(Updated: 30/01/2000)

N.B. Above Chart is abstracted from Metastock Program

Last week's STI and Sesdaq movement were some how within our expectation. We said that, "Expect STI to move down towards 2200 in the early part of the week and may stage a rebound by mid to end of next week." STI did move down towards 2234 in the first two days of the week and started to rebound towards 2325 by mid to end last week. As for Sesdaq, we said that "For Sesdaq, it will probably trade within the range of 148-142 in the early part of the week. However, if it can break above 148, it will test its resistance at 153." The index went down to 142 on Tuesday and rebounded to test 148 last Thursday. We are glad that once again our prediction was right to the dot! Last week was indeed a battle between the bull and the bear, with the bull appeared to have an upper hand in the mid-end of the week. Just when we thought that some sunshine may have come and brighten up our sky, suddenly a hurricane strike our Western pals last Friday (with Dow -280 points and Nasdaq -160 points) and put us into a very awful position for the coming week. So, can we still see a bit of Chinese New Year rally? Were the Dow and Nasdaq over react last Friday?

With FOMC meeting on next Tuesday and Wednesday, the key forecast for next week will be the US interest rate. We had said in our last week commentary that 11,000 was a main support for Dow Jones. The fact that it was broken convincingly last Friday, had suggested to us that the technical picture for Dow was indeed very bad. As such, it will most likely continue heading south to test its major support at 10200-10400 level. For the bull to remain in control, this level should not be broken. Failing which, the US market (for Dow Jones index at least) may have kick start its long awaited bear market. As such we have to monitor very closely on US market for the coming week. Beside the FOMC meeting, we will also have a string of economic data from US, with major data such as non-farm payroll to be released on Friday (as such, a sell on rumor buy on fact for the FOMC meeting may be short lifted). The last portion of Corporate results will also be released next week, with Wednesday's result on Amazon.com to be the main focus (after it had announced a retrenchment of 150 workers last Friday). Hence, next week is certainly won't be a week for the faint of heart! Expect STI to track closely with the US market for the coming week. It would probably move down to test its low of 2234 in the early part of the week and if Dow continues to drop towards 10400 or lower, STI will look set to test its critical support at 2180-2220. As for Sesdaq, the failing to break above 148 last Thursday had suggested that it had lost its momentum and should drop back to test its support at 143. A break below this level will have a serious impact to the market, which may see it testing 135 and below. The plunge on Dow Jones and Nasdaq last Friday had indeed nailed down the last hope for our Chinese New Year rally. We can only hope that the damage for the coming week will not be too severe for us to manage.

The following are resistance and support to watch for Dow Jones, Hang Seng and Nikkei next week:

Any break-out on these levels, will certainly affect our STI movement.

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) and is now in its abc 2nd wave. In this case, we may have seen a short term top at 2582.90. Alternatively, we may have just completed the 5th of wave (5), we can only confirm the case when STI breaks below 2150. 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

1. FOMC meeting on Tuesday and Wednesday.
2. The release of Non-farm payroll on Friday.
3. The corporate results in US (especially the Wednesday release of Amazon.com result).
4. The political development in Indonesia when President Wahid is visiting Middle East and Europe.
5. The movement of US stock market and T-bond.
6. The movement of Dollar vs Yen.
7. The stability of Regional and Singapore curencies
8. Regional stock markets movement.
9. Singapore 3 months Inter-bank rate.