technical highlights 21042010 _faber_ final

8/9/2019 Technical Highlights 21042010 _Faber_ Final

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Local Market Leads:

Boosted by the overnight US markets rebound and the regional bourses strength, the local market staged a firmrecovery on mild bargain-hunting supports yesterday.

Investors returned to snap up stocks, encouraged by news of split votes in the US Securities and ExchangeCommissions (SEC) decision to charge Goldman Sachs for fraud earlier. This has eased concerns that other

banks could be sued. The strong earnings from Citigroup also renewed optimism over the 1Q reporting season.

In fact, investors also overlooked the additional property tightening measure in China, and an increase on the keyinterest rate by the Indian central bank. Beijing said it would ban property developers from accepting prepayment

on uncompleted housing without official approval.

Recovery momentum strengthened in the afternoon after European markets started the day on a stronger note,joining rebounds across Asian regional markets, such as SET (+5.43%) and Hang Seng (+1.02%).

The FBM KLCI jumped 9.23 pts or 0.70% to 1,335.90 for the day. However, turnover slowed to 797m sharesfrom Mondays 813m shares. There were 456 counters up versus 230 counters down.

Technical Interpretations:

The FBM KLCI registered a positive candle yesterday and ended on the dot of the 10-day SMA of 1,336. The candle pattern, following Mondays hammer candle, and a fresh buy signal on the stochastic oscillators

implied that the index could stage further recovery today.

However, a complete removal of the 10-day SMA, with a turnover of at least 1.0bn shares is needed to continuethis rebound. Failure to meet the above criteria will bring back the strong selling momentum.

In other words, a retreat from the 10-day SMA will resume its downtrend towards the 40-day SMA of 1,314, the2.6-pts technical gap at 1,305 and the 1,300 psychological level in the near term.

Chart 1: KLCI Daily Chart 2: KLCI Intraday

Techn ica l Research

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

Market Technical ReadingRemoval Of The 10-day SMA Crucial To Regain Upside Momentum...

Malasia

MARK

ET

DATELINE

PP

7767/09/2010(025354)

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

21 April 2010

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


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21 April 2010


Daily Trading Strategy:

Technically, the formation of a positive candle and the better momentum readings suggest a possible furtherrebound today, if the FBM KLCI crosses to above the 10-day SMA of 1,336.

However, the continued fall in the daily turnover and the failure to completely remove the 10-day SMA yesterdayimplied that there is still risk ahead for the index to regain its upward momentum.

Only if the index chalks up a positive confirmation candle to above the 10-day SMA and manages to increase thedaily trading volume to above the 1.0bn shares mark, will it see a strong return in trading momentum. Otherwise,

we expect sellers to resume their activities soon.

Chart wise, the short-term downside targets for the FBM KLCI have remained unchanged at the 40-day SMA of1,314, a 2.6-pts technical gap near 1,305 and the 1,300 level.

On the upside, a removal of the 10-day SMA will boost the trading sentiment and hence, leading the index to therecent high of 1,347.61, before resuming its previous medium-term target at 1,390.

Source: RHBInvest & Bloomberg

Table 2 : Major Indices & Commodities

Local Key Indices ClosingChange

(Pts)

Change

(% )FBM KLCI 1,335.90 9.23 0.7FBM 100 8,785.56 60.92 0.7

FBM ACE 4,165.09 22.01 0.5

Major OverseasIndices

Dow Jones 11,117.06 25.01 0.2

Nasdaq 2,500.31 20.20 0.8S&P 500 1,207.17 9.65 0.8

FTSE 5,783.69 55.78 1.0

Hang Seng 21,623.38 218.21 1.0Jakarta Composite 2,891.27 50.84 1.8

Nikkei 225 10,900.68 -8.09 -0.1Seoul Composite 1,718.03 12.73 0.7

Shanghai Composite 2,979.53 -0.77 0.0SET 765.76 39.47 5.4

FT Straits Times 2,981.37 20.44 0.7Taiwan Weighted 7,900.42 46.20 0.6

India Sensex 17,460.58 59.90 0.3Major Commodities

NYMEX Crude Oil(US$/barrel) 83.45 2.00 2.5MDEX CPO Third

Month (RM/metric ton) 2,498.00 28.00 1.1US Inte rest Rate Current Last Updated

Overnight Fed Fund

Rate0-0.25% Unch

16 Mar

2010

Next FOMC meeting 27-28 Apr 2010

Table 1 : Daily Statistics

Scoreboard 14 Apr 15 Apr 16 Apr 19 Apr 20 Apr

Gainers 375 293 201 134 456

Losers 325 406 495 622 230

Unchanged 282 298 305 219 293Untraded 375 363 359 388 384

Market Cap

Turnover

(mln shares) 845 1,045 784 813 797Value (RM

mln) 1,364 1,638 1,207 1,210 1,218

Currency

MYR vs USDollar 3.1990 3.1925 3.1880 3.2150 3.2045


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21 April 2010



After suffering three days of strong selldown, the KL futures market turned around with a strong reboundyesterday.

