Today’s price action was interrupted by the patience of waiting capital, stifling any potential recovery. It was only when prices dipped significantly that larger waiting orders emerged, revealing substantial buying interest at lower levels. The low volume carried over from last weekend’s session, indicating that those most eager to cut their losses had already done so, which could be seen as a positive sign for the market.
The unexpected macroeconomic data released over the weekend sparked some initial excitement, but the capital flow dynamic quickly dampened this enthusiasm. The selling pressure overwhelmed the buying interest, and the market now rests in the hands of sellers rather than buyers. This negotiation between buyers and sellers will likely continue, resulting in several more range-bound sessions with low volume until those holding capital take a more assertive stance.
Analyzing intraday fluctuations, the market currently evokes a sense of frustration, as any upward price movement is swiftly met with selling pressure. However, only those holding stocks are feeling this disappointment; those holding cash are in a more comfortable position. The market is still in the ‘test margin’ phase and has yet to reach the stage of testing investors’ psychology. It will only transition to the next phase when stockholders become utterly disinterested in prices, signaling the market’s progression toward forming a bottom.
Today’s session exhibited two positive aspects. Firstly, liquidity: in a downward trend, slow trading after high-volume distribution and sharp declines indicates either reduced selling pressure or a decrease in loose stock holdings. The matched orders on the two exchanges today totaled 11.5 thousand billion, comparable to mid-September sessions. Secondly, there were numerous deep-priced bottom-fishing orders placed toward the end of today’s session. Whenever prices dropped significantly, trading activity noticeably increased, and 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 both buyers and sellers, and liquidity, price range, and fluctuations are all part of this intricate dance. While predictions may sometimes be inaccurate, the likelihood of correctness 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 a day or two.
Some stocks have now corrected to attractive buying levels. However, given the market’s instability, a gradual buying strategy is advisable. Stockholders are at a relative disadvantage, so exercising patience can provide a strategic advantage. Buying on dips is relatively straightforward, as it merely involves covering previously sold positions, and there is enough for everyone without creating a competitive environment.
Today’s futures market continued to reflect expectations of the underlying market, with the F1 basis remaining positive throughout the day. This situation, coupled with low volume, could be enticing for short sellers. However, they would need to push the underlying index to profit meaningfully. In the morning session, VN30 dipped below 1341.xx, creating a short opportunity, but the lack of momentum in the underlying index made it unprofitable, especially for those who didn’t exit quickly enough. The afternoon session presented a better opportunity, as the second dip below 1341.xx coincided with increased selling pressure on the underlying index, resulting in a more favorable dynamic for short sellers, despite the basis not narrowing significantly. The VN30 index opened up two volatility ranges, from 1341.xx to 1334.xx and then to 1327.xx. However, it is crucial to maintain discipline by closing half the position at the 1334.xx level to secure profits, with the remaining half aiming for additional gains or, at worst, breaking even.
Today’s significant drop in volume suggests a decrease in loose stock holdings. The market is likely to experience a few narrow-range sessions with low volume or attempts to test supply through volatility expansion. The strategy remains to focus on stock-picking opportunities and dynamically manage long/short positions in the derivatives market.
VN30 closed today at 1335.48. The nearest resistance levels for tomorrow are 1341, 1348, 1356, and 1365. The nearest support levels are 1333, 1325, 1318, and 1308.
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 analysis presented here 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 recommendations presented in this blog.
