The market witnessed increased selling pressure today, but liquidity took a significant dip. This was the effect of bargain hunting. Investors have stepped aside to let sellers take the lead in seeking liquidity.
The VNI had its biggest drop since April 9th, which was also the day it hit its low for the year. However, this was the result of a slight downward trend over the past three sessions. The sudden surge in downward momentum indicates that many have changed their outlook and exited the market.
Today’s news flow was no different from last week’s, and the market’s adjustment was a normal response to supply and demand dynamics, not due to any sudden event. The VNI, of course, was heavily influenced by some key stocks like VIC and VHM, which fell to their daily limit losses, but the VN30 basket as a whole performed poorly, with 11 other stocks falling by more than 1%. This basket has been weak not just today but over the past 10 sessions, which is why the VNI couldn’t break through to new highs.
With the number of declining stocks tripling the number of gainers, the wave in speculative small- and mid-cap stocks, which had previously ignored the VNI, was affected by today’s overall trend. It is highly likely that the market has formed a short-term distribution zone, but until now, there were still scattered opportunities, creating a sense of security. When speculative money simultaneously “bottomed out,” the ability to go against the trend disappeared, and speculative stocks suffered heavier losses. At the close, the VNI had nearly 90 stocks falling more than 2%, while the VN30 had only four.
Today’s highlight was liquidity, with the total matching value on the HSX falling to its lowest level in 11 sessions. Money flowed out of all stock groups, and the majority of today’s most liquid stocks fell in price. From this group’s perspective, selling pressure to lower prices has completely dominated.
Technically, the VNI still has a short-term support zone around 1290-1300 points, equivalent to the lowest level of the volatile session on May 26th. That was the session when the market was forced down suddenly, but very good bottom-fishing appeared, resulting in 10 consecutive distribution sessions. Under the pressure of the pillars, it is difficult to guess where the index will bottom out. In the next few days, we need to see how the pillars will be rotated.
The good news is that the market is adjusting healthily and purely due to changes in supply and demand. Of course, we can also blame the uncertain factors in trade negotiations, but these reasons have existed for many days, not just today. Those who have withdrawn from the market in the past two weeks have a big advantage, and when the index turns and sends a negative technical signal, it will put pressure on many stocks. Many will follow the downward trend and create opportunities to rebuild portfolios at reasonable prices.
Today’s derivatives market was quite unusual, as the risk of falling prices was clearer than in previous sessions, but the F1 basis narrowed significantly. This created a low-risk short opportunity. Most of the time, the VN30 fluctuated within a narrow range from 1415.xx to 1408.xx. Below 1408.xx is the open range to 1398.xx. So, if you’re brave, you can short early, but it’s better to wait for the VN30 to hover around 1408.xx and show more obvious weakness, plus observe the pillars. When the index breaks below 1408.xx, the opportunity is most obvious.
The phenomenon of money flowing back into defensive positions suggests that the market will continue to weaken, although the range depends on how enthusiastic sellers are. The 10 distribution sessions created a fairly thick stuck zone, and it’s not clear what the margin was at this point, as there were also many sessions where the VNI hit new highs. To find out, the market is highly likely to have strong pressure tests. The strategy is to wait for stock purchases, and be flexible with derivatives.
The VN30 closed today at 1396.56. Tomorrow’s nearest resistances are 1399, 1408, 1415, 1422, and 1429. Supports are 1390, 1384, 1378, 1372, 1364, and 1352.
“Stock Market Blog” is a personal blog and does not represent the views of VnEconomy. The opinions and analyses are those of the individual investor, and VnEconomy respects the author’s views and writing style. VnEconomy and the author are not responsible for any issues arising from the investment opinions and analyses presented here.
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The market witnessed a significant downturn during Monday’s morning session, with a sea of red and a sudden dip in liquidity. The VN-Index took a severe hit, retreating to just above the 1320-point mark, largely due to the substantial decline of two heavyweight stocks, VIC and VHM.
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