(Updated 20/06/99)

N.B. Above Chart is abstracted from Metastock Program

Last week, we said that "if STI continues to move up towards 2100 (which we believe it will happen next week), it will then enter into a very critical zone (between 2100-2300)." STI did move up in according to our expectation, except it did not move as much as we would like to see. This had shown that the internal is now getting weaker, thought we still expect STI to continue moving up towards 2100-2150 by end of this week, it may have lost its implusive strength. The main event happened last week was the news from three local banks on their local and foreign tranches merger, this had caused the foreign tranches of the banks to drop while the local tranches appreciated. From the chart point of view, the MSCI index is now looked much weaker than STI index. This is certainly not a good sign, considering that most of the foreign funds are actually following MSCI index closely. Last week, we also said that "As for individual sectors, Electronic and Manufacture sectors remain the strongest while Properties sector may do the catching up in the coming week." The market did perform in according to our expectation, while Electronic and Manufacture sectors were surging and the Properties sector began to move. This week will be a bit different than last week, while we believe STI will continue to move up towards 2100-2150 level, the sectors that will lead the up-move will be Properties, Multi Industries and than follow by Banking in term of priority. While Sesdeq, Electronic and Manufacturing sectors will begin their correction by the end of the week. For STI, a break below 2026 will signal the beginning of a more meaningful correction that may last for a month or so, before an up surge again towards 2100-2300 level.