The market had a fairly positive technical recovery session today. Surprisingly, money poured in strongly and pushed prices up in many stocks. Today’s session also showed different recovery potentials, different choices of money flow, especially when juxtaposed with the last weekend’s downturn session.
Usually after a heavy downturn session with a sudden surge in liquidity, the market tends to recover the next day. However, the recovery potential will differ as there might not be enough money to push prices up for all stocks or to push prices up impressively. The stocks reaching new highs today will be positive stocks. The stocks returning to the fluctuation range of previous sessions are still struggling in the distribution zone. Stocks that recover less than half or even one-third of the previous session’s decline are weak. Finally, stocks that are unable to increase and continue a series of declining sessions are definitely the weakest.
The positive point today is the appearance of stocks that attracted good liquidity with strong price increases, showing the presence of real money pushing prices up. These stocks have short-term speculative opportunities, but they are still only a small part of the market. The majority of remaining stocks are still just typical technical recoveries or oscillations creating distribution zones.
The accumulated stock volume since after the Lunar New Year is quite large, so the withdrawal process cannot be completed in just 1-2 sessions. The recovery developments returning to important resistance zones in the coming sessions will show clearer signals of whether the money flow is strong enough to balance the amount of stocks sold off. If we look back at the period when reaching the peak in August and September last year, the rebound sessions were also very impressive but ultimately only led to saturation of buying power.
My viewpoint remains that the current opportunity is lower than the risk. Some strong stocks are just opportunities for adventure, if too “greedy” then only play with a small position. At this time, risk management should be prioritized to conserve resources because the best eating phase has passed.
The derivative market today reacted cautiously to the recovery of the VN30. The fluctuation range of the F1 contract is much narrower than the underlying index. Although the VN30 fluctuated between 1219.xx and 1232.xx, the F1 contract mostly stayed within 1225.xx and 1230.xx. When the VN30 had weak fluctuations in the morning, the F1 contract was almost sideways. When the VN30 increased in the afternoon, the F1 contract widened basis and accepted a discount. The liquidity in the F1 contract decreased by 47% compared to the previous session, indicating that it was not only the dominated Short side restraining but also the Long side being weak. It is possible that derivatives players also did not have much satisfaction with trading today.
With a recovery session with quite high liquidity in the underlying market, there is still a chance of further increase tomorrow, at least in the morning. However, the range is difficult to expand. The underlying market may witness a new selling wave. The strategy is to watch for Short positions.
The VN30 closed today at 1233.31. The nearest resistances for tomorrow are 1240; 1249; 1256; 1261. Supports are at 1232; 1223; 1219; 1210; 1201; 1196.
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