure and heavy volume.

♦ For the day, the FBM KLCI settled at 1,362.08, losing another 0.66 pt or 0.05%. Overall daily volume expanded to
994m shares from Wednesday’s 811m shares. Market breadth turned positive, as counters up outpaced counters
down by 362 to 349.

♦ Elsewhere, Nikkei 225 rebounded sharply by 1.73%, but Shanghai Composite fell 0.67% on possible new
tightening measures in the property sector. It was reported that the China authority recently asked banks to test
the possible impact of a plunge in property prices on their loans and credit quality.

Technical Interpretations:

♦ Instead of a technical rebound, the FBM KLCI continued to accumulate its fourth negative candle in a row to
indicate higher possibility of follow-through weakness today.

♦ Not helping either, both the 14-day RSI and stochastic oscillators have tweaked lower to strengthen the odds of a
further short-term consolidation ahead.

♦ Having said that, we continue to expect a firm support near the 10-day SMA of 1,358 and the major resistance-
turned-support level at 1,350, and expect fresh bargain-hunting supports to return nearer to these levels.

♦ To jump-start a fresh rebound, the FBM KLCI needs to retake the recent high of 1,370.52 convincingly.

Please read important disclosures at the end of this report.

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Daily Trading Strategy:

♦ Generally, as expected, the FBM KLCI continued to undergo its consolidation after the recent rally.

♦ And with another small negative candle on the chart, coupled with possible pre-weekend profit-taking activities
and cautiousness ahead of the US monthly jobs data due on Friday, the index could expect further mild weakness
ahead.

♦ Having said that, its downside should be limited, due to a stronghold near the 10-day SMA of 1,358 and 1,350.

♦ And even the short-term momentum indicators appearing to lose steam, the overall uptrend of the FBM KLCI is
still intact, as long as the 10-day SMA and 1,350 remains supportive and the average daily turnover for the market
stays robust at 800m – 1.0bn shares in the near term.

♦ In fact, given the sustainable rotational plays of late, the FBM KLCI could kick off another round of rally anytime
soon, once the consolidation mode ends, in our view.

Table 2 : Major Indices & Commodities

Table 1 : Daily Statistics Change Change
Scoreboard 30 Jul 2 Aug 3 Aug 4 Aug 5 Aug Local Key Indices Closing
(Pts) (%)
Gainers 348 494 250 322 362 FBM KLCI 1,362.08 -0.66 0.0
Losers 378 280 479 363 349 FBM 100 8,974.98 3.67 0.0
Unchanged 274 243 270 286 276 FBM ACE 3,845.25 22.71 0.6
Untraded 365 348 367 399 378 Major Overseas
Indices
Market Cap Dow Jones 10,674.98 -5.45 -0.1
Turnover Nasdaq 2,293.06 -10.51 -0.5
(mln shares) 918 964 1,106 811 994 S&P 500 1,125.81 -1.43 -0.1
Value (RM FTSE 5,365.78 -20.38 -0.4
mln) 1,422 1,284 1,463 1,188 1,576 Hang Seng 21,551.72 1.84 0.0
Jakarta Composite 3,044.94 61.69 2.1
Currency Nikkei 225 9,653.92 164.58 1.7
MYR vs US Seoul Composite 1,783.86 -5.40 -0.3
Dollar 3.1790 3.1580 3.1590 3.1660 3.1540 Shanghai Composite 2,620.76 -17.76 -0.7
SET 874.92 7.58 0.9
Source: RHBInvest & Bloomberg Straits Times 3,006.76 4.89 0.2
Taiwan Weighted 7,936.85 -35.81 -0.4
India Sensex 18,172.83 -44.61 -0.2
Major Commodities
NYMEX Crude Oil
(US$/barrel) 82.01 -0.46 -0.6
MDEX CPO – Third
Month (RM/metric ton) 2,619.00 29.00 1.1
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:

♦ In the absence of strong trading catalysts, the FKLI closed slightly higher on quiet trading on Thursday after see-
sawing between the positive and negative territories throughout the afternoon session.

♦ From the early run-up to an intraday high of 1,369.0 (+4.0 pts), it gradually turned lower to 1,363.50 low
(-1.50 pts) on profit-taking activities as traders refused to make too much of a commitment ahead of the US key
jobs data on Friday.

♦ But thanks to late buying supports, the FKLI for Aug contract regained its upward momentum and ended up by
another 1.50 pts or 0.11% to 1,366.50 yesterday.

♦ Still, the closing with a negative candle and the weak short-term momentum readings have pointed to a possible
follow-through selling pressure ahead.

