N.B. Above Chart is abstracted from NextView Program

As SGX has stopped published UOBSESDAQ index from 10/1/08 onwards, we have decided to stop the weekly commentary on UOBSESDAQ index. However, we will monitor closely on the FTSE China index or small cap index and will decide which one to use in three months time to do coverage on small cap stocks. Sorry for the inconvinient.

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While Sesdaq index has shown some strength in the beginning of new year and looks as if will be a better performer than STI in 2008. The sell down last Friday may change the outlook completely. With global markets now tilting more towards going down, Sesdaq will be too small to go against the trend! The coming two to three weeks are very important to global stock markets and that will apply to Sesdaq too. We have mentioned  before that SESDAQ need to cross above 220 level in order to stay bullish. The stand has not been changed since one month ago. Indeed the 220 level seems pretty tough for it to break, for it had attempted twice last month to break above it. Nevertheless, the movement next two weeks will be rather important for it may detect the direction for the coming months. If index ever breaks above 220 another bull run may be starting. If index breaks below 200 level, than it will be heading for a bear market. So, stay tune and keep alert these two weeks! Only a break above 220 this week or next will open up the possible of bottoming at 199 level. To make a strong stand, the Bull need to cross above 230 to justify the mid term up direction. Right now, perhaps the best way is to wait for the market to tell us the direction. Technically SESDAQ may have completed its bottoming process. We have to monitor carefully to identify the wave structure during this process. Once it has completed a clearer mid term direction shall emerge.  We expect SESDAQ to test 200 this week before any possible of rebound. If you are short term traders, this could be a big opportunity to stay active and make money next week. However, if you are long term investors you should stay away for the market will be volatile and the mid term direction has not been defined yet! Only traders can benefit from this environment and they must be discipline in order to survive the volatility.

The following are the support and resistance to watch for SESDAQ.
Resistance:       220, 225, 228, 230, 242, 245, 250
Support:             210, 204, 202, 200, 199, 185

Following are two possible wave counts on SESDAQ as at to-date:

1. Preferred Count (60% probability)-- bullish count
   My preferred count calling for a top at 121.5 (on 20/2/2004) as  wave ((1)). It has then followed by wave ((2))  that ended at 75.47 on 3/6/2005 . We have completed wave (1) and (2) of wave ((3)) and is now in progress for wave (3) of ((3))! If this count is correct, we are expecting wave ((3)) to complete somewhere near 160 by March- June'07. This index will then go for a sideways consolidation wave ((4)) that may last for six months to a year, before another wave ((5)) emerge to carry the index into new historical high by year 2010!

2. Alternate Count (40% probability)-- bullish count
   My alternate count calling for a top at 73.1 (on 10/5/02) as wave (1) and then followed by a four months consolidation on wave (2) that ended at 50.4 (on 27/9/02). It had then entered into an impulsive wave (3) rally that ended at 121.4 (on 27/2/04). The market had since gone through a sell off to 75.5 on wave (4) that ended on 3/6/05. We are now near the end of wave (5) of ((1)). If this count is correct, we are indeed in a very early stage of a super cycle, which may carry us till 2010 on ((1))- ((2))- ((3))- ((4))- ((5)) basis, with an eventual target between 250 to 300 by year 2010!! Is this a dream! If so, may the dream come true.
   I do not place a high hope in this count, for there is simply no major economy or political factor that can propel such move for the time being. However, if SESDAQ can trade above 160 by end of March 2007, such scenario may happen!!