Market Technical Reading - Heading Towards The 1,390 Level Soon… - 02/08/2010

8/9/2019 Market Technical Reading - Heading Towards The 1,390 Level Soon… - 02/08/2010

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Local Market Leads:

♦ Led by the last-minute purchases on selective heavyweights, Bursa Malaysia bucked the regional markets’

downtrend by settling at its highest level since end-Feb 2008 on Friday.

♦ This has successfully shrugged off the afternoon profit-taking activities, which were triggered by the overseas

weakness amid growing cautiousness ahead of the US 2Q GDP report due in late last Friday.

♦ But as institutional investors snapped up key index-linked stocks, PetGas (+45sen), Sime (+11sen), GenM (+9sen)

and Genting (+14sen), the FBM KLCI rose 2.51 pts or 0.18% to its day high of 1,360.92 towards the closing.

♦ Besides blue chips, selective lower liners, especially property-related stocks like Malton (+8.5sen) and Bolton

(+13.5sen) also attracted strong buying interest.

♦ Turnover remained robust at 918m shares, though lower than Thursday’s 1.0bn shares. Market breadth, however,

turned negative for the first time in three trading days, as losers outweighed gainers by 378 to 348.

♦ Elsewhere, Asian markets closed lower on profit-taking pressure after the recent gains. Nikkei 225 suffered the

most by sliding 1.64%, followed by Jakarta Composite with a 0.89% loss.

Technical Interpretations:

♦ Despite the intermittent afternoon profit-taking pressure, the FBM KLCI managed to regain its bullish momentum

towards the late session and closed at its fresh year high at 1,360.92.

♦ On the chart, with a third positive candle in a row, plus the upbeat momentum readings, this suggests a

continuation in the current uptrend in the immediate term.

♦ In other words, the FBM KLCI is well underway to scale higher to the next upside target at 1,390, in our view.

♦ Meanwhile, the recent breakout point of 1,350 will continue to underpin the current upswing.

Chart 1: FBM KLCI Da ily Chart 2: FBM KLCI I ntraday

Techn ica l Research

D a i l y T r a d i ng S t r a t egy

Market Technical ReadingHeading Towards The 1,390 Level Soon…

M a l a s i a

M A R K

E T

D A T E L I N E

P P

7 7 6 7 / 0 9 / 2 0 1 0 ( 0 2 5 3 5 4 )

RHB ResearchInstitute Sdn BhdA member of theRHB Banking GroupCompany No: 233327 -M

2 August 2010

Please read importan t disclosures at the end of this report.



2 August 2010


Daily Trading Strategy:

♦ The FBM KLCI’s current run-up appears more resilient than expected in the wake of broad-based selldown in the

overseas markets late last week.

♦ In fact, given the strong rotational plays on blue chips and lower liners, we continue to stay bullish on the market

direction for short-, medium- and long-term period.

♦ Not only that, the constant profit-taking pressure was also well absorbed in recent sessions, as what we had

expected earlier, should the index sustain at above the 1,350 resistance-turn-supprt level.

♦ This has strongly portrayed the strength on the current upswing, and suggested more upside potential on the back

of growing buying support.

♦ And as long as the daily turnover remains firm at between 800m and 1.0bn shares mark, we believe the FBM KLCI

will rechallenge the next upside target at 1,390 soon.

♦ For the support, the solid resistance-turn-support level at 1,350 will capped any surprise downside potential.

Source: RHBInvest & Bloomberg

Table 2 : Major Indices & CommoditiesLocal Key Indices Closing

Change

(Pts)

Change

(% )FBM KLCI 1,360.92 2.51 0.2FBM 100 8,953.64 9.16 0.1

FBM ACE 3,794.77 -8.96 -0.2

Major OverseasIndices

Dow Jones 10,465.94 -1.22 0.0

Nasdaq 2,254.70 3.01 0.1S&P 500 1,101.60 0.07 0.0FTSE 5,258.02 -55.93 -1.1

Hang Seng 21,029.81 -64.01 -0.3Jakarta Composite 3,069.28 -27.54 -0.9

Nikkei 225 9,537.30 -158.72 -1.6Seoul Composite 1,759.33 -11.55 -0.7Shanghai Composite 2,637.50 -10.62 -0.4

