Today’s price action was interrupted by the patience of waiting liquidity, stifling any potential recovery. It was only when prices dipped lower that larger waiting orders emerged, revealing substantial buy-side interest. The low volume carried over from last weekend’s session, which could be seen as a positive sign as those who wanted to cut losses had already done so.
The unexpected macroeconomic data released over the weekend created some initial excitement, but the market sentiment quickly turned sour as buying pressure waned. Sellers are currently in control of the market, and price negotiations will likely continue to create volatile sessions with low volume until those with capital become more aggressive.
Intraday fluctuations are causing frustration among investors, as any upward price movement is met with selling pressure. However, this sentiment is primarily felt by stockholders, while those holding cash are in a more comfortable position. The market is still in the ‘margin testing’ phase and has yet to reach the stage of testing investors’ psychology. A bottom-forming process will likely occur when stockholders become apathetic to price movements.
Today’s session had two positive aspects. Firstly, the volume; in a downward trend, slow trading after high-volume distribution and sharp declines indicates either a reduction in selling pressure or a decrease in loose liquidity. The matched orders on the two exchanges today totaled 11.5 thousand billion, similar to mid-September levels. Secondly, there were many deep-catching orders placed at the end of today’s session. Whenever prices dropped significantly, trading activity increased, and some stocks, particularly securities stocks, witnessed impressive reversals, suggesting a shift in cash holders’ strategies.
Market transactions always involve probing the intentions of each side, and volume, price range, and fluctuations are part of that outcome. While predictions may sometimes be incorrect, the likelihood of accuracy increases over multiple sessions when signals align. Therefore, the process of forming market tops or bottoms often involves failed fluctuations and rarely concludes within one or two sessions.
Some stocks have corrected to attractive buying levels, but as the market remains unstable, a gradual purchasing strategy is advisable. Stockholders are at a disadvantage, so patience can be a virtue. Buying on dips is easy, as it simply involves covering previously sold positions, and there is no need to rush as opportunities abound.
The basis F1 in the futures market remained positive throughout the day, indicating continued expectations for a recovery in the underlying market. However, with low volume, this situation is delicate and could easily turn into a ‘short’ opportunity. To increase volatility, the index needs to be pushed down, and while this happened in the afternoon session, resulting in a better range, the basis did not contract, limiting short-selling profits.
Today’s significant drop in volume suggests a decrease in loose liquidity, and the market is likely to experience narrow ranges with low volume or sessions with forced openings to test supply. The strategy remains to focus on stock-picking and dynamically manage long and short positions in the derivatives market.
The VN30 closed today at 1335.48. Tomorrow’s resistance levels are 1341, 1348, 1356, and 1365. Support levels are 1333, 1325, 1318, and 1308.
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