 (Updated 31/10/99)  N.B. Above Chart is abstracted from Metastock Program We said last week 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." The index did perform in according to our expectation in the early part of the week. It fall towards 2,000 and tested a low at 1978 before bouncing back and started to test the resistance at 2050. However, STI failed to fulfill our expectation of breaking above 2100 by end of the week and instead it closed at 2017. This was primarily due to the knee jerk created by the failing of Ms Megawati to be elected as Indonesia president. Last week we were concerned about the Indonesia's president election and the 12th anniversary of '87 crash in Dow Jones. Although there is no drastic movement in the market last week, the Indonesia president election was full of surprises and dramatic outcomes that showed us the meaning of politics. As for Dow Jones, thought there is no anniversary crash, the movement were certainly volatile, with one day worried about interest rate and other day encourage by good corporate results etc. To sum up, last week was quite volatile but it neither damaged the sentiment of the market nor gave a boost to the bull. So, what's next? Are we going to stuck in this trading range for the rest of the year? We were certainly in a very difficult trading environment over
the past three months. To be honest, this three months would probably be
remembered as the most difficult time to make a forecast as compare to any time over the
last three years of STI's history. As such, we have no choice but to be extreme patience
while waiting for the market to disclose clues bit by bit. We did expect STI to give us a
clue last week by at least surpassing the 2100 level, but it did not. So, this week and
next week become two very important weeks for us. If the bull wants to make it case
present before the turn of millenium, then the only opening window this year for them is
either this week or next. If STI still unable to move up above 2100 by end this week or
early next week, then we would probably never see anymore rally this year until the turn
of millenium. On the other hand, if STI breaks below 1978 this week or next, then it is
going to head towards 1800 by December. It is interesting to note that our market is now
moving very similar to all major indices worldwide, such as Dow Jones, S&P, Nikkei and
Hang Seng. As such, any break on a critical chart point on these indices, may provide us
an early warning or expectation on which direction we will be heading to. The resistance
and supports to watch next week are as follows: 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 three possible medium term scenarios. One is that we have just completed a triangle wave (4) correction mode, and that wave (5) is about to begin. Second, we have just completed wave 2 of wave (5) and that an impulsive wave 3 of wave (5) is about to start. Third, we are still in wave c of wave (4), which eventually will bring us down towards 1800 before completing the correction. 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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