SET 855.83 1.24 0.1

Straits Times 2,987.70 -9.95 -0.3Taiwan Weighted 7,760.63 -38.36 -0.5India Sensex 17,868.29 -123.71 -0.7

Major Commodities

NYMEX Crude Oil(US$/barrel) 78.95 0.59 0.8MDEX CPO – ThirdMonth (RM/metric ton) 2,517.00 3.00 0.1

US Inte rest Rate Current Last Updated

Overnight Fed Fund Rate 0-0.25% Unch22-23 Jun

2010

Next FOMC meeting 10 Aug 2010

Table 1 : Daily StatisticsScoreboard 26 Jul 27 Jul 28 Jul 29 Jul 30 Jul

Gainers 336 308 445 386 348Losers 355 381 264 345 378

Unchanged 274 285 278 279 274Untraded 398 391 378 355 365

Market Cap

Turnover

(mln shares) 851 732 847 1,000 918Value (RM

mln) 1,122 1,335 1,251 1,481 1,422

Currency

MYR vs USDollar 3.1970 3.1815 3.1870 3.1820 3.1790



2 August 2010



♦ Dampened by bearish sentiment in the overseas markets, the local futures market came under strong selling

pressure by ending broadly lower on Friday.

♦ Taking the negative lead from another day of weak US closings, sellers returned and pressed down the FKLI upon

opening.

♦ As selling pressure mounted towards the late session, due to heavy selldown in the European markets, the futures

index traded softer in the late session.

♦ At the close, the FKLI for Jul contract declined 5.50 pts or 0.40% to 1,356.50. But more importantly, the Aug

contract was knocked down by 10.50 pt or 0.77% to finish at 1,354.00.

♦ Technically, the Aug contract has chalked up a bearish candle to refresh a possible technical pullback threat.

♦ Following last Friday’s sharp setback, both short-term momentum indicators have ticked down, with the stochastic

oscillators issuing a fresh “sell” signal on the chart.

♦ This means, if there is no quick rebound today, the recent rally could pause.

♦ Having said that, we expect fresh bargain-hunting support to reemerge near the resistance-turn-support level of

1,350 and the 10-day SMA nearby soon. This will prevent any further downside momentum and at the same time

refreshing its chances to prolong the recent uptrend.

Daily Trading Strategy:

♦ Against our expectation, the FKLI failed to extend its winning streak last Friday. Instead, it made a steep fall to

suggest a potential technical pullback ahead.

♦ Therefore, it must stage a strong rebound today to avoid a further downside risk. Anyhow, we are of the view that

the FKLI should see firm support near 1,350 and the 10-day SMA nearby.

♦ Today’s trading range for the FKLI is likely to be around 1,350 to 1,365.

Table 3: FKLI ClosingsFKLI (Month)

Contracts Open High Low Close Chg (Pts) Settle Volume Open Interest

Jul 10 1359.00 1361.00 1355.00 1356.50 -5.50 1356.50 2802 6705

Aug 10 1360.00 1363.00 1352.50 1354.00 -10.50 1354.00 5795 17663

Sep 10 1358.50 1362.00 1353.00 1353.00 -11.50 1353.50 367 532Dec 10 1358.00 1361.00 1353.00 1353.00 -10.50 1353.50 88 255

Source: Bursa Malaysia

Chart 3: FKLI Da ily Chart 4: FKLI Intraday



2 August 2010


US Market Leads:

♦ Wall Street recovered from the early selloff by closing almost unchanged on Friday, as some positive earnings

news and economic data outweighed the weaker-than-expected US 2Q GDP numbers.

♦ The US DJIA slumped as much as 120 pts at one time after the US Commerce Department reported that the US

economy grew 2.4% yoy in the second-quarter. Economists had expected an annualised rate growth of 2.6%.

♦ But fresh bargain-hunting support reemerged following a slightly better US consumer sentiment report and the

Institute for Supply Management-Chicago business barometer. Also, investors reacted positively to strong

earnings from life insurer MetLife (+4.6%) and security software company McAfee (+9.4%).

♦ As traders overlooked the weak GDP number, the US light sweet crude oil futures for Sep delivery continued to

rebound for a second day, gaining 59cents or 0.8% to US$78.95/barrel.


