 (Updated 09/05/99) 
N.B. Above Chart is abstracted from Metastock Program Last week, we mentioned that "an upmove on STI above 1,904 is still possible, but it would probably be capped at 2,000." It was a lucky guess and indeed STI make a high of 1995 last Thursday before making a U turn and plunged on Friday. We maintain our last week's view that a correction on STI is very likely and will eventually move toward 1700-1760 level. The reasons are as follows: 1) Last Thursday comments by Mr Greenspan may prove to be a turning point on the global interest rate movement. With Mr Greenspan suggested that tight labor market may eventually cause inflationary in US, the US market is now shifted toward a bias for tighten of monetary policy. Under such scenario, a cut in Singapore interest rate is now rather remote. 2) Although last Friday US employment data came in within market expectation, T bond continued to drift lower. Another indication that market sees Fed will hide rate in the near future. 3) Our BG Lee spoke last Friday that our stock market was either undervalued last year or is now overvalued, suggested to us that the current buying spry may be overdone without concrete fundamental support. 4) With NATO mistakenly? bombed China Embassy in Yugoslavia, some political tension may surface in the coming week, and is certainly no good for the Asia market. 5) On domestic front, most of the good news were already discounted in the market and judging from our usual seasonal market movement, the month of May is usually a quite month with not much news available to support the market (although the deregulation of Singapore banking sector that supposed to be announced in a few weeks time may have some impact to the market, but then I am not sure whether such news is good or bad to our market). 6) With Indonesia election approaching soon, I believe most of the investors would rather take a back seat during this time.
Technically, STI has just completed its impulsive wave (3). The market has shown some momentum divergence and is due for correction. We are continue to search for clues in the market to determine which scenarios posted in our "Long Term Perspective" is most likely to happen. But sad to say until today we have not found the clue yet. However, we will patiently wait for the market to tell us the story and will inform you as soon as it is determined.
Events To Watch For The Coming Weeks/Month |