(Updated: 02/07/2000)

N.B. Above Chart is abstracted from Metastock Program

We had mentioned over the past few weeks that, the major support for Dow Jones is at 10400-10300. Any break below this level, especially if it close below 10200, will have a devestating effect to global stock markets. Although Dow Jones did try to test the 10400-10300 region last week, it had managed to climb above the 10400 level towards closing. This had some concerns to us, but technically the level had not been broken! As such, the US markets remain in their months long consolidation phase. As for STI, it was stuck in a very tight trading range, with a weekly change of only +3.09 points, which is virtually unchanged. However, the penny stock index, Sesdaq, did relatively well as compare to STI. It had made a gain of 5.1 points, which was much better than STI in percentage term. But does it mean, there are more retail interest now, as compare to last year. Personally, I do not think so. In fact the trend is rather worrisome, for current market volume is mainly contributed by day trading and very short term speculation. On most of the days last week, there were about 60% of total volume came from the top 20 volume traded stocks. This had certainly demonstrated that the current market is very speculative in nature, and that most of the volume were created by stockists (who do not need to pay commission), short term traders such as remisiers, syndicates and day traders. The market breadth was rather poor and that most of the blue chips remained sideline with not much Institution interests. Is this going to continue? When can we see a more meaningful bull run in our market, since Fed meeting has just over?

While US market  is now fighting with two devils, namely inflation and a possible of poor corporate results. If Greenspan hikes the interest rate too much, it may result in a deep recession in United States, which is not good for stock market. Since high interest rate will mean higher borrowing cost for Corporation and that will affect the company bottom line and the stock value. On the other hand, if Greenspan stops tightening the interest rate now and if the job market continues to be tight and that inflation continues to raise, than it could cause another big plunge in stock market to correct for the inflationary pressure. This is the general consensus happening right now in the market. But the way I see it, is rather different. I think US market is now experiencing some thing very similar to what was happening to our Sesdaq market last year. In other word, with the big plunge in Nasdaq during 1st half of this year, most of the retail investors (and some mutual funds as well) are now in a very bad shape. The wealth they had built up over the past years are now more or less evaporated. For those who are unlucky, they may now in a negative net worth and are waiting for banks to make them bankrupt. If this is the case, than it will be very difficult for US market to kick up another powerful bull run. And most likely than not, it will go through a long period of sideways consolidation (like the one year sideways for Seeds since July'99), and may last for another six months. IF this scenario is correct, than there will be not much activities in US market until after its President election in October (which I believe this is what Greenspan wants). Now, what will be the implication to our market if the scenerio is correct? Well, the most possible scenario for STI will be a slow climb up towards 2250-2300 in the coming months, couple with once a while some good run for individual stocks. As for Sesdaq, if it can stay above 112 next week, it has a good chance of heading towards 122 in the coming weeks. For next week, the interest will continue to be centered in penny stocks, with activities continue to be in top 20 volume. The only concern will be the employment data of US to be released next Friday. For the timebeing, the market is only suitable for short term trading and you must be quick to take your profit and do not be greedy. So, do be humble and cautious!
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 are now in a cross road between a bull and a bear market. A break above 2250 on high volume will trigger an impulsive bull run in our market. However, if STI dips below 1900, the bear market may resume and could brought STI towards 1500 or lower. There are two possible long term scenarios, please check it out for our latest updating in the Long Term Perspective page. We shall wait for more clues from the market before discussig it further.

Events To Watch For The Coming Weeks/Month .

1. The US unemployment data to be released next Friday.
2. The possible tension developed between China and Taiwan.
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.