 (Updated: 11/06/2000)  N.B. Above Chart is abstracted from Metastock Program Last week we said,"it seems that there is a high chance that Nasdaq may have hit its Intermediate bottom and is now turning up. Only a break below the recent low will create another panic selling worldwide. As for Dow Jones, it is still confined to a trading range and does not show any preference to move in either directions. Only a break above or below the two distinct trend line will set the trend for the coming months. And we shall be patient to wait for such break out." Indeed, both Nasdaq and Dow Jones continued to trade within a trading range and did not show any signs of breaking up or down. We also said that "As for STI, we believe it will continue to move up in the early part of the week. But this technical rebound should be capped at 1990-1980 level before profit taking set in." STI did move up last week, but we were surprised by its strength and that it could manage to surge up for four days and only some mild pull back last Friday. Nevertheless, the high of 2061 created last week is still within the acceptable zone of 2050-2100 level. As such, there is no indication that a strong break up is in the making. So, what should we do know? Can we expect a summer rally for SIT? What are the impact on the re-weighting of SIT index components last Saturday? It seems to me that most of the oversold in Nasdaq and Dow Jones over the past one month had been nuetralised by the past 1-2 weeks rally. The markets are now back to a trading range where the bulls and bears are trying to out beat each others but dare not come out with any big commitment. Only a break above 4,000 for Nasdaq and 11,000 for Dow Jones will trigger another bull run (may be a summer rally towards a new record high!). However, if the above two resistance manage to cap the US market rally, then a new low on both indices are still possible, we simply need to have more patient to wait for a break. As for STI, the announcement of the re-weighting on STI index components over the week end, may have some impact to the index next week. Just like what had happened in Nikkei few months ago, a relocation of index components will usually create some selling immediately on those stocks that will be reduced in the weightage, which indirectly make the index lower. In addition, next Tuesday's retail sales and Wednesday's CPI in US market will also deter investors to hold positions. As such, we believe STI will come down in the early part of the week towards 2015 and lower. The pivot point for STI next week will be at 2015, a drop below this level will lower the trading range for STI towards 1900-2000 level for the coming weeks before the Fed meeting. As for Sesdaq, it may pull back and consolidate around 105 before setting up for another big move. You may also see quite a bit of force selling coming in next week, especially for those active penny stocks transacted last week. So, do trade cautiously until a clearer picture emerge.
We have finally cracked the long awaited 1970-1930 level, which signaled the beginning of an intermediate down trend (at least!) in the coming months. This break down has now open up two possible long term scenarios and we shall discuss them in our long term perspective site. Please check it out for our latest updating in the Long Term Perspective page. One of the possible Intermediate bottom may be at 1700, for it represent the 50% retracement from 800 to 2580. We shall discuss it more detail later.
Events To Watch For The Coming Weeks/Month .
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