The VN Index saw a slight dip into the red today, ending a four-day streak of rapid point gains. While the loss in points is not as significant, the contraction in breadth indicates that profit-taking pressure has intensified somewhat, dominating a relatively wide range of stocks. This is a normal consequence of the previous strong upward momentum, as the index enters the region of previous highs.
Notably, liquidity on the HSX fell sharply by over 21% from the previous day, reaching approximately VND 3,829 billion, with banking stocks witnessing a decrease of VND 1,778 billion. Yesterday’s liquidity was maintained thanks to the attraction of bank stocks, but today, this group failed to maintain its performance while other stocks also saw a significant decline in trading.
Weakening liquidity often reflects a certain level of caution in the market, especially when accompanied by a higher number of stocks in the red than in the green. Of course, low liquidity and a narrow range of declines also indicate that selling pressure is not too intense. However, on the upside, caution is warranted as increasing liquidity may signal a potential shift in market sentiment.
After four consecutive sessions of rapid gains, investors are likely to be more hesitant to chase prices for fear of being trapped in a potential downturn. While the first T+2.5 session did not see a significant volume of selling, it does not guarantee that this consensus to hold stocks will persist in subsequent sessions. Typically, after an explosive day, the upward momentum can extend up to T+5 before investors start taking profits, including those who purchased during the initial bottom-fishing phase. Of course, profit-taking activities also depend on the magnitude of gains for specific stocks, as well as the inflow of money into particular stocks. However, the greater the gains, the easier it is for divergence to occur within the crowd.
The current uptrend in both the index and many stocks has been relatively rapid. After the easiest phase, a period of rotation is likely to follow. Capital flows from stocks that have already made significant gains to those with more room for growth, as they are perceived as having lower risk. However, in this second wave, a more cautious approach is usually adopted, making it challenging for liquidity to strengthen further. Additionally, the priority for safety will outweigh the desire for risk-taking, resulting in potential intraday adjustments where liquidity may gradually increase due to a more “restless” psychology among investors.
Markets, like individual stocks, experience both ups and downs. Currently, there are no significant risk factors that could induce fear in the market, but short-term supply and demand dynamics can still influence fluctuations. As we near the end of August, there are expectations for the Fed to cut interest rates in September, and beforehand, there could be a removal of the prefunding knot. Short-term adjustments are not necessarily detrimental but present opportunities for buying and trading at reduced capital costs.
Today, the derivatives market exhibited very narrow fluctuations as the VN30 index lacked the driving force of the leading banking group. F1’s wide discount only allowed for long positions, and the VN30 failed to break out of the narrow range of 1319.xx to 1315.xx. Whenever the VN30 surpassed 1319.xx, it lacked the strength of the pillar stocks; hence, despite the advantage of basis, there were no significant gains. Liquidity in this market also decreased by more than 15% compared to the previous day, reaching the lowest level in the last five sessions.
The lack of stability in the banking group and the overall weakening of capital inflows into the VN30 limit the potential for the index to rise. Opportunities for profit in the derivatives market rely on the impact of pillar stocks, and the higher probability lies in pushing the market downwards. The strategy here is to employ a flexible combination of long and short positions, with a preference for short positions and capturing profit-taking opportunities in individual stocks.
The VN30 closed today at 1318.57. The nearest resistance levels for tomorrow are 1319, 1325, 1331, 1337, 1342, and 1350. Support levels are 1313, 1307, 1301, 1295, 1290, 1282, and 1277.
“Blog Chứng Khoán” reflects the personal views of the author and does not represent the opinions of VnEconomy. The perspectives and assessments shared are solely those of the individual investor, and VnEconomy respects the author’s views and writing style. VnEconomy and the author are not responsible for any issues arising from the published opinions and investment perspectives.
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%.
