The market witnessed yet another massive liquidity session with nearly VND 82.6k billion across three exchanges, following the session on July 29 with nearly VND 79.7k billion. The VN Index pushed to a new high, stimulating a ‘frenzied’ psychological response before selling emerged.
The scale of capital in the market far exceeded previous records, and the volatility was also more unusual than in the past. The large sell-off on July 29 also originated from a highly excited psychological state after the VN Index reached a new peak on July 28. This time, it was a violent push within nearly two sessions. When sentiment was at its strongest, a bucket of cold water was poured in.
The two-session rise was likely the result of several days of ‘testing’ the supply around 1500 points and finding ample funds and strong sentiment. In history, there have been times when the market adjusted very strongly after a long upward trend, but if the demand is still healthy, there will be a ‘retest’ of the peak before a proper adjustment. This time, the money is truly stronger than expected. However, today’s reaction also shows that the area above the July 28 peak will face new selling pressure, and the area below 1500 points has bottom-fishing support. These two areas may continue to be tested further.
The VN Index closed up 1.24% for this session, but there was a very clear support effect. Most stocks did not perform as strongly. The proactiveness in today’s sell-off was extremely high, similar to July 29, when a huge amount of stock was held by those going against the trend while the majority were excited.
Furthermore, while the VN Index reached a new high today, most stocks did not, and many have yet to recover the loss from July 29. Some truly strong stocks had the opportunity to play T+ until today, but others did not. Therefore, relying on the strength of the index is not appropriate at this time; instead, one should rely on specific supply and demand.
Overall, today’s volatility was strong but not unusual, as history has seen similar fluctuations. The current liquidity threshold is just extremely large. However, no matter how much money there is, it is not stronger than the volume of stocks; it just takes more time to oscillate and a stronger amplitude to distribute it all. The question to ask now is still: when everyone is excited and overwhelmed with capital, who is selling so much? It’s easier to answer who’s buying because when the market is good, there are more new accounts, more money is deposited, and more margin room (when prices rise). In the past, there were stocks that were extremely pumped, creating huge liquidity, and when it came to reckoning, there were tens of thousands of small accounts buying, but only a few hundred large accounts selling.
The derivatives market fluctuated terribly today. For most of the time, the underlying market was stimulated and highly excited, and Long was naturally suitable, not to mention the basis was favorable by tens of points. The reversal from around 2 pm was something that only proactive players could keep up with, and most Long positions would have hit the trailing stop. Short-chasing is a high risk because you can’t know how the pillars will be regulated. In fact, big players can profit from both sides today, so be aware that when VN30 exceeded 1722, F1 even reversed the basis.
With today’s large-scale proactive sell-off, quite a few stocks will ‘collapse’, and the index will depend on the pillars. In fact, most stocks didn’t make much profit in the two-session rebound. The strategy is still Long/Short derivatives to relieve boredom.
VN30 closed today at 1690.43. The nearest resistance for tomorrow is 1694, 1711, 1722, and 1739. Supports are at 1681, 1673, 1663, 1652, 1644, and 1632.
“Blog Securities” is personal and does not represent the opinions of VnEconomy. The views and evaluations 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 views and opinions posted.
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