 (Updated: 12/12/99)  N.B. Above Chart is abstracted from Metastock Program The market had delayed a week but did finally come back to our expectation. Last week we said that, "Expect STI to move up and challenge its record high next week, and will probably create a high somewhere around 2280-2350. If we are to see STI at 2350 this year, it will have to happen next week." Indeed, STI did move up in according to our expectation, it surpassed our 2350 target and closed at 2395 last Friday. It was a breath-taking week, with STI continued with a 5 consecutive up days and a whopping 165 points gain. In last week commentary, we also said that, "As for Sesdaq, it will remain the weakest index for the time being. Any up-move will face resistance at 140 and 145." We were right again! Sesdaq had faced strong resistance around 140 through the week and only managed to push above 145 towards last Friday's closing. While we are witnessing two extreme movement between blue chips and penny stocks, such phenomena will not continue for long. One way or another, it is either second liners doing a catch up in price with the blue chips or eventually the blue chips have to correct downward to get in line with other stocks. Which way is it going to happen? How will blue chips and second liners performance next week? I am sure these are the issues that we are thinking over the week end. First, we have to realise that the past few weeks rally were
fueled by big blue chips and some heavy Nasdaq related electronic counters. This behavior
is similar to what was happening in US over the past few weeks, where the rally was also
centered by a few selective stocks. As such, unless there is a broader rally in US market
for the coming week, such patent shall continue. Second, the main participants for Sesdaq
counters are retailers, syndicates and stockists. With most of the retailers sitting
sideline, waiting for the effect of the recent announcement on shorten down of contra
period, the second liners will have few participants. As such, a broad base rally to
include all second liners is very unlikely until the participants are use to the shorten
contra period. Such issues may eventually be resolved in January'2000. We expect STI
to continue its rally in the early part of the week, and may create an intermediate top at
2400-2450 around middle of the week before a correction kicks in. As for Sesdaq, it will
meet a resistance at 153-158 level and start to drift lower by middle to end of the week.
The rally in Wallstreet and our market will probably taper off some time next week and be
replaced by a volatile side way trading range. Under such circumstance, rotation play on
selective stocks may continue. As for Dow Jones, if it turns at resistance 11341, it
may create a short term double top, and for Hang Seng its resistance is at 16180. Any turn
at the resistance for these two markets, may signal a correction for STI. Technically, it is increasing likely that we have kicked start the long awaited 5th wave. If we are right, the market is now in the 5th of the 1st of the wave (5). In this case, we may see a short term top at 2400-2450 level. Alternatively, we may be at the beginning of the 5th of wave (5). If this is so, then when the 5th wave end, we may be experiencing a big correction by then. We shall let the market tell us the story next week.
Events To Watch For The Coming Weeks/Month
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