Today’s drop in liquidity was partly due to investors being more cautious on the futures expiry date, but it is likely to recover tomorrow as funds rebalance their portfolios. Importantly, stock prices were not hurt by the low liquidity, as selling pressure was also very weak.
The upward momentum has slowed down for most of the session, with the VNI even turning red in the morning. The volatile trading somewhat reflected the slight imbalance in supply and demand during the session. Nevertheless, the market breadth showed that the upside prevailed throughout.
The final recovery pushed the indices to their intraday highs, with a dominant number of rising stocks and very promising gains from the low prices. This dynamic indicates that, despite the decrease in liquidity, bottom-fishing funds are still active and taking advantage as the sellers are unable to exert significant pressure.
The Fed’s rate cut overnight was in line with market expectations, and while there may be mixed analyses about the larger-than-expected cut causing concerns about a recession, that is a very distant possibility. The effect of this rate cut on Vietnam is positive, and it will take several months, if not a year, to know if the US is heading towards a recession. What matters is that a rate cut cycle has begun, ending the tense anxiety about exchange rates. Vietnam now has a favorable opportunity to boost money supply, for instance, by buying back USD, while historically, low-interest-rate cycles in the US have always led to investment capital shifts. Since the beginning of the week, foreign investors have been net buyers again in the Vietnamese market, which is an initial positive signal.
Currently, the main information flow in the market is leaning towards the positive, or at the very least, the factors that worried the market in the past no longer have an impact. The stories that the market is eagerly awaiting are also often trendy, like a fad, with a flood of disheartening information at one point making even neutral news seem negative. Fads come and go, and information is the same; just look back at the fear-inducing information from last week or a few sessions ago, and you’ll find that not many people remember them today. How the market reacts to information is always more important than the nature of the information itself.
The market dynamics are currently strengthening, and many skeptics are still waiting for a market correction before buying. However, as prices continue to rise, they will eventually find themselves unable to wait for lower prices. When even small intraday corrections are considered “buying opportunities,” the impact of bottom-fishing funds will become evident. The market is positive, and it’s time to hold on and let the late money correct its mistakes.
Today was the F1 expiry for the futures market, and the blue-chip divergence made VN30 erratic and frustrating. The index hovered around 1318.xx but couldn’t break through to 1325.xx to open a Long setup. The downward pressure caused the index to touch 1318 several times, but it lacked the strength to fall further (support at 1305.xx), so going Short wasn’t profitable either. F2 maintained a wide positive basis, and the liquidity wasn’t sufficient to narrow the basis when VN30 rebounded from 1318.xx. Today was a no-trade day for the futures market.
The end-of-week review effect will boost liquidity again. Currently, liquidity is the most important signal, reflecting whether hesitant money becomes decisive. F2’s wide spread indicates expectations for the underlying. Hopefully, the basis will narrow tomorrow, and the strategy is to wait for a Long opportunity.
VN30 closed today at 1318.41, right at a milestone. The next resistance levels for tomorrow are 1325, 1335, 1340, 1348, and 1358. Supports are at 1310, 1305, 1299, 1289, and 1280.
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