(Updated: 12/03/2000)

N.B. Above Chart is abstracted from Metastock Program

Last week we said, "As for STI, expect it will move up early next week towards 2150-70 level. The first two days will probably tell us if STI has a strength to move further up or make another U turn to test its expected low at 1980-70. Only a break above 2220 with good volume, will give us a confident that STI is now entering into its big upmove towards 2350. We are not sure how good is the chance, but we believe the next two or three trading days will give us a clue on this matter." STI did move up to a high of 2154 on Monday, but unfortunately, the rally could not sustain and it made a U turn and drop to a new low at 2044 on Wednesday. If you were more alert, you should detect the weakness last Monday and got out from the market with little scratch. Once again, the market had indicated to us that it had not ready for any meaningful rebound yet. As for Sesdaq, we had said that, "If by next week, it still unable to close above 145, it may be heading for big trouble. A break below 137, will lead to a test of 133 and may eventually form a rising wedge with a target of 103." Indeed, Sesdaq had followed exactly as what we expected. It broke the support at 137 and headed to a low of 131 before making some technical rebound and closed at 138 last Friday. Now, the question that remains in everyone mind is probably be, when will a meaningful rebound start? Have we seen the short term bottom? If not, when will it happen?

Three things had happened last week that make us uncomfortable. First, the U turn by STI index after hitting the high of 2154 last Monday, suggesting to us that our market is still very weak. Second, our SES Construction Index had broken its important support at 687. This was the low since July'99, and by coincident the chart of SES Construction Index seems quite similar to our Sesdaq index. Does it mean that Sesdaq will follow this index and head to new low, with a possible of fulfilling our target of 103? Third, despite of many attempts, Dow Jones was unable to close above 10,000 mark by Friday, could it be heading for more troubles? This week will have many events in the agenda. From USA, there are three important economic figures coming out this week. On Tuesday, we will have February retail sales, follow by Thursday's PPI and Friday's CPI. From Taiwan, the President election will be finalised on Saturday. And from Singapore, we have shares delivery time shorten down from T+5 to T+3 starting 15th March and on 16th March we have our public holiday. With all these in mind, we would be surprised if there is a good rally in the coming week. Expect our market to be very quite in the early part of the week with a downward bias. As for Dow Jones, its inability to stay above 10,000 has suggested to us that a new low may be in the making, and could be happening by end of the week. As such, SIT will probably be heading towards 1970 by then. As for Sesdaq, it will continue to drift lower and may test its important low at 128. There is one question that has been in our mind over the past few weeks, i.e. are we in the bear market now? We are trying to draw a conclusion by looking from STI, Sesdaq and all individual sectors indices. In fact most of the sectors indices had started to decline since STI kicked start its 4th wave correction in July'99. These included properties, multi industries, commerce, hotel, construction, transport and sesdaq indices. The only sector that power up the 5th wave of STI was from Finance sector. But then, since 15th Feb'2000, it has broken its up channel and finally joined the other indices to begin heading lower. The only two sectors that are still in the up trend are electronic and manufacturing indices. Can these two sectors continue to move up and halt the other sectors from heading lower? We doubt so! For from past history, our market needs properties and finance to lead. The manufacture and electronic sectors are simply too small to bring back the other sectors. Because of that, we think we are in the bear market now and the electronic and manufacture sectors would probably join in the bear party when STI begin its wave C down-move. That will probably happen some time in September this year. So, meanwhile just stay prudent and we may have a good wave B rebound some time in May. Just hope that by that time, we are still alive and have some bullets to take the ride.

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.

We have finally decided to put 2583 as the top of wave 5 of wave (5), even thought theoretically we should wait until STI close below 1970. This premature labeling may lead us into a wrong picture for the long term, if STI eventually stay above 1970 and do not break below it thereafter. But nevertheless, the early we make our stand, the easier it is for our investment decision. At current stage, we would prefer to be prudent then to be sorry later. We will of course continue to monitor closely and should circumstance require us to rethink the wave labeling, we will not hesitate to do so accordingly.

Events To Watch For The Coming Weeks/Month .

1. Tuesday's US retail sales, Thursday's PPI and Friday's CPI.
2. The possible tension between China and Taiwan during Taiwan final phase of President election.
3. The political development in Indonesia.
4. The movement of US stock market and T-bond.
5. The movement of Dollar vs Yen.
6. The stability of Regional and Singapore currencies
7. Regional stock markets movement.
8. Singapore 3 months Inter-bank rate.