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. Following last weekend’s low-volume session, liquidity remains very low, which could be seen as a positive sign as those most eager to cut their losses have already exited.
The surprisingly positive macroeconomic data released over the weekend created some initial excitement, but the capital flow “disagreed.” Weak buying pressure quickly led to a weakening of the upward momentum. The market is currently in the hands of sellers rather than buyers. Price negotiations will continue to create many sessions of range-bound trading, as seen today, with low liquidity until those holding capital become more aggressive.
Looking at intraday fluctuations, the market is creating a sense of frustration, as any upward movement is met with selling pressure. Only those holding stocks are frustrated, as those with capital are in a comfortable position. The market is still in the “margin-testing” phase and has not yet reached the stage of testing investors’ psychology. It will only transition to the bottom-forming phase when stockholders become completely indifferent to prices.
Today’s session had two positive aspects. Firstly, liquidity: in a downward trend, after distribution sessions and sharp declines with high volume, a slowdown in trading is a positive sign. It indicates either a reduction in selling pressure or a decrease in loose stock holdings. Today’s matched trading volume on the two exchanges was 11.5k billion, similar to mid-September sessions. Secondly, there were many deep-catch orders placed at the end of today’s session. Whenever prices dipped significantly, trading activity increased noticeably. Some stocks, particularly securities stocks, witnessed impressive reversals, suggesting a shift in the mindset of capital holders.
Market trading is always a probe into the thinking of each side, and liquidity, range, and price fluctuations are part of that outcome. Guesses can be right or wrong, but over many sessions, when signals align, the probability of accuracy increases. Therefore, the process of market bottoming or topping always involves failed fluctuations and rarely ends within 1-2 sessions.
Some stocks have corrected to the point where they can be bought. As the market is still unstable, the buying strategy should also be gradual. Stockholders are at a disadvantage, so patience will pay off. Buying on dips is easy, as it’s just a matter of covering previously sold stocks, so there’s no need to rush.
Today’s derivatives market continued to reflect expectations of the underlying market, with the F1 basis remaining positive throughout the day. However, this situation, coupled with low liquidity, could easily become a “delicacy” for shorts. Nevertheless, to push the fluctuation up, the large caps still need to be pushed down. In the morning, the VN30 dip below 1341.xx favored shorts, but it was not very effective as the large caps remained range-bound, and even late in the morning, not cutting losses quickly could result in a loss. The afternoon session was better, as the second dip below 1341.xx for VN30 saw a more significant impact due to the resonance from the large caps. Although the basis did not narrow, limiting short profits, the index’s range improved significantly. VN30 has two range-opening regions: 1341.xx to 1334.xx and 1327.xx. However, it is crucial to maintain discipline and close half the position at the 1334.xx threshold to secure profits, with the remaining half aiming for additional gains or breaking even.
With today’s significant drop in volume, the amount of loose stock appears to be decreasing. The market is likely to experience a few sessions of narrow trading ranges with persistently low liquidity or sessions with range-opening tests to gauge supply. The strategy remains to focus on stock purchases and flexible long/short positions 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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