The Vietnamese stock market continued to test supply and demand dynamics around the 1250 level, with today’s range being wider than yesterday’s. While the VNI dipped to 1247, it quickly recovered within a few minutes. The low volume during this period can be seen as a positive sign as it indicates that investors are confident and not rushing to sell. However, the market has yet to experience a true test of supply and demand below the psychological support level.
The market is showing signs of reduced selling pressure, and the testing of supply seems to be stable. At the expected support level, selling pressure usually decreases as investors holding stocks hope that this will be the bottom and there is no need to panic sell. However, selling pressure may increase again if the psychological support level is broken. Therefore, a break below this level would provide a more definitive test result.
On the buying side, the testing of demand has also been ineffective so far. With the market moving in a narrow range, there isn’t a significant increase in greed. It is challenging for prices to rise at this point, especially during the week of the Q2 NAV finalization, so there is no rush to buy. Combining the reduced selling and buying activity, the volume for the last two days has decreased significantly.
The large-cap stocks have not yet made a significant impact. Today, when the VNI fell below 1250, only VPB, TCB, and CTG experienced notable declines, while the heaviest-weighted stocks, including VCB, VHM, VIC, GAS, BID, and FPT, saw only minor or no decreases. As a result, the index performance was inconclusive. On the other hand, the time spent below 1250 was very brief, lasting only about 10 minutes. While this can be attributed to the weak selling pressure, it also indicates that we have not yet reached a point where there is a high level of psychological excitement.
The reduced selling pressure and low volume during this correction period are positive signs. It suggests that investors are confident and either have a light position or are highly risk-tolerant. This group of investors naturally supports the upward trend. Conversely, those holding cash have the psychological advantage and are willing to wait and refrain from chasing the market higher. The volume on the upside today was low, and the VNI’s upward movement was primarily driven by a few heavyweights rebounding mildly.
I maintain the view that the market needs a genuine test of supply and demand. It is advisable to gradually buy on dips with a wide range. While the VNI could break below 1250 and head lower, it is crucial to monitor the stocks of interest closely. Many stocks have already undergone corrections, are forming bases, or have reached strong support levels. Even if the market experiences a wide-ranging push, these stocks are likely to attract active buying interest. It’s important to remember that the index does not necessarily reflect the buying point for individual stocks.
Today, the derivatives market remained vibrant and trader-friendly, with a tight basis. In the morning session, VN30 futures rose above 1292, and the basis for F1 futures contract was only discounted by around 2 points. Below 1292, there is room to open the range down to 1282 and further to 1276. If VN30 falls below 1282, the stop-loss level will be triggered when the index retraces back above this level. The minimum position closure point is VN30 at 1282, with the remaining half gambling on 1276. Below 1276, there is another range opening down to 1266, but reaching that level would require a very strong push from the heavyweights, which does not seem to be the case at the moment.
The afternoon session was more challenging. VN30 touched 1276 towards the end of the morning session but quickly rebounded. The subsequent breaks above 1282 were unclear, and most trades had to be closed early or resulted in suboptimal profit margins. Nonetheless, such is the nature of intraday trading, and it is not always smooth sailing when placing bets.
This week, with the finalization of Q2 NAV, the likelihood of a significant increase is low, and the market may continue to fluctuate. Any upward movements are likely to be driven by reduced selling rather than impressive demand. However, the derivatives market can still be leveraged for trading opportunities. The strategy remains the same: look for buying opportunities in stocks during dips and adopt a flexible long/short approach in the derivatives market.
VN30 closed today at 1291.3, right at a milestone. The next resistance levels to watch tomorrow are 1296, 1303, 1309, 1315, 1320, and 1327. The support levels are 1280, 1272, 1266, and 1260.
Disclaimer: This “Stock Market Blog” reflects the personal views and opinions of the author and does not represent the views of VnEconomy. The opinions and views expressed are those of the individual investor, and VnEconomy respects the author’s perspective and writing style. VnEconomy and the author are not responsible for any issues arising from the investment opinions and perspectives presented in this blog.
Dragon Capital Chairman: “Long-term vision is needed, accepting necessary adjustments for a safer, more efficient, and higher quality market”
According to Mr. Dominic Scriven, Chairman of Dragon Capital, the role of the finance industry in the stock market will be significant in 2023 and possibly in 2024. The roles of other industries, such as real estate or consumer goods, will depend on their respective challenges.
Investing in a volatile market: Should beginners consider putting money into high-yield bonds for 10-30% yearly profit?
Short-term stock market trading has proven to be a risky venture for many investors, leading to substantial losses. However, there are a few select open funds that have managed to achieve impressive returns, reaching up to 30%.
