Update

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Extended Gain

KLCI ends +0.1% at new record close of 1412.79 in heavy volume of 1.8 billion shares but off intraday high of 1416.97 as mild profit-taking narrowed gains. Market breadth negative at close with decliners leading gainers 573 to 324. Market likely to extend gains tomorrow, possibly retest all time high of 1416.97. Benchmark tipped to trade in 1400-1420 range tomorrow. "he launch of the East Coast Economic Region development program may drive investors to start value hunting some construction and building materials related stocks and some oil and gas concerns in coming weeks. Rising crude oil prices have also boosted interest in crude palm oil related stocks which has also helped to buoy the market.

POS HOLDINGS
Due to rebound, well supported at 2.65

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KLCI Next Target 1,420

KLCI ended +1.5% at record high of 1398.35 in heavy volume of 1.91 billion shares, driven by gains across all sectors supported by buying interest from both foreign and local funds, say dealers. Gainers trounced decliners 663 to 222. Ringgit's rise to multiyear high (USD/MYR last at 3.3480) cited as catalyst for foreign funds. Benchmark likely to extend gains in follow through trade next week, possibly trade in 1390-1420 range next week as long as Wall Street manages to hold up and is not rattled by credit-risk issues. Pockets of positive corporate developments among heavyweights are also attracting fresh investment from both retail investors and funds alike.

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Dollar & Wall Street Weakening

KLCI ends +1.4% at 1378.27 on local fund buying of select blue chips, plantation stocks; successful breach of 1370 resistance may pave way for market to revisit stronger resistance of 1383 (Oct high) in near-term; but of course, for the market to keep going upwards, external conditions, specifically Wall Street's performance, also needs to be supportive; KLCI to trade in 1370-1383 range short-term. Market breadth positive, with advancers outpacing decliners 504 to 319; volume moderate at 1.5 million shares.

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If not down, its up

KLCI ends +0.2% at 1359.83 in heavy volume of 1.59 billion shares, retreating from intraday high of 1369.44 as profit taking erodes early gains. At close, market breadth negative with decliners topping gainers 454 to 389. Dealers say market likely to continue consolidating within 1350-1370 range tomorrow. Investors will continue to look to Wall Street for direction but selling into strength may cap gains at around 1370.

Major News:
The Store Corp Denies Pacific Hypermarket Sale Talks Report
Salcon May Rise To MYR1.15 Ahead Of Insur Co. Buy
Putera Capital +20.1% On WCE Contract Hopes
Voir +2.1%; Profit-Taking Crimps Listing Premium
AirAsia Exec: Unaware Vietnam Govt Rejected License For Unit
Vietnam Media Reports Suggest Govt Rejected AirAsia License
OSK Keeps Buy On Alam Maritim; Targets MYR2.70
Hwang DBS Keeps Buy On Sunrise; Tgt MYR4.90
MIMB Ups Eonmetall Target To MYR1.30; Rated Buy
MIER Expects Dlr At MYR3.35 End-2007, MYR3.00 End-08
Ctrl Bk Unlikely To Up Rates In 2008 If CPI Under 3%
MIER Cuts 2008 GDP Growth Forecast To 5.4% Vs 5.8%

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Offshore Ringgit Trading Positive for Hot Money

Sia Ket Ee from OSK Research said that the latest statement by BNM Governor marked a significant change in stance of the central bank to prepare the market for a possible lifting of the Ringgit offshore trading ban. He believes BNM is already confident that domestic financial infrastructure is maturing, especially after the staged liberalisation and that the domestic economy could also be ready for a more volatile Ringgit trading. We view the “change in tone” favourably as it will expedite the development towards a more developed foreign exchange market, hence enhancing Malaysia’s attractiveness as a destination for investments.

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Volatility Prevail

KLCI ends +0.5% at 1357.33 buoyed by gains on Wall Street overnight and firmer regional markets, say dealers. Volume traded moderate at 1.48 billion shares; market breadth positive with gainers outpacing decliners 639 to 222. Investors will continue to look to the performance on Wall Street for market direction tomorrow; anticipate market will consolidate in 1340-1370 range. Today's rebound was a knee-jerk reaction but the KLCI's inability to close Monday's gap-down move is a bearish sign. Selling into strength may persist, capping the KLCI's near term gains.

