Today’s price action was interrupted by the patience of waiting liquidity, stifling any potential recovery. It was only when prices dipped lower that larger waiting orders emerged, revealing substantial buy-side interest. The low volume carried over from last weekend’s session, which could be seen as a positive sign as those who wanted to cut losses had already done so.
The unexpected macroeconomic data released over the weekend created some initial excitement, but the key factor was that the money flow disagreed with the bullish sentiment. The weak buying pressure quickly led to a deterioration of the upward momentum. The market is currently in the hands of sellers rather than buyers, and price negotiations will likely continue to create volatile sessions like today with low volume until those holding capital take a more assertive stance.
Looking at intraday fluctuations, the market is inducing a sense of disappointment as any upward movement is met with selling pressure. However, only those holding stocks are feeling disheartened; those holding cash are in a more comfortable position. The market is still in the “margin-testing” phase and has yet to reach the stage of testing investors’ psychology. It will only transition to the bottom-forming phase when stockholders completely lose interest in prices and become apathetic.
Today’s session exhibited two positive aspects. Firstly, liquidity behaved as expected in a downward trend, with slow trading following distribution sessions and steep declines with high volume. The matched orders on the two exchanges today totaled 11.5 thousand billion, similar to the mid-September sessions. Secondly, there were many deep-catching orders placed at the end of today’s session, indicating increased buying interest when prices dipped. Some stocks, particularly securities stocks, witnessed impressive reversals, suggesting a shift in the mindset of capital holders.
Market transactions always involve probing the intentions of each party, and volume, price range, and fluctuations are part of that outcome. While guesses can be right or wrong, the probability of accuracy increases when multiple signals align over several sessions. Therefore, the process of forming a market bottom or peak often involves false signals and rarely concludes within one or two sessions.
Some stocks have corrected to attractive buying levels, and a step-by-step approach is advisable given the market’s instability. Stockholders are at a relative disadvantage, so exercising patience can provide an edge. Buying on dips is relatively easy as it involves covering previously sold stocks, ensuring everyone has a chance to participate without creating excessive competition.
Today’s derivatives market continued to reflect expectations of the underlying market, with the F1 basis remaining positive throughout the day. However, this situation on low volume could easily turn into a “delicacy” for short sellers. Nevertheless, to increase volatility, the index needs to be pushed down further. In the morning session, VN30’s dip below 1341.xx favored short sellers, but it was not very effective as the index fluctuated, and those who didn’t cut losses quickly incurred losses. The afternoon session was more promising, with the second dip below 1341.xx witnessing a more assertive response, and although the basis didn’t contract, it limited short sellers’ profits while improving the index’s volatility. VN30 has two ranges to expand its volatility: 1341.xx to 1334.xx and 1327.xx. However, it is crucial to maintain discipline by closing half the position at the 1334.xx threshold to secure profits, with the remaining half aiming for additional gains or breaking even.
Today’s significant drop in volume indicates a decrease in loose stocks. The market is likely to experience a few narrow-range sessions with low volume or sessions with forced openings to test supply. The strategy remains to focus on stock purchases and employ a flexible long/short approach in derivatives.
VN30 closed today at 1335.48. Tomorrow’s resistances are 1341, 1348, 1356, and 1365. Supports are 1333, 1325, 1318, and 1308.
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