(Updated: 20/02/2000)

N.B. Above Chart is abstracted from Metastock Program

Last week we said, " Expect STI to move lower towards 2180 in the early part of the week. But will probably rebound in middle of next  week before coming down again." STI did trade lower and touched 2179 on last Wednesday (just 1 point out of our prediction!) before rebounded to 2241 on Thursday and finally closed lower at 2177. It had performed exactly to our expectation and we are glad that our prediction was right to the dot again! As for Sesdaq, we were expecting it to trade within a trading range of 153-146 level while waiting for a clearer direction from STI. But to our surprise, it did manage to break above 153 and traded to a high of 159.43. This was because of the strength in Nasdaq and some announcement by listed companies on the news related to Internet and technology development. Can Sesdaq continue to show strength in our market? What is the implication of Dow Jones breaking a critical wave support at 10355 to our market? Can Nasdaq continue its bull run after a 3% dropped last Friday? These are the questions that are hanging in every investor's mind now.

A big plunge of 295 points in Dow Jones towards 10219 was some how within our expectation. The fact that the big sell off came in the afternoon, could be due to the options expiration, the long weekend ahead or the aftermath of Mr. Greenspan speech on Thursday. We had said in our last week commentary that Dow Jones should eventually fall towards 10000-10100 before finding any support and we were right on it. Could this plunge turn out to be a big crash in the coming week? We think it is unlikely. In fact our Asia markets had been predicted on this plunge before their markets closed last Friday (where most of the Asia indices closed with a big percentage drop and near their respective lows.) With US having a President day holiday on Monday, it gives our Asia markets a chance to re-assess the current damages and a time to cool down a bit. Even so, that does not mean that we will be immune to their last Friday's fall. In fact, the testing time will probably come in the middle of next week, where US market re-open and that all eyes will focus on Dow Jones to see if it can hold at 10000-10100 major support level. We believe it should make a good rebound at that level on its first test, but will re-test that level again in mid March. As for SIT, it will probably go down on Monday to test its support at 2150 before some bargain hooting emerge. If we do see a strong rebound in Dow Jones next week then STI will probably break its resistance at 2250 and move towards 2325. However, if STI fails to hold at its support 2150, then we are heading towards 1980-70 major support. And indeed, it will then be the last defense for the bulls! The fact that, Dow Jones is now in its down trend and continue to face selling pressure, will certainly have a negative impact to our market. Although we are not in a confirm bear market, we believe a short term top (at least) of 2583 is now confirmed and that we are unlikely to test that level in the coming two months. The greatest fear will be that, if Nasdaq had decided to join Dow Jones and started to move down in big magnitude, that will put all major indices in US to be in down trend and could be a disaster to us. It is certainly too premature to jump the gun right now, but nevertheless a cautious stand at this time will be the best choice for investors.

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.

Ever since the beginning of the year, we have not changed the labeling of our wave counts on the above chart. This is because, technically the high of 2583 on 3rd January'2000 can still be either wave 1 or wave 5 of bigger wave (5). Only a break below 1970 will confirm that we are now in a bear market (a big wave (II)). For the time being, we would rather stick to our conservative count and remain 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 1970. 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. Thursday Singapre 4th quarter GDP figure.
2. Friday's Dr Hu's budget speech.
3. Friday's US 4th quarter GDP.
4. The political development in Indonesia after President Wahid arrived back to Indonesia.
5. The merger talk between SingTel and Hongkong Telecom.
6. The movement of US stock market and T-bond.
7. The movement of Dollar vs Yen.
8. The stability of Regional and Singapore currencies
9. Regional stock markets movement.
10. Singapore 3 months Inter-bank rate.