Major Headlines:
AMMB: No Plans For Merger With RHB Capital
KLCI Tends To Perform Well During Elections -Citi
Charts Tip Hubline At Buy For Rebound To 80 Sen-TA
OCBC Upgrades Silverlake Axis To Buy
Coastal +1.5%; Sale Of 2 Vessels For MYR38.7M
Berjaya Corp +12%; Upside Capped At MYR1.17
OSK Turns Bearish On Near-Term KLCI Outlook
Silverlake Axis +2.4% On US$7.35M Licensing Deal
Wijaya Offers Good Opportunity, Tgt MYR1.25 -OSK
Citi Keeps Buy On IOI, KLK, IJM; Ups Target Prices
Transmile +1.5% On Plane Lease Confirmation
Perisai +2.3%;Eyes $50M In Mideast Projects
Third Foreign Party Keen On Malaysia RHB Capital Stake-Report

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Oil & gas prospects in NCER

Liaw Thong Jung from Aseambankers Investment Bank said that the oil & gas projects under the NCER program will be centred in 3 key areas in Kedah – ZIPY, ZIPKOP and Tanjung Dawai.

These privately-funded projects, with investment values reaching RM83b, are anchored by several key players for:
(i) oil refinery,
(ii) oil storage,
(iii) oil transportation and
(iv) offshore fabrication projects.

These high-impact onshore oil & gas projects could have positive spillover effects on service providers in the oil & gas industries. The construction sector could also benefit from infrastructure works.

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Rebounddddd.. I hope so

KLCI ends 1.4% lower at 1350.81, dragged down by regional, Wall Street weakness; volume moderate at 1.65 billion shares; market breadth negative with decliners beating advancers 784 to 136. Investors to continue looking to outside for market direction tomorrow. If Wall Street goes sharply lower again, I can't see the market being able to buck the trend since there aren't very many strong positive cues on the local front at the moment. Tips short-term KLCI support at 1325, resistance at 1365.

MAIN NEWS:

• Berjaya Land JV To Build $500M Ppty Proj In S Korea
• Saudi Fin Min: Oil Price Not Justified By Demand
• Anwar Faces Prosecution Threat For Protecting Source
• RHB Capital Denies Report Of Merger With Ambank Group
• ZTE Corp Signs Power Supply Agreement With Telekom Malaysia
• Malaysia Palm Oil Exports Data Below Expectations
• Bolton Up; Eyes MYR5B Projects In 2 Years
• Malaysia Sep CPI Likely +2.0% On Rising Food Prices
• Kencana Sees FY08 Net MYR70M, 15-20% Orderbook growth
• Citi Raises Digi Target Price To MYR28, Keeps Buy
• OSK Maintains Buy On Top Glove; Target MYR7.40
• Ranhill Down; Oil Discovery Hopes Fade
  

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All eyes on Wall Street and Fed now

Ng Jun Sheng from SBB Securities said that global investors are reminiscing this week about where they were during the 1987 crash, in which the Dow plunged 22.6% on 19 Oct. The combination of circuit breakers instituted by the NYSE, and the Federal Reserve's willingness to intervene, means a crash on the level probably will not happen again. But that doesn't mean the market will not experience mini-crashes that crush investors and roil the markets for days or even weeks at a time. As investors looking to recoup from the worst week in almost three months will have to keep one eye out for signs of weakness in the tidal wave of earnings and some key economic release due this week as well as the threat of surging oil prices and geopolitical risks.

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Synergy `The Monster' Drive

On listing, Synergy Drive (which will be renamed Sime Darby) is expected to catapult immediately to the number one spot on the KLCI. RHB Research said, the plantations sector remains positive, and we expect the uptrend in plantation stocks’ share prices to be sustained.

A tentative fair value for Synergy Drive of RM10.15/share based on a straightforward consolidation of the earnings of the three groups under Sime Darby, Golden Hope and Kumpulan Guthrie, and imputing a target CY08 PER of 20x for the plantation earnings and 15x for the non-plantation earnings. This would imply a target market cap for Synergy Drive of RM61.9bn.

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Nartural Resources - The Biggest Boom You'll Ever See!

Larry Edelson writes: Gold is at 27-year highs, about to blast off even higher … and soar to well over $1,000 an ounce.

