The Flow of Funds: Consecutive Failures at the 1300-Point Peak, Is There Still a Chance for a Breakthrough?

The VN-Index has made two attempts to break through the 1300-point threshold in just five sessions last week, but both were unsuccessful. The strong liquidity in these failed attempts left a more distinct impression of distribution activities…

Experts continue to have opposing views on the market’s short-term trajectory. The pessimistic outlook from last week proved accurate as the VN-Index experienced two significant corrections at the end of the week. This perspective remains concerned about the market being distributed and anticipates the bottom of this corrective phase to be relatively deep. In contrast, more optimistic opinions persist, suggesting that despite the substantial liquidity and evident downward pressure last week, selling signals began to wane on the last day. The anticipated adjustment threshold revolves around the 1250-1260-point range.

Despite differing short-term perspectives, experts generally maintain a positive assessment of the market’s subsequent trend. The current corrective phase does not hinder the prevailing upward trajectory, and the opportunity to surpass the 1300-point threshold remains viable.

Nguyen Hoang – VnEconomy

The market experienced a rather disappointing week, with three unsuccessful attempts to surpass the 1300-point peak. Each time it approached this threshold, selling pressure mounted, culminating in two consecutive declining sessions at the week’s end. Average weekly liquidity also witnessed a notable surge, with high-volume trading during the declining sessions. This week’s performance starkly contrasted the previous week’s, prompting the question of whether it signals large-scale distribution in the market.

Nguyen Viet Quang – Director of Business Center 3, Yuanta Hanoi

Examining the weekly candlestick chart, the VN-Index has formed a bearish engulfing pattern with significantly higher liquidity compared to the previous period. Additionally, the daily chart revealed an SFP on Thursday, indicating a breakdown of the previous five sessions’ consolidation with substantial volume. Furthermore, since September 29, not a single attractive candlestick pattern has emerged; the green sessions with high liquidity also featured long wicks, and the red sessions mostly witnessed above-average volume. Based on these observations, I assess a high probability that the market is undergoing large-scale distribution.

Nghiem Sy Tien – Investment Strategy Executive, KBSV Securities

The market sentiment has taken a more negative turn after the continuous upward momentum was halted around the 1300-point mark. Such a development is understandable, given investors’ heightened expectations, especially with the banking group taking the lead. The disparity between supply and demand became evident during the final trading session, characterized by a sharp decline in liquidity and the index closing at the day’s lowest point, signaling a contraction from the buying side.

However, I believe these signals indicate extensive profit-taking rather than a reprise of distribution sessions around the peak. While liquidity surpassing 20,000 billion VND is positive in the current context, it is not sufficiently dramatic to confirm a distribution session. The market is likely to continue fluctuating to shake off short-term trading positions and return to a balanced state to attract proactive buying demand.

Nguyen Thi My Lien – Head of Analysis, Phu Hung Securities Company

Last week, the market once again failed to conquer the psychological threshold of 1300 points and faced more intense selling pressure. Nonetheless, given that it was just one session of heavy selling, I don’t think there are enough signals to conclude that the market is being distributed. Conversely, the leading banking group has managed to maintain relatively positive signals without succumbing to intense selling pressure, leading me to lean more towards the possibility that the market is merely undergoing a brief shakeout at the 1300-point level before gearing up for another conquest.

Nguyen The Hoai – Director of Dong Nai Branch, Rong Viet Securities

The short-term trend is being challenged as the banking group undergoes profit-taking. Given their large market capitalization and liquidity, the performance of banking stocks significantly influences overall market liquidity. However, it is premature to conclude that the market is undergoing large-scale distribution at this juncture.

Le Duc Khanh – Analysis Director, VPS Securities

The 1300-point threshold remains a formidable resistance level for the market. It is not uncommon for the index to undergo corrective consolidations or reverse to the lower support region. In my view, the VN-Index requires additional time to reclaim the peak, and there is a chance for market recovery in the upcoming trading week.

Nguyen Hoang – VnEconomy

Last week, you assessed that the market was moving sideways and that the failure to surpass the 1300-point threshold was merely a typical consolidation phase. Given the more negative developments this week, is the market entering a genuine corrective phase? How deep could this correction go?

Nguyen Thi My Lien – Head of Analysis, Phu Hung Securities Company

As mentioned earlier, I don’t perceive the current signals as overly negative. The market has only experienced one session of intense selling pressure without any continuation in the subsequent session, as evidenced by the declining volume. Simultaneously, the leading banking group has preserved its upward trajectory. Consequently, I anticipate a brief corrective phase, and the market is likely to rebound next week. Support is expected around the 1266-1283 or 1250-1260-point range.

Nguyen The Hoai – Director of Dong Nai Branch, Rong Viet Securities

I maintain a positive outlook on the market’s mid-term trend. Despite the tense geopolitical situation hindering the conquest of the 1300-point threshold, the stable domestic and global macroeconomic landscape leads me to believe that the index’s correction could reach 1250 +/- 10 points.

Nguyen Viet Quang – Director of Business Center 3, Yuanta Hanoi

Last week, I predicted that the VN-Index had reached the end of wave 5 and would enter a corrective phase, and indeed, the market underwent notable corrective sessions, breaking down from the previously constructed base. Presently, I am monitoring several support regions: around 1240 points and 1200 points. However, the presence of these support zones does not guarantee a rebound, as it depends on the price action and reaction at these levels.