♦ But in our opinion, the recent uptrend appears sustainable, with firm support seen at the 10-day SMA near 1,360.
Additional stronghold is at the resistance-turn-support level of 1,350.

♦ On the upside, a further removal of 1,374.50 will restore its upward momentum towards the next upside target at
1,390.

Daily Trading Strategy:

♦ Technically, the latest negative candle and the poor momentum readings indicate a possible weakness today.

♦ However, we believe any pullback will be shallow and brief, given the expected stronghold support near the 10-day
SMA of 1,360 and 1,350.

♦ For today, the futures index is likely to move within a range of 1,363 to 1,374.

Table 3: FKLI Closings

FKLI (Month)
Contracts Open High Low Close Chg (Pts) Settle Volume Open Interest
Aug 10 1369.00 1369.00 1363.50 1366.50 1.50 1366.50 2949 20377
Sep 10 1369.00 1369.00 1364.50 1366.00 0.50 1366.00 179 654
Dec 10 1368.00 1368.00 1364.50 1367.00 3.00 1367.50 121 265
Mar 11 1368.00 1369.00 1366.00 1367.00 1.50 1369.00 86 106

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:

♦ Dragged down by an unexpected rise in initial jobless claims and weaker-than-expected retail sales, investors
moved to lock in profit by sending the US markets slightly lower on Thursday.

♦ The US Labor Department said initial jobless claims rose by 19,000 to 479,000 last week, versus expectation of a
drop to 455,000. This in turn, stoked nervousness ahead of the US monthly non-farm payrolls report tonight.

♦ According to the Reuters’ survey, economists had expected a loss of 65,000 jobs in Jul.

♦ Meanwhile, retailer JC Penney tumbled 7.7% after saying its sales slipped 0.6% in Jul, missing estimates of a
3.5% increase.

♦ On the NYMEX, the US light sweet crude oil futures for Sep delivery extended its losing streak by retreating
another 46 cents or 0.6% US$82.01 a barrel.

Technical Interpretations:

Dow Jones Industrial Average (DJIA)

♦ As investors turned cautious, the US DJIA eased down by 5.45 pts or 0.05% to 10,674.98, but still well off its
intraday low of 10,612.85.

♦ This resulted in a formation of a “negative harami” candle, signalling a weaker momentum ahead.

♦ However, any downside is likely to be well-contained by the solid breakout point at the Jun’s high of 10,594.16.
The next lower support is at the 21-day SMA of 10,388.

♦ In other words, the uptrend towards the higher resistance target at 10,850 is still intact as long as the Jun high
can buffer any downside pressure.

Nasdaq Composite (Nasdaq)

♦ In the absence of follow-through buying support, the Nasdaq Composite index declined 10.51 pts or 0.46% to
finish at 2,293.06 yesterday.

♦ And with a “positive harami” candle on the chart, this points to a slower momentum ahead.

♦ Coupled with the weaker momentum readings, further consolidation is possible, unless it can swiftly penetrate
above the recent high of 2,307.60 to resume its upswing momentum towards 2,330.

♦ On the downside, firm supports near a technical gap at 2,264.81 and the 21-day SMA of 2,245 can be expected.

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Daily Technical Watch:

Chart 7: Equine Daily Chart 8: Equine Intraday

Equine Capital (1147)

A decisive penetration to above RM0.52 will turn the chart more bullish…

♦ After peaking at RM0.725 high in mid-Jun 2009, the share price of Equine slipped into consolidation, following its
failure to sustain at above the strong resistance level of RM0.685.

♦ This prompted a steady correction on the stock and caused its share price to drift to below the RM0.445 level in
Nov 2009.

♦ Although the stock managed to rebound to above RM0.445 in Jan 2010, it lost the level again in late Feb 2010.

♦ After a few months, it finally staged a powerful chart breakout on Monday, with a 0.5 sen technical gap recorded
on the chart.

♦ It touched a high of RM0.515 yesterday, near the RM0.52 resistance level, before narrowing its gains to end the
day at RM0.50.

♦ It acquired a positive candle to suggest follow-through buying momentum is likely today. In our view, a retest of
the immediate resistance at RM0.52 can be anticipated soon.

♦ The chart will turn more bullish, if it stages a decisive penetration to above RM0.52 in the immediate term. It will
further lift the share price towards the next higher resistances at RM0.59 and RM0.685.

♦ Strong supports stayed at the RM0.445 level near the 10-day SMA.

Technical Readings:

♦ 10-day SMA: RM0.4405

♦ 40-day SMA: RM0.4027

♦ Support: IS = RM0.445 S1 = RM0.365

♦ Resistance: IR = RM0.52 R1 = RM0.59 R2 = RM0.685

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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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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
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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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