Oil is also at new record highs … trading over $85 a barrel … on its way to $120 … then, even higher.

The price of wheat just reached as high as nearly $10 a bushel … the highest price ever … up 103% in just six months.

In fact, the prices of dozens of natural resources are soaring like never before. So today, I want to answer …

The Three Key Questions You Must Ask About the Natural Resources Boom

First, what's driving natural resources higher?

My answer: There are two very important forces at work:

A. Three BILLION people in Asia are catapulting themselves into the 21st century, with newly awakened needs and wants … with knowledge and awareness of the rest of the world like they never had before (courtesy of the Internet and e-mail) …

And with governments now finally acknowledging that socialism and communism can never survive in a world as open and flat as we have today.

B. The plunging dollar. Since almost all natural resources are traded globally in dollars, as the dollar falls in value, natural resource prices must rise to compensate. This is effectively deflation in the dollar, and inflation in natural resource prices.

Combine the above two forces — and you have the most potent combination for rising natural resource prices that history has ever seen.

Second, how much longer can this boom last?

My answer: The natural resource boom will continue for YEARS!

Some analysts expect it to continue for up to 20 more years. My cycle studies and indicators are not that optimistic, but they do strongly suggest that this natural resource boom will continue until 2011. In other words, you have at least FOUR MORE YEARS to capitalize on these trends.

Third, how much higher can prices go?

My answer: Prices can go much, MUCH higher.

To give you an idea of the big picture, take a look at this chart of the Commodities Research Bureau Index (CRB), which tracks a basket of 16 of the world's most traded commodities. This is what the index looks like once it's been adjusted to account for the decline in the purchasing power of the dollar over the last 30 years …

As you can see, the inflation-adjusted high in the CRB Index occurred back in 1973 at 1,047 in today's dollars. Now, the index is trading around just 450!

Bottom line: The CRB Index is still below HALF its inflation-adjusted peak! So prices could easily DOUBLE from where they are now.

And that's a broad index. It does not show you how much higher specific natural resources can go. For example, gold would have to TRIPLE to reach its inflation-adjusted high. Coffee would have to soar 800%!

It might sound crazy, but it all comes down to supply and demand. And demand, as I mentioned previously, is rising to one record high after another. So much so that …

One Planet's Worth of Natural Resources Is No Longer Enough!

In fact, the human race is gobbling up the earth's resources faster than ever before. The planet is quickly going into an ecological deficit.

According to recent calculations from the Global Footprint Network, a foundation whose mission is monitoring the world's natural resources, our consumption of Mother Nature's offerings soared from half the planet's total capacity in 1961 to over 1.3 planet Earths in 2007!

In other words, the world is consuming 30% more in natural resources than Mother Earth can pony up in a year!
Think about that: It takes the planet a year to regenerate what humanity consumes in a little over nine months time. And each year it gets worse, with "Ecological Debt Day" coming earlier and earlier.

From the looks of it, there's no reversing the trend: At current consumption rates, it will take TWO planet Earths to sustain humans in less than 50 years.

That includes "renewable natural resources," which regenerate if they are not over-harvested. Of course, they are already being consumed at a rate exceeding their natural rate of replacement. Meaning, in effect, that even our renewable resources are becoming non-renewable.

Zoom in on the problem a bit further and unfortunately, it becomes even more startling. For example, the world's use of non-renewable fossil fuels has jumped more than nine-fold since 1961. Meanwhile, per-capita use of the planet's biologically productive land and water is 22% greater than the planet has to offer.

High-income countries are the biggest natural resource consumers, using the equivalent, on average, of 7.7 global hectares of land and water for each person.

(And as you might suspect, the U.S. is the biggest consumer, racking up an ecological deficit of 12 hectares of Mother Nature's bounty for every man, woman and child.)

Only the continents of Africa and Latin America, and the countries of Australia and Canada, offer more natural resources than their populations consume.

More facts that will continue to drive natural resource prices higher …

By the end of next year , for the first time in history, more than half of the world's population will be living in urban areas. As a result, consumption of natural resources is sure to accelerate.

Per-capita grain production started declining in 1984 and continues to fall. Witness this year's U.S. wheat supplies at their lowest levels in 59 years!

Even supplies of fish and seafood are dwindling, with per-capita fish production having declined unabatedly since 1980 and recently reaching record low catches in many areas of the world.

