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

14 October, 2024

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

Experts continue to have opposing views on the short-term market outlook. The negative outlook from last week proved correct as the VN-Index experienced two fairly strong corrective sessions at the end of the week. This perspective remains concerned about the market being distributed and awaits the bottom of this corrective phase at a relatively deep level. In contrast, more positive opinions persist, suggesting that despite the large liquidity and clear downward pressure last week, selling signals were exhausted by the week’s end. The expected adjustment threshold is around the 1250-1260 point level.

Despite differing short-term perspectives, experts generally remain optimistic about the market’s future trend. The current adjustment does not affect the existing upward trend, and the opportunity to surpass the 1300-point mark remains viable.

Nguyen Hoang – VnEconomy

The market had a rather disappointing trading week, with three unsuccessful attempts to surpass the 1300-point peak. Each time it reached this threshold, selling pressure pushed it down, and it declined sharply in the last two sessions. Average weekly liquidity also increased significantly, with high liquidity in all declining sessions. This week’s performance was quite different from the previous week. Does this indicate large-scale distribution in the market?

As the leading banking group still maintains positive signals and does not face strong selling pressure, I tend to believe that the market is only experiencing a brief pause at the 1300-point level before attempting to conquer it again.

Nguyen Thi My Lien

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

Looking at the weekly VN-Index candle chart, we observe a reversal candle cluster with higher liquidity compared to the previous period. The daily chart shows an SFP on Thursday, breaking the accumulation base of the previous five sessions with large liquidity. Additionally, since September 29, the index has not formed any attractive candles; green candles with high liquidity but long wicks, and red candles with above-average volume. Based on these observations, I assess that the market is likely undergoing a large-scale distribution phase.

Nghiem Sy Tien – Investment Strategy Executive, KBSV Securities

The market’s psychology is turning more negative after the continuous upward momentum was halted around the 1300-point mark. Such a development is understandable, given investors’ high expectations, especially with the banking group taking the lead. The supply-demand correlation became evident in the final trading session, with a sharp drop in liquidity and the index closing at the session’s lowest point, signaling a contraction from the buying side.

However, I believe these signals indicate profit-taking rather than redistribution around the peak. While liquidity above VND 20,000 billion is positive at this point, it is not significant enough to confirm a distribution session. The market will likely continue to fluctuate 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 stronger selling pressure. However, with only one session of intense selling, I believe there are insufficient signals to conclude that the market is being distributed. Conversely, as the leading banking group has maintained positive signals and has not been under strong selling pressure, I lean towards the possibility that the market is merely experiencing a brief pause at the 1300-point level before attempting to conquer it again.

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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. Banks have large market capitalization and liquidity, which contributes to the overall market liquidity. However, it is premature to conclude that the market is undergoing large-scale distribution at this point.

Le Duc Khanh – Director of Analysis, VPS Securities

The strong resistance level of 1300 points remains a challenging milestone for the market. It is common for the index to adjust and accumulate or reverse to the lower support region. In my opinion, the VN-Index needs more time to return to the peak, and there is an opportunity for market recovery in the coming 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 just a typical accumulation pause. With more negative changes this week, is the market entering a genuine corrective phase? How deep can this correction go?

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

As mentioned earlier, I believe the current signals are not overly negative. The market has only experienced one intense selling session, without continued selling pressure in the final session, as evidenced by the low volume. Additionally, the leading banking group has maintained its upward trend. Therefore, I expect this to be a brief correction, and the market may recover next week. Support is expected around the 1266-1283 or 1250-1260 point region.

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

I assess that the market remains positive in the medium term. In the past week, tense geopolitical news hindered the conquest of the 1300-point threshold, leading to a retreat. However, with stable domestic and foreign macroeconomics, I anticipate the index’s adjustment level to be around 1250 +/- 10 points.

Many bank stocks have returned to their all-time highs or reached strong resistance levels. I assess that this group will not maintain its role in leading and supporting the market as it did in the previous phase and may even exert additional downward pressure.

Nguyen Viet Quang

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 the market was undergoing distribution. This played out, and the index experienced strong corrective sessions, breaking the previously formed base. Currently, I am paying attention to several support regions: around 1240 points and 1200 points. However, these support levels do not guarantee a rebound, and we need to consider the price action at these levels.

Le Duc Khanh – Director of Analysis, VPS Securities

In my opinion, the market will adjust but remain within the 1265 – 1275-point range. Two critical support and resistance areas to watch are 1260 – 1265 +/- points and 1270 – 1275 points. If the VN-Index can surpass 1275 points, there is a high chance it will return to the previous peak of 1300 points and break through in the subsequent upward wave.

