 (Updated: 21/05/2000)  N.B. Above Chart is abstracted from Metastock Program Last week's markets action were pretty much within our expectation. We said that, "At present, we believe the odd is still favoring another sell off in Dow Jones and Nasdaq towards a new low, before a more meaningful rebound can occur. This could happen either after the Fed meeting or towards the end of May." Indeed we continued seeing a sell off in both Dow Jones and Nasdaq after the Fed meeting on 16/5. It was especially so in Nasdaq, where the index had fallen 3.9 percent over the week. We also said that, "As for our market, it simply has too much to worry in the month of May. The Fed meeting on 16/5, the tension between China and Taiwan, the riot in Indonesia, the coming IPO of BCA bank in Indonesia and the bearish outlook of Nikkei etc. These are the huge uncertainties that may affect our market one way or another. Besides, the break down in our financial sector index last week, and the weakness exhibit in both properties and manufacturing sectors indices, had shown us that there would probably no prominent sector that is capable of leading our stock market out of the wood yet. With these in mind, if STI can continue to trade within the range of 2000-2200, is considered lucky! But we believe, the odd is probably belong to the bear, and that a break of support at 1930-1970, will probably see STI drops towards 1800-1850 level." And to our amaze, the STI index had gone down in according to our expectation and we were right to the dot! This again has demonstrated that Technical Analysis and Elliott Wave Theory do work in current competitive environment despite the influx of information through Internet. Finally we had mentioned that, " As for Sesdaq, expect it to continue drifting lower. A break below 110, will signal a continue sell off towards 100 and below." And again, Sesdaq did move down accordingly and broke the 110 support last Friday before closing at 110.46, just a fraction above the 110 support! Since all markets did move in according to our expectation ,are they going to continue moving down and make some important break out? When will STI make a short/ medium term bottom? Will Nasdaq experience another big sell off? These are some challenging questions that need to be addressed. Last week's Fed meeting was within market expectation when the Fed hiked the rate by 0.5%. However, this time the market action was somewhat different. It was a buy on rumour and sell on fact situation. The market began to sell down the day after Fed hiked the rate, which was mainly due to market worried that another Fed hike may be in the card. With US market continues to be influent by the interest rate movement, the global stock markets will not be immune by the situation. In addition, last week announcement by Nat. Elect about the shortage of components that may affect its half year earning had hit our market badly too. With the only bright spot, the Manufacturing Sector, been damaged by last week massacre in Contract Manufacturing companies, our Singapore market is now completely at lost. First, we had a big correction in Properties sector (some stocks had fallen more than 50% from the peak), then came the broke down in Financial sector few weeks ago. And now, the Manufacturing sector has decided to join the party. With all these major sectors pointing downward, we believe our market simply do not have a chance for speedy recovery. Indeed, it is more likely to continue drifting lower towards 1850-1800 as per our prediction last week. We believe the next two weeks are very crucial to worldwide stock markets. With Nikkei hitting a new low, Hang Seng and Kospi just a few points above their recent low, the Asia stock markets look set for a possible of another melt down. We believe if Nasdaq can not hold its recent low (3107) in the coming two weeks, the whole Asia markets will face another big sell off. And that will more or less confirm the beginning of our global bear markets. We will inform you at the latest time, if such event does occur. However, if you have been following this commentary closely, you should be out of the market since early January, for we have been bearish since the beginning of this year and have not changed our view since then. As for Sesdaq, we believe it will continue drifting lower towards 100 and below. For retail investors, our advise is to stay cautious even though the price of penny stocks may look very attractive now. The following are resistance and support to watch for Dow Jones, Hang Seng and Nikkei next week.
We have 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. But nevertheless, the early we make our stand, the easier it is for our investment decision.
Events To Watch For The Coming Weeks/Month .
|