Coal is being mined at a vastly unsustainable rate. At best, the world has 100 years of coal left.

The world's supply of oil is projected to last approximately 40 years at current production rates.

Worldwide, the natural gas supply is adequate for about 50 years.

Even the world's gold production is declining, with production in South Africa, the world's largest gold producer, recently falling to an 84-year production low.

What can you do to protect yourself from this situation?

Stay the course in your natural resource investments!

And if you're not on board with this market sector yet, see the latest issue of my Real Wealth Report for all of my recommendations. It goes to press this Friday.

Best wishes,

Larry

This investment news is brought to you by Money and Markets . Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit http://www.moneyandmarkets.com .

Consolidate

KLCI likely to continue to consolidate within the 1365 and 1385 range Friday after closing +0.1% at 1376.22 on heavy volume of 1.7 billion shares as late profit-taking pared gains. Plantation stocks and selected blue chips were again in focus. Market breadth negative with losers narrowly edging gainers 429 to 411. The market is expected to continue its consolidation mode tomorrow in the absence of fresh leads. The local market sentiment tomorrow will likely mirror U.S. stocks overnight.

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Black Monday: Can It Happen Again?

From BARRON'S) By andrew Bary It's fitting that as the 20th anniversary of the ferocious 1987 stock-market crash approaches, most major U.S. equity averages are at or near record levels, and many markets in the developing world at boiling points. -- The prevailing view on Wall Street is that the monumental drop on Oct. 19, 1987, when the Dow Jones Industrial Average plunged 508 points -- 22.6% -- on then-record volume, won't be repeated. There's good reason for the widespread optimism. But, then again, Wall Street seemingly is always optimistic until something goes terribly wrong. Not that the bulls don't have some good arguments. The Dow's drop on Oct. 19, 1987, was unprecedented, and hasn't come close to being equaled since then. The largest percentage decline in the current decade was 7.1% on Sept. 17, 2001, and the biggest drop in the past two years was 3.3% on Feb. 27, 2007. Even the historic 1929 crash, while deeper, broader and longer-lasting, didn't produce a one-day downdraft as vicious as 1987 did. The Great Crash included a 12.8% one-day loss on Oct. 28, 1929, followed by an 11.7% slide the following day and one of 9.9% on Nov. 6. So, the 22.6% drop 20 years ago was truly a statistical outlier. In fact, to the extent that Wall Street looks back at that disastrous fall day in 1987, it's probably to scoff with amazement that investors were foolish enough to dump stocks on what turned out to be one of the great buying opportunities. By the end of that year, the Dow had regained 11 percentage points of its loss. And by Dec. 31, 1988, the DJIA was almost 25% higher than it was at the end of Black Monday. One reason that monster declines are less likely now is that investors recognize something that they didn't in 1987: The Federal Reserve is on their side. When the markets were rocked this summer by fears about the economic impact of the subprime mortgage crisis, the central bank hesitated initially, but then did what Wall Street demanded and has come to expect: It provided liquidity and cut short-term interest rates. Helped by the Fed, the Dow has eclipsed its July peak of 14,000, ending Friday at 14,093, up 13% this year. And tech-share strength has powered the Nasdaq, which is up 16%, to 2,806. The stock market is no bargain now, but it's not as richly valued as it was in 1987, when the crash ended a five-year bull run that had tripled the Dow. The trailing price/earnings ratio on the Standard & Poor's 500 index stood around 22 on the eve of the crash, versus about 18 today. More importantly, interest rates now are much lower, which enhances stocks' relative appeal. In contrast, Treasury bonds were in a deep bear market 20 years ago. On the morning of the crash, the yield on benchmark 30-year bonds hit 10% -- more than double their current 4.87%. Short rates then were close to 7%, versus 5% today. "The stock market has never been as overvalued before or since" the crash, says Tom McManus, chief equity strategist at Banc of America Securities. "Stocks have a much more stable foundation of valuation now than in the summer of 1987." In hindsight, it's amazing that the market went on a tear in 1987, rising by more than 40% to its August peak, when bond prices were crashing. The U.S. economy is stronger now than it was in 1987, and Wall Street matters less globally, making stock markets abroad less vulnerable to shocks in the U.S. Globalization was still years away in 1987. Russia then was part of the communist Soviet Union, and much of Eastern Europe was under Moscow's thumb. China was emerging from the economic instability that lingered well after Mao's death, while India was captive to socialist policies that had prevailed since its independence in 1947. "I don't think there's a chance that the market can go down 22.6% in one day" now, says Byron Wien, the chief investment strategist at Pequot Capital Management in New York. "There is too much liquidity and too many buyers to cause a cascade like that." Technology has improved, too. McManus, then working in the equity-trading division at Goldman Sachs, recalls how the New York Stock Exchange was so swamped with orders that some trades couldn't be completed for