Strong Stale Bull Selling to Cap Upside

Bursa Malaysia shares ended mixed on Tuesday, capping a five-day winning streak,but profit-taking on selected blue chips was offset by keen buying interest in oil & gasrelated stocks after global crude oil prices rallied to new record highs, almost reachingUSD118 a barrel on fears of pipeline sabotage in Nigeria. The KLCI was marginallydown by 0.7 of a point to close at 1,279.3, off a high of 1,284.08. Market breadth wasless bullish as 354 gainers led 300 losers on slower trading volume which totalled619mn shares worth RM1.1bn.

Upside Restricted by Weak Buying Momentum
As we had anticipated, profit-taking correction did emerge to cap upside, given theincreasingly overbought momentum on short-term technical indicators for the KLCI.We would continue to advocate investors sell on rally, as we expect strong stale bullselling to check immediate upside near the 1,300 psychological resistance level.Moreover, the weak buying momentum suggests that near-term upside should berestricted with most investors still sidelined and cautious. Immediate support on animmediate profit-taking correction is seen at the 1,260 to 1,250 region.

Reiterate Buy Oil & Gas Stocks
Nevertheless, we reiterate our buy calls on oil & gas related stocks such as Dialog,Petra Perdana, Ramunia, Ranhill and Wah Seong which are expected to out-perform thebroader market given the sustained strength in global crude oil to new record highs,which will boost demand for oil & gas related services.

US Stocks Fall on Earnings Concern, Record High Oil Prices
US stocks posted their biggest loss in more than a week as record high crude oil pricesand disappointing earnings from technology, health-care and consumer companies reignitedconcerns the profit slowdown will spread beyond banks. Texas Instruments,the second-largest US semiconductor chipmaker, fell the most since October on slowingorders from phone companies.

UnitedHealth Group, the biggest medical insurer, dropped almost 10% as sales toemployers slumped. Coach Inc. fell as discounts cut the profitability of its handbags,while Target Corp. led declines in 29 of 30 shares in the Standard & Poor's 500 RetailingIndex as crude oil surged above the USD119 a barrel level.

The S&P500 Index fell 12.23 points, or 0.9% to close at 1,375.94, while the Dow JonesIndustrial Average shed 104.79 points, or 0.8% to 12,720.23. The Nasdaq CompositeIndex dipped 31.1 points, or 1.3% to 2,376.94. About nine stocks fell for every two thatrose on the NYSE.