Dow Jones Industrial Average (DJIA)

♦ After sliding to an intraday low of 10,347.50 in the early session, the US DJIA gradually came back and ended the

day nearly flat. It eased 1.22 pts or 0.01% to 10,465.94.

♦ On the chart, it formed a potential “dragonfly doji” candle, reflecting a possible rebound after staging a mild

technical pullback recently.

♦ In other words, the Dow may try to kick off a rebound today towards the recent high of 10,584.99, even as both

short-term momentum readings still remained weak.

♦ However, if it is able to retake the Jun high of 10,594.16, it will resume the run-up. Meanwhile, it will be well-

supported near the 21-day SMA of 10,222 and the solid 10,150 support level in the near term.

Nasdaq Composite (Nasdaq)

♦ From the early selldown to 2,218.61 low, nearer to the 21-day SMA of 2,210, the Nasdaq Composite index staged

a reversal by ending up 3.01 pts or 0.13% to 2,254.70 on Friday.

♦ With its first positive candle in four trading days, the chart suggests a potential further rebound ahead.

♦ If it attracts follow-through buying support, and rallies across the recent high of 2,307.60, it will rechallenge

2,330 soon. Strong supports stay at the 21-day SMA and the 2,190 strong level.

Chart 5: US Dow Jones I ndustrial Average (DJI A) Daily Chart 6: US Nasdaq Composite DailyChart 5: US Dow Jones I ndustrial Average (DJI A) Daily Chart 6: US Nasdaq Composite Daily



2 August 2010


Daily Technical Watch:

IJM Land (5215)

A prolong rally tow ards the RM2.74 and RM2.93 levels likely…

♦ The share price of IJMLand resumed its rally in Aug 2009, when it removed the RM1.66 level after a three-month

consolidation phase, and rallied all the way to a high of RM2.68 in Oct 2009.

♦ The stock, however, triggered a stiff profit-taking pressure, forcing it downward to seek support near the RM2.18

significant level.

♦ Although it missed the support on few occasions to the lows of RM2.03 and RM2.05 in Feb and Jun 2010, it has

always recovered to above RM2.18.

♦ In early Jul, when it rebounded across the RM2.18 level, the 10-day SMA has cut to above the 40-day SMA, this

has reinforced the positive readings on the technical platform.

♦ Subsequently, it formed a base near RM2.18 and relaunched a fresh rally last week. It closed the week at RM2.40

with a huge bullish candle to above the 10-day SMA of RM2.26.

♦ Technically, as both the momentum indicators are pointing upward, we expect the upward momentum to

continue pushing the share price higher this week.

♦ If it manages to remove the tough hurdle at RM2.50 soon, it will enjoy a prolong rally towards the RM2.74 and

RM2.93 resistance levels in the near term.

♦ Key supports can be found at the 10-day and 40-day SMAs near the RM2.26 and RM2.20 region, followed by a

stronghold at RM2.18, resistance-turn-support level.

Technical Readings:

♦ 10-day SMA: RM2.258

♦ 40-day SMA: RM2.196

♦ Support: IS = RM2.18 S1 = RM1.93 S2 = RM1.66

♦ Resistance: IR = RM2.50 R1 = RM2.74 R2 = RM2.93

Chart 7: IJMLand Daily Chart 8: IJMLand Intraday



2 August 2010


IMP ORTANT DI SCLOSURES

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. Theopinions and information contained herein are based on generally available data believed to be reliable and are subject to change without notice, and may differ orbe 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 beconstrued 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 anymanner whatsoever and no reliance upon such statement by anyone shall give rise to any claim whatsoever against RHBRI. RHBRI and/or its associated personsmay 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 objectivesof persons who receive it. The securities discussed in this report may not be suitable for all investors. RHBRI recommends that investors independently evaluateparticular investments and strategies, and encourages investors to seek the advice of a financial adviser. The appropriateness of a particular investment orstrategy will depend on an investor’s individual circumstances and objectives. Neither RHBRI, RHB Group nor any of its affiliates, employees or agents acceptsany 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 providinginvestment banking and financial advisory services. In the ordinary course of its trading, brokerage, banking and financing activities, any member of the RHBGroup 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 equitysecurities 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 otherservices 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 reflectinformation 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 basedupon 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 recommendedsecurities, 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 theactions of third parties in this respect.

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Market Technical Reading - Heading Towards The 1,390 Level Soon… - 02/08/2010