hours. Often, it was even unclear whose orders were being filled when trades did get done. Computer systems sophisticated enough to smoothly handle trades and record-keeping were only beginning to be used by the markets in 1987. Information also was less available to investors than it is today. The Internet didn't exist, and cable TV wasn't widespread. There was no CNBC or Bloomberg Radio. The optimists also note that the U.S. probably now has one of the least overheated stock markets in the world. Since the start of the current bull run in early 2003, the Standard & Poor's 500 is up about 90% -- impressive, but still the smallest gain among major markets, according to Birinyi Associates. Despite all this, a decline of 1987 proportions, while unlikely, isn't impossible. After the crash, the New York Stock Exchange implemented circuit breakers designed to prevent another meltdown. Under current rules, the market shuts down if the Dow industrials fall 2,700 points, or nearly 20% at its current level. Specifically, the rule stipulates that if the benchmark average drops 2,700 points prior to 1 p.m., the market closes for two hours. If a 20% decline occurs between 1 and 2 p.m., trading halts for an hour. If the 20% swoon occurs after 2 p.m., trading ends for the day. Furthermore, the maximum daily decline permitted is 4,050 points. A drop of that magnitude would shut the market for the rest of the day, regardless of when it occurred. The current circuit breakers haven't come close to being tripped. Still, the optimists' case has some big flaws. What could precipitate a 1987-style setback? The leading candidate is a major geopolitical shock. A U.S. attack on Iran, for instance, could drive oil prices past $100 a barrel, lead to wholesale liquidation of dollar assets by Middle Eastern investors and destabilize the region by drawing powers like Russia into the conflict. That, in turn, could set off a financial crisis by prompting wholesale liquidation of stocks by leveraged hedge funds and other investors, while putting enormous stress on the leveraged balance sheets of major banks and securities firms. Such a catastrophe could be worsened by the trillions of dollars of derivatives that Berkshire Hathaway CEO Warren Buffett has called "financial weapons of mass destruction." Meanwhile, top executives at Goldman Sachs and elsewhere have referred to August's market setback as a 100-year flood or a 20-standard-deviations event -- a fancy way of implying that it was a statistical fluke unlikely to recur. Dislocations in the mortgage and leveraged-finance markets emerged, hammering stocks by nearly 10% over a few weeks and battering a group of big quantitative equity funds that suffered declines of as much as 30%. What happened in August, however, was no extreme event. The setback in the junk-bond market was mild compared with what happened in 2002. If a geopolitical shock erupted in a period of market instability, the Street would have to deal with some real financial trouble. It's worrisome that the best and brightest on Wall Street consistently underestimate the odds of market-jarring events because this suggests that the financial community isn't well-prepared for a true 100-year flood. "Why is it every year or two, we seem to experience 100-year events? When people talk about a 100-year flood, it's another way of saying that something bad happened and they didn't expect it," says Rick Bookstaber, a former hedge-fund manager for FrontPoint Partners and the author of the recently published book, A Demon of Our Design. It argues that the risk of a true financial crisis has risen in recent years, despite efforts to reduce that danger. "As the markets get more complex, leveraged and interconnected, they become more crisis-prone," Bookstaber asserts. Advances in engineering, he argues, have made the physical world a safer place, but financial engineering has increased dangers for investors. For instance, the leverage used by hedge funds and financial institutions can create the potential for a cascading decline, because price drops can lead to forced selling. The selling then can feed on itself and infect unrelated markets. That's just what happened when the Long-Term Capital Management hedge fund collapsed in 1998. And despite the often-heard theory that the major stock markets are decoupling, there seems to be a growing correlation among them when prices drop. The growing influence of hedge funds and other leveraged investors may account for that. Bookstaber has some experience with financial mayhem -- he was one of the original practitioners of portfolio insurance, a supposedly benign hedging strategy that turned out to be one of the main causes of the '87 crash. The idea behind portfolio insurance was that institutional investors would sell stock-index futures during market declines to limit their losses. When the Dow fell 10% over the week before the crash, portfolio-insurance triggers were tripped, causing heavy sales of S&P 500 index futures on the morning of Oct. 19. This drove the futures to a discount to the underlying index. Arbitrageurs then bought futures and sold individual stocks, deepening the market losses and turning a bad day into a terrible one. Wall Street firms like to talk about their tolerance for risk and their willingness to provide liquidity. But these financial behemoths are highly leveraged, sometimes having just one dollar in equity capital backing every $30 of assets. Their holdings include tens of billions of dollars of illiquid securities. In reality, if disaster strikes, the financial giants might be sellers of assets and seekers of liquidity.

