The market seems to be “driven” by a “abandonment” script with strong and decisive upward momentum. The two consecutive bullish sessions and the accumulation of bottom-fishing orders have contributed to a “tight supply” scenario.
Today’s liquidity was low, with the two listed exchanges matching just under 11k billion (excluding negotiated deals). However, this low trading volume was due to the morning session, as market participants awaited the futures expiry event. Looking at the afternoon session in isolation, trading activity returned to normal, equivalent to the average of the first three sessions of the week.
Despite the large Short positions held by proprietary traders on the F1 futures contract until the end of yesterday’s session, the strong upward momentum persisted in the underlying market. The VN30 index, representing the 30 largest stocks by market capitalization, closed up 1.17%, outperforming other indices.
The limitation was that the largest stocks in the market, such as VCB, FPT, VIC, and VHM, did not participate in providing upward momentum. In a bottoming process, what matters is not the magnitude of the increase but the transfer of expectations, which is reflected in a significant reduction in selling volume. Throughout the downward wave since the beginning of October until now, the price adjustments in stocks have been quite large (much larger than the nearly 7% decline in the VN Index) so, at this point, most short-term positions are likely to be loss-making. With the VN Index reaching the psychological support level of around 1200 points, those with the ability to “bear the losses” are not under margin pressure. Therefore, the pressure to cut losses around this level tends to decrease, implying that the most fearful market participants have already exited their positions.
Of course, this is just a logical inference about the psychological state of market participants, and the actual market behavior may differ. That’s why we need bearish sessions to test the supply side. When the market declines, doubts about the bottom will rise, and trading activity will be influenced by the overall bearish sentiment. In the 3.5 sessions before the VN Index touched the 1200-point region, the trading volume decreased significantly during the downward price action. This is a positive signal.
The rapid upward movement in the last two sessions has provided a significant advantage for short-term traders. This afternoon, there were not many sellers, which means that there will be accumulated volume in the next few sessions. Therefore, the market is likely to continue to fluctuate. If the confidence of stockholders increases, there will be fewer short-term trading activities, and the bottoming scenario will be followed by a new upward wave, presenting more significant opportunities.
Today, an interesting basis reversal phenomenon was observed in the F1 futures contract early in the session. This was likely due to position-closing transactions, as proprietary traders held significant Short positions. The liquidity in the F1 contract was also surprisingly high, as trading volume usually decreases during the expiry session. If the Short positions were closed during the session instead of waiting for automatic expiry, the pressure would be significantly reduced.
In the first half of the morning session, the VN30 index fluctuated uncomfortably, neither breaking above 1271.xx nor falling to 1260.xx. However, the fact that it hovered closely around 1271.xx was a positive sign, especially with the basis reversal. After 10:30 am, the VN30 index recovered above 1271.xx, with the basis providing a 3-point advantage for Long positions. This presented a good entry point for going Long, with two possible stop-loss scenarios: Scenario 1—stopping loss if the VN30 index falls back below 1271, considering the basis contraction at the expiry time; Scenario 2—stopping loss based on a 3-point basis cushion from the entry price. In the second half of the session, the VN30 index did not increase decisively but hovered around 1271.xx. The F1 contract also did not contract the basis but maintained the spread without triggering any stop-loss scenarios. In the afternoon session, the situation improved, and the basis eventually aligned with the logic of the expiry. The VN30 index was pulled up more visibly and touched the first resistance level at 1279.xx, which was a good point to close half of the Long position. The remaining position could be comfortably held until the automatic expiry.
Today’s strong upward movement may have been influenced by the futures expiry event. However, the challenging period for stockholders was also relatively long. The low trading volume indicated that not many participants wanted to sell, as today’s price range was still better than the selling pressure observed yesterday afternoon. It is likely that the loosely held loss-bearing positions have already exited, and only the short-term trading positions remain. The strategy going forward continues to be flexible Long/Short positions in the derivatives market.
The VN30 index closed today at 1286.67. The nearest resistances for tomorrow are 1290, 1295, 1302, 1309, 1316, and 1320. The support levels are 1279, 1272, 1265, 1260, and 1255.
“Stock Market Blog” reflects the personal views of the author and does not represent the opinions of VnEconomy. The views, interpretations, and trading strategies mentioned herein are those of the individual investor, and VnEconomy respects the author’s perspective and writing style. VnEconomy and the author are not responsible for any issues arising from the investment opinions and strategies presented in this blog.
The Crypto Rush: Bitcoin Surges Towards $90,000, Soaring Over $9,000 in a Day
A wave of excitement is sweeping the cryptocurrency market as Bitcoin, the world’s leading cryptocurrency, surges towards the historic milestone of $90,000.
“The Art of the Written Word: Mastering the Craft of Compelling Content”
The VN-Index surged, slicing through the 200-day SMA resistance. For the bullish momentum to be sustainably reinforced, trading volume needs to surpass the 20-day average. The Stochastic Oscillator has already signaled a buy in oversold territory. If the MACD indicator follows suit in upcoming sessions, the short-term outlook will turn even more optimistic.
The Cautious Sentiment: Will It Persist?
The VN-Index retreated amid subdued trading volumes, which remained below the 20-day average. This pullback underscores investors’ cautious sentiment following the previous rally. However, the index remains firmly above the 200-day SMA, indicating that the outlook is not overly pessimistic. As of now, the Stochastic Oscillator has dipped into oversold territory, generating a buy signal. Should the MACD indicator follow suit in upcoming sessions, it would further alleviate near-term risks.
