An impressive turnaround unfolded during the futures expiry session. It’s unclear whether this was a pull-up effect, but the recovery was widespread, well-led, and supported by strong liquidity.
According to regulations, the final settlement price is calculated from the last 15 minutes of the continuous matching period and the ATC session. However, the market recovered in the early afternoon, just a few minutes after the afternoon session began. The rally was relentless and successful until the end, with broad market support. Even if there was an attempt to prop up the market, the positive outcome is still impressive and indicates a return to open trading.
The way orders are placed and their magnitude always reflects the appetite for risk. The aggressive buying style witnessed today demonstrates a high level of proactiveness. The broad market participation also indicates a similar mindset, even though individual stocks recovered at different paces. The improved afternoon liquidity suggests a healthy alignment of liquidity, range, and price direction. That’s the real significance of the “wick-pulling candles.”
Before today’s turnaround, the market went through a narrow-range session with minimal liquidity (12.5k billion matches), and this morning’s liquidity was the lowest in eight sessions. The only issue this morning was that stocks had a slightly wider range of declines; if it had been narrower, the signal would have been stronger. Nonetheless, the outcome was still positive. It appears that liquidity has been waiting for the October expiry to pass before taking action.
Technically, today’s reversal session is a positive sign, and the uptrend since August for VNI remains intact. If the market continues to rise on the last day of the week, there is a high probability that the index will form another higher low. Such a technical pattern will attract attention, and as long as the downtrend becomes shorter in duration, smaller in range, and closer to the resistance level, the chances of breaking through the resistance increase.
However, it’s important to note that the index has its own story, and a breakout would be ideal as it would create broad consensus and change the mindset of conservative investors. Opportunities still lie in specific stocks, and even in the best-case scenario, the chances are not the same. Therefore, it’s crucial to focus on your portfolio first. Stocks that have undergone minor adjustments within their typical fluctuation range are strong. Those forming bottom zones are also worth considering. It only takes a few more sessions to boost morale and eliminate the lethargy, despondency, and pessimism of the past few days!
Today is the futures expiry, and F2 maintains a significant basis (averaging nearly 8 points). The F2 term is still very long, so shorts are unlikely to benefit from basis elasticity. F1, on the other hand, doesn’t need to consider the basis, making it easier to set stop losses.
The initial sliding pace lacked a standard setup, with VN30 mainly fluctuating below 1359.xx, quite far, and slowly. A better opportunity presented itself when VN30 broke through 1353.xx; if this level is breached, the next threshold is 1348.xx and 1341.xx, and the stop-loss for shorts can be set according to VN30 when it rebounds above 1348.xx. In the early afternoon, VN30 broke through 1348.xx, and the basis turned positive, after which the index rebounded above 1348.xx. That was the point to close the position. The subsequent rebound created a good setup for longs, with a stop-loss set according to VN30 if it falls back below 1348.xx. The target for closing half the position is VN30 reaching 1353.xx. The rest rose beautifully to 1359.xx.
Today’s F2 performance indicates a considerable expectation for the underlying market, even as VNI and VN30 plummeted this morning. The influx of liquidity had a positive effect, altering the prevailing pessimistic mindset. The opportunity for the indices to retest the peak zones remains. The strategy is to be long/short flexible, favoring longs, and mindful of the basis.
VN30 closed today at 1362.89. Tomorrow’s nearest resistance is 1368; 1376; 1380; 1387; 1396; 1401. Support is at 1358; 1348; 1341; 1333.
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