A big problem with leverage is that it can force investors to sell just when markets are most depressed and opportunities are greatest. The U.S. mortgage market arguably is as attractive as it has been in several years, but a leveraged investor like Thornburg Mortgage (ticker: TMA) can't take advantage of it. It was a forced seller of mortgages in August because lenders wanted their money back. Few investors are positioned as well as Warren Buffett, who has $40 billion of cash at Berkshire Hathaway and can await opportunities. Berkshire's liquid balance sheet may be getting more recognition in the stock market because Berkshire Class A shares (BRK-A) Friday hit a record and now fetch $127,100, up 15.6% this year. Yes, there are enormous pools of liquidity in the world, including more than $5 trillion of reserves held by global central banks, more than $1 trillion of that by China alone. There also are an estimated several trillion dollars of so-called sovereign wealth funds run by the likes of the Persian Gulf states, Singapore and Norway. But how much, if any, of these funds would be deployed during a crisis is unknown. How they're used could help determine the depth of a crisis. Geopolitical risk, especially the danger posed by Iran, has been discussed by Niall Ferguson, the noted financial historian and Harvard professor who was profiled in a Barron's cover story this year ("Wake-Up Call," March 12). Given the hawkish view toward Iran by some officials in the Bush administration and the unpredictability of the Iranian regime, the odds of a U.S.-Iran conflict aren't trivial -- although the ability to wage war against Iran is questionable, given the U.S. armed forces' deep involvement in Iraq. Iran has long been an irritant to America. In fact, one factor in the 1987 crash was the uncertainty caused by a U.S. attack on Iranian oil platforms that Washington said had been used to attack an American tanker. Ferguson has argued that the repercussions of a U.S.-Iran conflict could cause a repeat of what happened after the onset of World War I -- an extended shutdown of major equity markets. To him, the World War I situation shows just how fragile liquidity can be. Financial markets were blind to the coming of war in 1914 until it had virtually begun. The markets now might be ignoring the growing danger in the Middle East. Another obvious risk is a Chinese economic slowdown or financial crisis. It's notable that the biggest decline in the Dow this year -- 416 points on Feb. 27 -- was a direct response to a sharp selloff in the Shanghai market. While China still probably isn't big enough in the world economy to prompt a market crash, it certainly could contribute to one. Liz Ann Sonders, the chief investment strategist at Charles Schwab, cites several parallels between the economic and financial backdrop in 1987 and now, including a weakening dollar, rising oil and commodity prices, inflation fears, a long-standing economic expansion, an elevated stock market, a relatively new Fed chairman, rising protectionist sentiment and a lengthy span since the last 10% market correction. Perhaps the most alarming similarity bears on the dollar, which has been under pressure against the euro, pound and Canadian dollar. Prices of key commodities have surged this year, with gold hitting $750 an ounce, its highest level since 1980. U.S. financial authorities aren't publicly talking down the dollar, as Treasury Secretary James Baker did to harmful effect just before the 1987 crash. Henry Paulson, the current Treasury secretary, keeps reiterating that a strong dollar is in the national interest, but few in the currency markets think he means what he's saying. Instead, they see Washington tolerating a weak greenback because it stimulates exports and should help trim America's record trade deficit. The U.S. may be playing a dangerous game, because the depreciating currency might be taxing the patience of world central banks that are seeing the value of their huge dollar-denominated holdings erode. While a run on the buck -- and a sharp market setback -- are possible, it doesn't appear to be in the interest of big dollar-holders like China, Russia or the Middle East nations to precipitate a collapse in the currency. The odds of a meltdown probably are low, but they're not so remote that investors shouldn't emulate Buffett by maintaining liquidity. Giddy markets should inspire caution. And the markets -- as they were in 1987 -- are giddy now. --- For Barron's subscription information call 1-888-BARRONS ext. 685 or inquire online at http://www.barronsmag.com/subscription/subscription.html.

