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(Updated 04/07/99)

N.B. Above Chart is abstracted from Metastock Program

Last week, we said "While Dow Jones looks like been trapped in a trading range between 10400 to 10900, a break of either sides may lead to a 10% move in the index. This will probably happen in the coming week, and the move will rule the entire stock markets in the world!" Dow Jones did break the 10900 marks after Wednesday's Fed 0.25% rate hike and a shift toward neutral stand on future interest rate movement. Expect Dow Jones to continue its up-move towards the eventual target of 11700, thought the movement may not be on a straight line but a wild swing on up and down.
Last Wednesday's Fed announcement did provide a relief on worldwide stock markets, and we had seen Japan, London and Singapore all broke to new high on their respective indices. Although we did expect STI to make a new high last week, we did not expect the strength to carry on until Friday and indeed it was a surprise to us. As for Sesdeq counters, we said that they would start correction and may lead the market in the process. The penny stocks did correct towards the end of the week but more on a rotating basis and did not reflect clearly in the indices.

So what will happen this week? Is the bull continue the upwards momentum or will a deeper correction emerge? I think STI will probably continue its up-move in the beginning and middle of next week but will succumb to selling pressure towards the end of the week. Such up-move will be propelled by Hotel, Properties and Banking sectors in term of priority, and may lead SIT towards 2250-2300 level. However, a break below 2150 will signal a beginning of a deeper correction, which will then bring STI towards 2100 as first target and a possible of 1950 in a few weeks time. As for Sesdaq counters and penny stocks, the deeper correction may start as early as Wednesday and will eventually take a correction of 10-20% in the coming weeks. In reality, penny stocks had become very volatile since last week and the opportunity of making money had become dimmer as time past. Investors are therefore advised to exercise extreme care in trading the penny stocks and for traders who could not sleep without a position, it would be advisable to turn the attention into blue chips and properties counters for safety reason.

Technically, STI has completed its wave 4 and is now entering into wave 5. The wave 5 is usually very unpredictable and may end in any moment. Expect STI to reach between 2200-2300 before some deeper correction emerge. A break out after the correction will help us in determine which scenario in our "Long Term Perspective" site is the most likely to happen in the coming months.

Support 2214, 2110, 2080, 2026, 1995, 1950, 1820-1850
Resistance 2250, 2300, 2500

Events To Watch For The Coming Weeks/Month

  1. The movement of US stock market and T-bond.
  2. The development of Indonesia election.
  3. Hang Seng Index movement.
  4. Nikkei and JGB movement.
  5. The stability of Regional and Singapore currencies (especially Indonesia Ruppiah)
  6. Regional stock markets movement.
  7. Singapore 3 months Inter-bank rate.
    8.