 (Updated 16/05/99)  N.B. Above Chart is abstracted from Metastock Program Ever since two weeks ago, we had been predicting that STI would undergo a correction that may last for weeks and that the consolidation would probably be in a range of 1920-1700. So far we are right to the dot, and indeed any rally last week could only reach the high of 1907. We continue to hold our stand and believe the correction will continue for a few more weeks before seeing another upmove in June-July, coincide with Dow Jones Summer rally. As for next week, STI will shift downward towards 1700-1760 range, the big plunge would probably occur on Monday and Tuesday due to the following factors:- 1) Last Friday, the Consumer Price Index in US was a record high of 0.7%, way above the general consensus of 0.4%. This had caused Dow Jones to plunge 199 points and the technical picture for Dow Jones now looks extremely bad. With US now looking set to shift toward a bias for tightening interest rate in its FOMC meeting this coming Tuesday, the Asia stock markets now look vulnerable for a big correction. Remember, since last August when Asia stock markets started their remarkable upturn, the primarily engine for the upmove was mainly due to lower interest rate by Fed and subsequently created a low interest rate environment for Asia. This scenario may change soon if Fed decides to tighten its monetary policy this coming Tuesday. 2) The announcement by MAS to suspend trading of banking stocks and related derivatives on Monday, pending the announcement of Singapore Banking deregulation, this move may not help the market. With market expected to move down on Monday opening due to Dow Jones performance, the sentiment is already bad, and that the suspension of trading in banking stocks would probably aggravate more panic selling, this is especially so in the properties sector. 3) Indonesia election campaign will kick off on 19th May, with more parties start to conduct group gathering for the campaign, expect more violence will emerge and this is no good for the markets. Judging from the above factors, I believe STI will have a bigger correction next week, with a possible of touching the low of 1720. However, only a break below 1560 will suggest that a more severe correction is in the card. If I am right, the next upmove would only come some time in June - July, coincide with Dow Jones Summer rally. Investors who had followed my advise in the past two weeks should now be very liquid in their portfolio and that the bargain hunting may emerge soon for you to take the advantage. 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 though I am now more incline towards the first alternate count. 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
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