Extend Gain

KLCI ends +0.5% at 1383.61, off intraday low of 1371.26 in heavy volume of 1.52 billion shares as local funds buy up heavyweights and government-led companies in last hour of trade. Market breadth positive gainers beating decliners 442 to 384 after a choppy trading session on intermittent profit-taking. Benchmark likely to extend gains tomorrow, test all time high of 1392.18 ahead of the long weekend. Profit taking by retail investors kept the market in negative territory for most of the day but this was mitigated by buying interest in heavyweights and government-led companies by local funds. Foreign funds were also actively buying some blue chips as the ringgit strengthened to a fresh nine year high of 3.3650 against the dollar.

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Hantam saja la

KLCI ends +0.6% at 1376.93, off intraday high of 1381.04 in heavy volume of 1.63 billion shares; sentiment lifted by gains on Wall Street overnight while local funds bought blue chips and government-led companies on dips. Market breadth ended negative with decliners edging out gainers 445 to 414. Benchmark expected to trade within 1370-1385 range tomorrow. Local funds continued to accumulate shares of government-led companies, including plantation and construction stocks. The new tax incentives for the Iskandar region also helped to keep the market buoyant.

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Follow Through Buying

KLCI ends +0.4% at 1369.39, off intraday low of 1359.63 in heavy volume of 1.70 billion shares as local funds bargain hunt blue chips and government-led companies on weakness, say dealers. Market breadth ended negative with decliners edging out gainers 423 to 416 although ratio narrowed toward close of trade. Benchmark likely to trade in 1360-1385 range tomorrow if follow through persists and U.S. stocks post at least modest gains overnight. The market went through a mild correction but firm buying interest by local funds helped to reverse the KLCI's fall. Heavy speculative trade drove up a number of small-cap and penny-stocks on positive newsflow.

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Consolidate

KLCI ends down 0.6% at 1364.14 in heavy volume of 2.15 billion shares with profit-taking across a broad range of sectors dragging benchmark off its intraday high of 1382.78. Market breadth ended negative with decliners outrunning gainers 517 to 378. Market may trade within 1350-1370 Tuesday if Wall Street fails to extend its gains overnight. We have had a pretty decent run up since September 18 and some degree of consolidation is not surprising.

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Recovery

KLCI ends +0.2% at 1369.84 in heavy volume with 1.25 billion shares changing hands, rebounding from intraday low of 1358.34 as bargain hunting on blue chips, government-linked stocks by local funds helped reverse losses. Market breath turned positive at close with gainers edging out decliners 416 to 410. Follow through buying interest may push benchmark to retest all time high of 1392.18 tomorrow. Local funds were actively accumulating government-linked stocks today. This prompted retail players to take up fresh positions in speculative issues, leading to the market's recovery.

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Still Positive

KLCI ends down 0.1% at 1366.96 in heavy volume with 1.74 billion shares changing hands; market retreated from intraday high of 1380.29 on profit-taking following mild pullback in some Asian bourses. Market breadth turned negative in late trade; decliners edged out gainers 555 to 318. Dealers say buying momentum may pick-up tomorrow as investors bargain hunt some blue chips and index-linked issues; tip KLCI to trade in 1360-1380 range tomorrow. Both foreign and local funds were active in today's trade, accumulating government-linked stocks in plantation and construction sectors and select heavyweights like Tenaga and Telekom. Sustained buying interest may keep the market buoyant tomorrow.

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Breadth Positive

KLCI ends +0.8% at 1347.05 in heavy volume led mostly Telekom Malaysia but profit-taking into strength dragged benchmark off its intraday high of 1353.71, say dealers. Market breadth positive; gainers trumped decliners 448 to 365. KLCI to trade in 1333-1350 range tomorrow. Telekom's share price movement contributed to more than 70% of the benchmark's rise today. Depending on the performance on Wall Street.

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