 (Updated: 02/01/2000)  N.B. Above Chart is abstracted from Metastock Program We have finally crossed over the year 2000, and to-date there were only a few bugs disturbing the world computer systems. May be we were over worried or we are still in the early stage of bugs war? Anyway, at least till today we are safe and sound in Singapore. Last week was fascinating, with all major indices in the world closed at or near the record high to celebrate the turn of Millenium, the bull had certainly over run the bear in 1999. Can STI continue to perform as what it did last year? Are Dow Jones and Nasdaq going to continue their breath taking melt up? These are certainly the questions that many investors would like to obtain the answer in the beginning of the year. Before we touch on these issues, let us examine the reasons for the melt up in US and World markets over the past two months. We believe the actual reasons that kicked start the recent melt up were due to: First, the expectation that Fed would not hike interest rate during the cross over of Y2K. Second, the Fed and other central banks had also injected tremendous liquidity in the market for worrying that Y2K may cause the panic and people rush to withdraw cash. This effect started in late November and the liquidity eventually flew into the stock markets. With markets continued to surge, more and more investors jumped on the bandwagon, for they started to believe Y2K would be a non-issue and that funds would start buying immediately after the Y2K cross over. So far the assumptions seem to be right, but can the euphoria continue in January? We are rather cautious at this stage. We believe most of the funds who would like to buy, have already committed in December and are now sitting on good profits. As for those funds that have not committed, most likely than not, they will wait for some corrections in Nasdaq and Dow Jones before starting their shopping. Remember, by mid January, the first set of inflation figures of the year will be released and that Fed will have their meeting on Feb 2. Also, Corporate results will come out some time in mid January (with most of the good results have already priced into the US market). These will encourage US investors to take profit and not to forget, these profit will not be included in their last year's tax assessment. With this in mind, we believe US market will start its correction from second week of January, and that this will also bring down our market. As for this week, STI will probably continue to move up in the early part of the week on Millenium celebration but will turn cautious in the later part of the week. A test of 2500-2540 is quite possible but should be cautious on its support at 2400. A break below 2400 will bring STI towards 2280. As for Sesdaq, it continues to be trapped in a big triangle, only a break above 161 will signal a big up-move in the card. However, if it fails to break the resistance at 156-161 level, it will turn down towards support at 148. A break below 148 will lead the index towards 133.
Technically, we are now in 5th wave. If we are right, the market has just completed the 5th of the 1st of the wave (5). In this case, we may see a short term top at 2450-2540 level. Alternatively, we may have just completed the 5th of wave (5). If this is so, we may be experiencing a big correction soon. We shall let the market tell us the story next week.
Events To Watch For The Coming Weeks/Month
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