 (Updated 17/10/99)  N.B. Above Chart is abstracted from Metastock Program We had predicted last week that, "we expect STI to move higher in the beginning of the week, with a possible of testing the resistance at 2150-2165 level. But it will pull back in the second half of the week towards 2080." STI did move up in the beginning of the week in according to our expectation, but failed to surpass the resistance at 2135. The index finally came down in the second half of the week due to the uncertainty in US market, and closed at 2061 last Friday. Thought our prediction was slightly out of the range, the market was indeed perform within our expectation. Our worry of the imminent plunge in US market had finally arrived. Dow Jones had make a classic pull back to its neckline and began to fall like no body business. The situation turned worst after Thursday night Greenspan's speech and the blown out of proportion PPI figure released on Friday. We were expecting an 8th degree earthquake type of drop (a magnitude of 400-500 points) last Friday, but it did not happen. Dow Jones had dropped 200+ pts in the early session and maintained within that range towards closing, this had certainly given us some kind of relief (or was it?). Looking back to the events happened in Indonesia last week, we were amazed as to what can happen in Indonesia. An election that started four months ago (the longest election in the world) was still a mysterious event like what it was started. We are only one week before the President election, yet no one knows who will emerge as a president or how many candidates will actually come forward to contest for the post. I guess the usual Indonesia style of handling things prevail, and we have no choice but to wait for the last minute to find out the faith of Indonesia future. So, what will happen next week? Is Dow Jones going to crash? Will Indonesia return to calm after its President election or more riots are on the card? How are these events come to affect our stock market? These are millions dollars questions that are hard to answer. First, we had not seen any panic selling (rushing for exit) in Dow Jones although it had dropped a total of 700+ points over the last five days. Does it mean that the engineered soft landing is working well? Or could it be just a tip of an iceberg that will eventually crack with delay panic selling? Second, who will emerge as the winner for Indonesia President this coming Wednesday. Can he/ she calm down the students and bring the economy back on track? These are the two keys to decide the faith of Asia stock markets, especially so for Singapore. While we are trying to search for any clues that can help us establish a case, sad to say, until now we are unable to find any concrete supports for the bear or the bull. If we have to make a commitment, then we would say that we will probably see STI drifting lower towards 2,000 in the early part of the week. And if there is no crash on October 19th (the 12th anniversary of '87 crash) in Dow Jones and that Indonesia manages to elect a President that has majority support on October 20th, then we will see STI moving above 2100 and possible breaking 2150. We think there are a few critical chart points need to monitor closely next week. Dow Jones --> 9800, S&P -->1200, Nikkei -->17000, Hang Seng -->12000 and STI -->2000. All these are major support for their respective markets. If any one of these indices break below these major supports, it may provide an early signal that the worst is not over and that STI may have to correct to 1800 or below! I guess this is the best advise we can offer so far, thought personally I do not think Dow Jones will crash this year. Technically, we are in a critical juncture for the medium to long term. As we are unable to identify wave 5, the market had left us in two possible long term scenarios. One is that we are still in wave (4) correction mode (or just about to complete wave 2 of wave (5), please refer to the above chart). As such, 2169 is a critical resistance to watch. If STI can break above this level, the bearish count is automatically cancel. On the other hand, so long as we are unable to identify wave 5, the up-move since September 1998 remains as a three wave move, which could turn out to be a corrective rally, hence a bigger wave C will bring STI into a new low below 800! (please refer to our alternate B scenario in our Long Term Perspective site). We need to be patience for the market to tell us its possible direction.
Events To Watch For The Coming Weeks/Month
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