Nghiem Sy Tien – Investment Strategy Executive, KBSV Securities

The less favorable developments this week have not altered my perspective. The overall trading psychology has turned more negative as the VN-Index’s attempt to breach the 1300-point mark failed, leading to increased profit-taking and reduced positions to safer levels across the market. However, I believe that the previous uptrend was primarily driven by cash inflows from investors, with limited leverage, making a series of sharp declines unlikely. The potential support region for the index to exhibit a recovery reaction is around the 1255 (+-10) point level.

Nguyen Hoang – VnEconomy

One reason for the VN-Index’s failure to surpass the 1300-point mark last week was the weakening of large-cap stocks, including the leading banking group. Stocks like VHM, VIC, GAS, and FPT lacked momentum, while bank stocks experienced clear profit-taking after an impressive previous rise. In our previous discussion, you highly regarded the strength of the banking group and its role in pushing the VN-Index beyond the peak. Can this group maintain its role amid profit-taking and a downward turn?

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

After a considerable increase, it is reasonable for the banking group to undergo profit-taking. In terms of valuation, this group remains attractive, so I think they will continue to be the market’s main driver in the coming period. Additionally, stable foreign net buying in the recent period has supported the market. When large-cap stocks achieve consensus, the market will overcome this challenge.

I maintain a positive outlook on the market’s medium-term trend.

Nguyen The Hoai

Nghiem Sy Tien – Investment Strategy Executive, KBSV Securities

Some bank stocks have experienced sharp increases, so profit-taking is a normal development as investors aim to secure profits. This is not necessarily a negative signal, and the critical factor lies in the supply-demand correlation of the stock. When there is sufficient buying pressure, and it sustains over multiple sessions, the stock’s upward momentum will improve, and buying demand will rejoin the adjusted stock. Additionally, large-cap stock waves typically last for an extended period rather than just a few sessions. Therefore, I expect the banking group to maintain its leading role for the index.

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

In our previous discussion, I did not hold a positive view of the banking group’s strength because the robust and profitable stocks were mostly small and medium-sized. Many bank stocks have now returned to their all-time highs or reached strong resistance levels. I assess that this group will not maintain its role in leading and supporting the market as it did 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 optimistic about the banking group’s ability to maintain its crucial role in driving the VN-Index’s upward trend. Although the entire market faced intense selling pressure last week, the banking group demonstrated resilience, experiencing only mild selling pressure and maintaining its upward trend. Additionally, money flowed into small and medium-sized bank stocks. These signals suggest profit-taking by small individual investors after a strong rise rather than large-scale selling. Therefore, I expect this group to avoid a trend reversal and continue its role in pulling the index higher during the recovery.

I believe the VN-Index needs more time to return to the peak, and there is an opportunity for market recovery in the coming trading week.

Le Duc Khanh

Le Duc Khanh – Director of Analysis, VPS Securities

I think the banking group can still recover after a few corrective sessions, but they will then diverge, with some stocks continuing to rise while others accumulate and correct without further increases. Other groups, such as securities, steel, and oil and gas, may take over in supporting the market.

Nguyen Hoang – VnEconomy

Amid the unfavorable developments in the underlying market, the VN30 index futures contracts have maintained a wide positive basis. Is this an absurdity or a positive signal about market expectations? If you were to participate in derivatives, would you bet on Long or Short at this point?

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

Vietnam’s derivatives market is currently quite small, so various factors can influence it. I cannot explain the nearly seven-point positive basis in the VN30 futures index. Technically, VN30F1M has completed wave 5 and is in the “a” corrective phase, so I would bet on Short. However, I will wait for the second bounce to enter at a more reasonable point.

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

Currently, the indices are undergoing corrections, but the primary upward trend remains intact. In an upward trend, the futures index having a higher point value than the underlying index results in a positive basis, indicating the market’s expectation of potential future gains. Therefore, the positive basis reflects the market’s optimism about the continuation of the upward trend. If I were to participate in derivatives, I would prioritize Short intraday positions due to the brief corrective phase. In contrast, Long positions would be preferred when the market approaches the support threshold.

I believe the previous uptrend was primarily driven by cash inflows from investors, with limited leverage, making a series of sharp declines unlikely. The potential support region for the index to exhibit a recovery reaction is around the 1255 (+-10) point level.

Nghiem Sy Tien

Nghiem Sy Tien – Investment Strategy Executive, KBSV Securities

The VN30 index futures contracts are maintaining a wide positive basis, partly reflecting positive expectations for the VN30 index, especially the banking stocks. However, the likelihood of VN30 rebounding immediately is low. While opening a Short position carries less risk, finding an attractive entry point may be challenging. Therefore, the appropriate strategy at this juncture is to buy the underlying and flexibly combine Long/Short positions.

Nguyen The Hoai – Director of Dong Nai Branch,