Le Duc Khanh – Analysis Director, VPS Securities

In my view, the market will undergo corrections while remaining within the 1265 – 1275-point range. Two critical support and resistance zones to observe are 1260 – 1265 +/- points and 1270 – 1275 points. If the VN-Index successfully surpasses 1275 points, there is a high probability of returning to the previous peak of 1300 points and potentially breaking through in the subsequent upward wave.

Nghiem Sy Tien – Investment Strategy Executive, KBSV Securities

The less favorable developments this week have not altered my personal perspective. The overall market sentiment has shifted negatively as the VN-Index’s attempt to breach the 1300-point threshold fell short, triggering more profit-taking and reduction in positions to safer levels. Nevertheless, I maintain that the previous uptrend was primarily driven by cash inflows from investors rather than extensive leverage, implying that the market is unlikely to witness a series of steep declines. The potential support zone where the index may exhibit a rebound reaction is around the 1255 (+-10) point level.

Nguyen Hoang – VnEconomy

One of the reasons for the VN-Index’s failure to surpass the 1300-point threshold last week was the waning strength of large-cap stocks, including the leading banking group. Stocks like VHM, VIC, GAS, and FPT exhibited weakness, while banking stocks underwent evident profit-taking after their impressive gains. In our previous discussion, you emphasized the robustness of the banking group and their pivotal role in propelling the VN-Index beyond the peak. Can this group retain its role amid profit-taking and a downward reversal?

Nguyen The Hoai – Director of Dong Nai Branch, Rong Viet Securities

After a considerable upward journey, it is reasonable for the banking group to undergo profit-taking. From a valuation perspective, this group remains attractive, leading me to believe that they will continue to be the market’s primary driving force in the upcoming period. Moreover, the consistent net buying by foreign investors in recent times has provided additional support to the market. When large-cap stocks achieve consensus, the market will overcome this challenge.

Nghiem Sy Tien – Investment Strategy Executive, KBSV Securities

Some banking stocks have experienced steep climbs, so profit-taking is a natural occurrence as investors seek to secure their profits. This development is not necessarily negative, and its impact depends on the supply-demand dynamics of the specific stock. When a stock witnesses substantial inflows over multiple sessions, it tends to exhibit robust upward momentum, attracting buying demand as it undergoes sufficient correction. Additionally, the ascent of large-cap groups typically unfolds over an extended period rather than just a few sessions. Hence, I anticipate that the banking group will retain its leading role in propelling the index.

Nguyen Viet Quang – Director of Business Center 3, Yuanta Hanoi

In our previous conversation, I did not hold a high opinion of the banking group’s strength, as the robust and profitable stocks tended to be the smaller and medium-sized ones. Currently, many banking stocks have reached all-time highs or approached strong resistance levels. I assess that this group will struggle to maintain its role in propelling and sustaining the market, as witnessed in the previous phase, and may even exert additional downward pressure.

Nguyen Thi My Lien – Head of Analysis, Phu Hung Securities Company

Following the corrective signals last week, I remain confident in the banking group’s ability to maintain its crucial role in driving the VN-Index’s upward trajectory. Although the entire market underwent intense selling last week, the banking group demonstrated resilience, avoiding intense selling pressure and preserving its upward trend. Moreover, there was a shift in capital towards smaller and medium-sized banking stocks. These signals suggest that the selling pressure emanated from small- investors taking profits after a robust climb rather than large-scale investors exiting their positions. Therefore, I expect this group to sustain its trend and resume its role in propelling the index upon market recovery.

Le Duc Khanh – Analysis Director, VPS Securities

I anticipate that the banking group will likely rebound after a few corrective sessions, although subsequent performance may vary among individual stocks, with some continuing to climb while others undergo consolidation and corrections. Other groups, such as securities, steel, and oil and gas, could step in to support the market.

Nguyen Hoang – VnEconomy

Amid the unfavorable developments in the underlying market, the VN30 index futures maintained a wide positive basis. Is this an anomaly, or does it reflect positive expectations for the underlying market? If you were to participate in derivatives, would you go Long or Short at this juncture?

Nguyen Viet Quang – Director of Business Center 3, Yuanta Hanoi

Given the relatively small scale of Vietnam’s derivatives market, various factors can influence it. Therefore, I won’t attempt to explain the rationale behind the nearly 7-point positive basis in the VN30 index futures. From a technical perspective, the VN30F1M has completed wave 5 and is undergoing corrective wave “a,” leading me to favor the Short position. However, I will await the second rebound session to identify an optimal entry point.

Nguyen Thi My Lien – Head of Analysis, Phu Hung Securities Company

Currently, the indices are undergoing corrections without altering the prevailing upward trend. In an uptrend, a higher reading in the futures contract compared to the underlying index implies a positive basis, indicating the market’s anticipation of potentially higher levels in the future. Consequently, the positive basis reflects the market’s optimism about the continuation of the upward trend. If I were to engage in derivatives, I would prioritize Short intraday positions due to the ongoing brief corrective phase. In contrast, Long positions would be more favorable as the market approaches the support threshold.