The market suddenly dropped sharply yesterday (October 26) in the context that VN-Index was gradually forming a small accumulation base to recover. The sharp decline caused the index to lose the basic support levels at 1,100 points and 1,070 points.
Negative information surrounding the pillar stocks created overwhelming selling pressure throughout the trading session, along with the highest liquidity increase in the past month, showing investors' panic mentality.
The selling pressure that has been maintained almost since the beginning of the session has left the market with no chance to find any support to hold on to. Perhaps the expectation will come from the "shake-out" session with soaring liquidity and the late-session bounce that will help the short-term trend become less negative.
The VN-Index has returned to the beginning of 2023, while monetary policy remains loose, interest rates are low, and business results in the third quarter are gradually being announced and have shown a better trend than in the first two quarters of the year.
From a short-term perspective, yesterday's sharp decline shows that the downward momentum is still strong and the nearest support level for the VN-Index is the 1,015-1,045 point range. With the sharp decline, the market is in an oversold state and can recover at any time. However, every recovery is technical and often ends unexpectedly and is difficult to predict.
According to experts from Tan Viet Securities Company, the VN-Index closed the session with a marubozu candlestick pattern with a very strong downward momentum accompanied by a gap down and increased liquidity, signaling a very bad trading session. With a sharp decline, breaking through the short-term balance zone and approaching the lower support in the accumulated price base at the beginning of the year, the market's mid-term trend has officially turned to a downtrend.
The current decrease in points is synchronized on all 3 time frames, the index is in a bad state and the opportunity to have an immediate increase is very difficult. In the last session of the week, it is expected that the index can narrow the decline again to have the opportunity to form a short recovery to retest the previous balance zone.
Experts from SHS Securities Company also expressed the view that the market has returned to the previous medium-term accumulation zone and in the short term, the VN-Index may continue to decrease, but with the oversold state, the market may recover technically, but it contains risks. Short-term investors should temporarily stay out to monitor market developments. Medium- and long-term investors can continue to hold their portfolios and wait for the market to stabilize again.
Vietcombank Securities Company (VCBS) recommends that investors proactively increase their cash ratio, maintain a defensive mindset rather than disburse early to catch the bottom at the present time. The VN-Index is still under great pressure from the net selling of many large-cap stocks and it will be difficult to find a balance in the short term.
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