The FKLI opened 5.50 pts higher at 1,327.50, before trending higher all the way towards the 1,337.50 day high. For the day, the FKLI for Apr contract ended up sharply at 1,336.50 with a 14.50 pts or 1.10% gain. On the chart, the futures index registered a bullish cnadle, pointing to a further rebound today. However, the futures index failed to penetrate the 10-day SMA of 1,337 in bids to reclaim positive short-term

momentum yesterday.

As a result, the futures index might still face significant resistance at the 10-day SMA in the immediate term. Higher resistance is seen near the previous high of 1,350.50, while the supports are set at the 40-day SMA near

1,316 and the key 1,300 psychological level.

Daily Trading Strategy:

Yesterdays strong closing indicates further upside potential today. But until it can fully reclaim the 10-day SMA, the risk of resuming the recent selldown momentum is fairly high.

As a result, buyers should wait-and-see before taking any position today.

Todays trading band is likely to be within 1,330 to 1,341.Table 3: FKLI ClosingsFKLI (Month)

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

Apr 10 1327.50 1337.50 1327.00 1336.50 14.50 1336.50 4633 18941May 10 1328.00 1337.50 1327.50 1336.50 15.00 1336.50 594 954

Jun 10 1327.00 1336.00 1327.00 1335.00 15.00 1335.00 131 500Sep 10 1326.00 1336.00 1326.00 1335.00 15.50 1335.00 37 224

Source: Bursa Malaysia

Chart 3: FKLI Da ily Chart 4: FKLI Intraday


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21 April 2010


US Market Leads:

US markets extended their recovery momentum for a second day on Tuesday, led by energy stocks amid a rallyin crude oil prices as well as strong earnings from several companies.

Energy stocks, including Exxon Mobil (+1.1%) and Chevron (+0.9%) ended higher, after crude oil prices soaredmore than 2% following the resumption of flights at some European airports.

The US light sweet crude oil futures for May delivery rallied US$2.0 or 2.45% to US$83.45/barrel. Investors also welcomed better-than-expected quarterly profits from Goldman Sachs and Johnson & Johnson, but

the former fell another 2.1% after the UK regulators also launched a probe against the company.

After the close, Apple Incs share price shot up more than 6% as its quarterly results beat expectation. But Yahoodipped 1.9% on quarterly revenue that slightly missed expectation.


Dow Jones Industrial Average (DJIA)

As bargain-hunting activities picked up, the US DJIA added another 25.01 pts or 0.23% to 11,117.06 yesterday. With a small positive candle on the chart, a rechallenge of the recent high of 11,154.55 can be expected soon. But as we reiteraited, a complete removal of the recent high and the immediate-term resistance level of 11,250 is

needed to turn the indexs near-term sentiment back to bullishness.

Otherwise, selling could still resume and press the index towards the 21-day SMA near 10,943 and the crucialbreakout point at 10,850 due to the mixed short-term momentum.

Nasdaq Composite (Nasdaq)

In line with our expectation, the Nasdaq Composite Index shot up 20.20 pts or 0.81% to 2,500.31 with a smallpositive candle yesterday.

And if it can secure enough follow-through buying momentum today, it will rechallenge the recent high of2,517.82 soon.

But for it to resume its bullish uptrend momentum, it has to break out from 2,517.82 in order to push for furtherupside towards the next resistance at 2,630. Immediate support still stays at 2,470.

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


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Daily Technical Watch:

Faber Group (1368)

Still shying away from recrossing the RM2.29 important level

Fabers share price broke out form a congestion area at around RM1.51 to RM1.65 region in Feb 2010, with a2sen technical gap on the chart and began its rally to the north.

The stock climbed steeply across the resistance levels of RM1.81 and RM1.98, before taking a breather above theRM1.98 level in late Mar 2010.

Briefly, the stock resumed its rally and blasted towards the RM2.29 critical resistance level and followed swiftlywith another chart breakout.

By mid-Apr 2010, the stock has already traded near the RM2.60 heavy resistance level, with an intraday high ofRM2.63.

However, after touching that level, the stock triggered a steep follow-through selling momentum that dragged itto below the 10-day SMA of RM2.45 and marginally missed the RM2.29 level recently.

Although the stock recovered marginally to RM2.28 yesterday, and the short-term momentum indicators haveticked upward to indicate further upside today, it was still shying away from recrossing the RM2.29 level.

Without conquering this level, it will not be able to trigger a technical rebound, in our view. As a result, we are skeptical on its ability to trigger a technical rebound from the current level, should it stay at

below the RM2.29 level in the near term.

Lower support levels are seen near the 40-day SMA of RM2.176 and RM1.98, while higher resistance is at the 10-day SMA of RM2.45 and RM2.60.

Technical Readings:

10-day SMA: RM2.45 40-day SMA: RM2.176 Support: IS = RM1.98 S1 = RM1.81 S2 = RM1.65 Resistance: IR = RM2.29 R1 = RM2.60

Chart 7: Faber Daily Chart 8: Faber Intraday


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technical highlights 21042010 _faber_ final

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